Cash refund of unutilised Cenvat credit is permissible when a manufacturing unit closes, absent an express statutory bar.

Rule 5 of the Cenvat Credit Rules, 2002 was construed as containing no express prohibition on cash refund of unutilised Cenvat credit when a manufacturing unit is closed or the assessee exits the Modvat/Cenvat scheme. On that reasoning, accumulated credit was held refundable in cash in such circumstances, and the issue was answered in favour of the assessee and against the revenue.

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Issues: Whether cash refund of Cenvat credit is admissible on closure of the manufacturing unit.

Analysis: Rule 5 of the Cenvat Credit Rules, 2002 was construed as not containing any express prohibition against refund of unutilised Cenvat credit in cash. The Court followed the view that where the assessee has gone out of the Modvat/Cenvat scheme or the unit has been closed, refund in cash of the accumulated credit is permissible.

Conclusion: The issue was answered in favour of the assessee and against the revenue.

Ratio Decidendi: In the absence of an express statutory bar, unutilised Cenvat credit may be refunded in cash when the assessee has exited the scheme or closed the manufacturing unit.

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