Cash refund of unutilised Cenvat credit is not allowed unless the rules expressly permit refund

Unutilised Cenvat credit lying in the books on closure of a factory could not be refunded in cash because the credit scheme permits adjustment against duty liability, and refund is available only where the governing rules expressly authorise it. The Tribunal noted that statutory refund under the Cenvat framework is confined to limited situations such as export-related claims under Rule 5 or Rule 5A of the Cenvat Credit Rules, 2004, and the present claim did not fit within those provisions. The cash refund claim therefore failed, and the order denying refund was sustained.

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Issues: Whether cash refund of unutilized Cenvat credit lying in the books on closure of factory was permissible.

Analysis: The Tribunal relied on the Larger Bench view that Modvat and Cenvat credit schemes permit adjustment of duty liability in accordance with law, and that refund of unutilized credit is not available unless expressly provided. It noted that refund is recognized in the statutory scheme only in the case of export of goods and that the present claim did not fall within the limited situations under Rule 5 or Rule 5A of the Cenvat Credit Rules, 2004.

Conclusion: Cash refund of unutilized Cenvat credit was not admissible and the claim failed.

Final Conclusion: The appeal was rejected, and the order denying refund was sustained.

Ratio Decidendi: Unutilized Cenvat credit cannot be refunded in cash unless the governing rules expressly permit such refund, and refund cannot be claimed merely because credit remains unutilized on closure of the unit.

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