Rule 5 refund of unutilised export credit cannot be denied merely because it was not used for domestic clearances.

Refund of unutilised export-related CENVAT credit under Rule 5 is admissible where adjustment is not possible, subject to the prescribed safeguards, conditions and limitations. The mere fact that the credit was not first used for domestic clearances does not create an additional condition for refund, because the rule does not require prior utilisation for home consumption. The existence of accumulated credit exceeding the refund claim supported the conclusion that the credit remained unutilised. The refund denial was therefore unjustified, the impugned order was set aside, and refund relief was directed to be granted in accordance with law.

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Issues: Whether refund of accumulated CENVAT credit under Rule 5 could be denied on the ground that the credit was not first utilised for domestic clearances.

Analysis: The claim was for refund of unutilised accumulated credit relatable to exports under Rule 5 and the connected notification. On the text of the rule, where adjustment of the credit is not possible for any reason, refund is admissible subject to the prescribed safeguards, conditions and limitations. The existence of accumulated credit exceeding the refund claim supported the plea that the credit remained unutilised. The authority below was therefore not justified in questioning why such credit had not been used for home consumption clearances, since the rule does not impose that additional condition for grant of refund on exports.

Conclusion: The refund could not be denied on the ground of non-utilisation of accumulated credit for domestic clearances, and the issue was decided in favour of the assessee.

Final Conclusion: The impugned order was set aside and refund relief was directed to be granted in accordance with law.

Ratio Decidendi: Refund of unutilised export-related CENVAT credit is allowable under Rule 5 where adjustment is not possible, and it cannot be refused merely because the credit was not utilised for domestic clearances.

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