CENVAT credit refund cannot be denied solely because input services were received in an earlier quarter.

Refund of CENVAT credit under Notification No. 5/2006-CE(N.T.) cannot be denied merely because the input services were received in an earlier period than the quarter in which the export refund claim was filed. Paragraph 4 requires only that the exporter be unable to utilise the credit against exported goods during the relevant quarter or month; it does not impose a condition that the services be consumed in that same period. For a 100% export-oriented unit with no domestic clearances, refund of otherwise admissible credit is permissible, including credit relating to a past period when claimed in a later quarter.

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Issues: Whether refund of Cenvat credit under Notification No. 5/2006-CE(N.T.) could be denied merely because the input services were received in an earlier period than the quarter in which the export refund claim was filed.

Analysis: Paragraph 4 of the notification requires only that the exporter be unable to utilize the input credit against goods exported during the relevant quarter or month. It does not impose an additional condition that the input services must have been consumed in that same quarter. The credit taken by the appellant was admissible, and the appellant, being a 100% export-oriented unit with no domestic clearances, was not in a position to utilize the credit against exports in the quarter for which refund was claimed. The departmental circular also clarified that refund of credit of a past period in a subsequent quarter is permissible, and that in the case of 100% exporters, refund of CENVAT credit should be granted if otherwise in order.

Conclusion: The refund could not be denied on the ground that the credit related to an earlier period. The appellant was entitled to refund of Rs. 9,87,555/.

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