Refund of unutilized Cenvat credit on exported goods allowed, and delayed refund held to carry interest.

Unutilized Cenvat credit taken under Rule 9A of the Cenvat Credit Rules, 2002 on declared grey fabrics was held refundable even though duty-paying documents were not produced, because the stock was verified, the credit was validly quantified, the finished goods were exported, and the credit remained unutilized. The rejection of refund on the document ground was inconsistent with the scheme of the rules. Delayed payment of the refund also attracted interest, including on the sanctioned balance refund from the date of remand, because interest follows postponement of refund liability.

---

---

Issues: (i) Whether refund of unutilized Cenvat credit was admissible on credit taken under Rule 9A of the Cenvat Credit Rules, 2002 in respect of grey fabrics lying in stock without duty paying documents; (ii) whether interest was payable on the delayed refund amount.

Issue (i): Whether refund of unutilized Cenvat credit was admissible on credit taken under Rule 9A of the Cenvat Credit Rules, 2002 in respect of grey fabrics lying in stock without duty paying documents.

Analysis: The stock of grey fabrics was declared, verified and found correct. Credit was availed under Rule 9A(2) and quantified under Rule 9A(3). The earlier order in the appellant's own case had already held that credit taken under Rule 9A could not be differentiated from credit under Rule 3(2) for refund purposes. The rejection on the ground that duty paying documents were not produced was therefore inconsistent with the scheme of the rules and the facts on record, particularly since the finished goods were exported and the credit remained unutilized.

Conclusion: Refund of the unutilized credit was admissible and the rejection of the claim was set aside.

Issue (ii): Whether interest was payable on the delayed refund amount.

Analysis: The amount of refund that remained unpaid after the dispute attracted interest because the appellant had contested the rejection and the refund had been delayed. The balance refund already sanctioned also carried interest from the date of remand, as delayed payment of refund gives rise to interest liability to meet the ends of justice.

Conclusion: Interest was payable on the delayed refund amount, including on the sanctioned balance refund from the date of remand.

Final Conclusion: The appeal succeeded, the refund rejection was set aside, and the appellant was held entitled to consequential refund relief together with interest on the delayed amount.

Ratio Decidendi: Credit validly taken under Rule 9A of the Cenvat Credit Rules, 2002 and remaining unutilized on export of final products is refundable, and delayed refund carries interest.

---