Cash refund of unutilized Cenvat credit permitted after factory closure and exit from the credit scheme.

Unutilized Cenvat credit may be refunded in cash where a manufacturer has closed the factory, surrendered the excise licence, and exited the credit scheme, because Rule 5 of the Cenvat Credit Rules, 2002 does not expressly bar such refund. Applying that principle, the Tribunal sustained the order granting cash refund and rejected the Revenue's challenge.

---

---

Issues: Whether unutilized Cenvat credit could be refunded in cash when the factory had been closed and the excise licence surrendered.

Analysis: The Tribunal noted that refund of unutilized credit is permissible where the assessee has gone out of the Modvat/Cenvat scheme or the factory has closed, and relied on the principle that Rule 5 of the Cenvat Credit Rules, 2002 does not expressly bar cash refund in such circumstances. As the respondent had closed the factory and surrendered the excise licence, the earlier decision on the same principle applied fully.

Conclusion: Cash refund of the unutilized credit was permissible, and the Revenue's challenge failed.

Final Conclusion: The impugned order granting cash refund was sustained and the appeal was dismissed.

Ratio Decidendi: Where a manufacturer has closed the factory and exited the credit scheme, and the rule governing refund does not expressly prohibit it, unutilized Cenvat credit may be refunded in cash.

---