Refund of unutilized CENVAT credit on factory closure allowed where no statutory bar exists and binding High Court rulings prevail.

Accumulated CENVAT credit remaining unutilized on closure of the factory and surrender of registration was treated as refundable, because the Central Excise framework contained no express or implied bar against such refund. The claim could not be rejected merely on the basis that Section 11B of the Central Excise Act did not specifically provide for return of the balance credit. The reasoning also applied the principle that binding jurisdictional High Court decisions must prevail over a conflicting Larger Bench view relied on by the department. On that basis, refund of the accumulated credit on closure of the unit was allowed.

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Issues: Whether accumulated CENVAT credit remaining unutilized on closure of the factory and surrender of registration is refundable.

Analysis: The claim was rejected on the ground that Section 11B of the Central Excise Act, 1944 did not provide for such refund and that the unutilized credit could not be returned. The decision held that, on closure of manufacturing activity, there was no express or implied bar under the Central Excise framework against refund of the balance credit. It further held that the binding decisions of the jurisdictional High Courts allowing such refund had to be followed in preference to the Larger Bench view relied on by the department.

Conclusion: Refund of accumulated CENVAT credit on closure of the unit was held allowable, and the appeal succeeded.

Ratio Decidendi: In the absence of an express statutory prohibition, unutilized CENVAT credit remaining on closure of the factory is refundable, and a Tribunal must follow the binding jurisdictional High Court decision over a conflicting Larger Bench view.

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