Cash refund of CENVAT-backed duty allowed after factory closure and surrender of registration, since credit would serve no purpose.

Section 11B of the Central Excise Act does not distinguish between duty paid in cash and duty paid through CENVAT credit for refund purposes. Ordinarily, refund may be adjusted through the CENVAT account while the unit is operational, but where the factory has closed and registration has been surrendered, crediting the refund to a non-existent or unusable CENVAT account is meaningless. On these facts, cash refund was the appropriate mode of repayment, and the refundable amount had to be paid in cash rather than re-credited to CENVAT.

---

---

Issues: Whether refund of duty paid through CENVAT credit can be sanctioned in cash when the factory has closed and the registration certificate has been surrendered.

Analysis: Section 11B of the Central Excise Act, 1944 does not distinguish between duty paid in cash and duty paid through CENVAT credit. The normal course is to grant refund by crediting the CENVAT account when the unit is operating, but where the unit has closed and the registration has been surrendered, crediting the amount to a non-existent CENVAT account serves no purpose. On the facts, the factory had closed before sanction of refund, and the assessee could not utilise the amount if it were again credited to CENVAT.

Conclusion: The refund was rightly required to be paid in cash and not by CENVAT credit.

Final Conclusion: The assessee was entitled to cash refund of the refundable amount because the factory had closed and no usable CENVAT account remained.

Ratio Decidendi: Where refund of duty paid through CENVAT credit becomes due after closure of the factory and surrender of registration, Section 11B permits cash refund because credit to the CENVAT account would be meaningless.

---