Modvat credit refund barred when available credit was ignored and duty was paid in cash through the PLA.

Unutilised Modvat credit could not be refunded where the assessee had credit available but still chose to pay duty in cash through the PLA instead of first using the credit facility under Notification No. 35/87-C. The Court reasoned that there was no justification for bypassing available credit and then seeking refund on the footing that the credit was not used. Refund was therefore not allowable in the circumstances, and the issue was decided against the assessee and in favour of the Revenue.

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Issues: Whether refund of Modvat credit could be disallowed where the credit remained unutilised but the assessee chose to pay duty in cash through the Personal Ledger Account instead of utilising the available credit under Notification No. 35/87-C.

Analysis: The assessee had Modvat credit available during the relevant period, yet duty was paid in cash through the PLA. The Court found no justification for paying duty in cash without first availing the credit facility. It accepted that the credit amount was available and held that the assessee could not claim refund merely because the credit was not utilised when it was available for use.

Conclusion: The question was answered against the assessee and in favour of the Revenue; refund of the unutilised Modvat credit was not allowable in the circumstances.

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