Refund of unutilised CENVAT credit on exported goods allowed where AED (T & TA) credit was otherwise admissible and restricted in use.

Unutilised accumulated CENVAT credit of AED (T & TA) on inputs used in exported goods was held refundable under Rule 5 where the credit was otherwise admissible and its utilisation was restricted by the scheme. The Board's circular supported the view that such credit could be taken and, if left unutilised on export, was refundable subject to the prescribed conditions and limitations. The claim was therefore found admissible, the rejection was unsustainable, and the refund was upheld in favour of the assessee.

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Issues: Whether unutilised CENVAT credit of AED (T & TA) accumulated on inputs used in the manufacture of exported goods was refundable under Rule 5 of the CENVAT Credit Rules, 2002.

Analysis: The accumulated credit arose because AED (T & TA) paid on yarn used in manufacture of fabrics could not be utilised against the finished goods. The Board's circular clarified that credit of AED (T & TA) may be taken even though its utilisation is restricted, and that such unutilised accumulated credit is refundable under Rule 5 on export of goods, subject to the prescribed conditions and limitations. The Tribunal also noted that the issue stood covered by the cited High Court decision.

Conclusion: The refund was admissible and the rejection of the claim was unsustainable.

Final Conclusion: The impugned order was set aside and the refund claim was upheld in favour of the assessee.

Ratio Decidendi: Unutilised accumulated CENVAT credit of AED (T & TA) used in exported goods is refundable under Rule 5 where the credit is otherwise admissible and utilisation is restricted only in the manner prescribed.

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