Refund of unutilised Cenvat credit for exports upheld where the manufacturing unit had closed and credit remained blocked.

Refund of accumulated Cenvat credit under Rule 5 was treated as admissible where export-linked credit remained unutilised after the unit closed. The Tribunal noted that the Larger Bench view was displaced by the Karnataka High Court in Slovak India Trading Co. and the Bombay High Court in Jain Vanguard Polybutlene, both supporting refund when credit could not be effectively utilised, particularly after exit from the Modvat/Cenvat scheme. On that basis, the contrary Larger Bench position was not followed and the refund rejection was set aside with consequential relief.

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Issues: Whether refund of accumulated Cenvat credit was admissible under Rule 5 of the Cenvat Credit Rules where the assessee's unit had closed and the credit remained unutilised in relation to exported goods.

Analysis: The appeal concerned rejection of refund of accumulated credit claimed in respect of inputs and input services used for export clearances. The Tribunal noted that the reliance placed on the Larger Bench view was displaced by the Karnataka High Court decision in Slovak India Trading Co. and the jurisdictional Bombay High Court decision in Jain Vanguard Polybutlene, which treated refund as admissible in the absence of effective utilisation of credit, particularly where the factory had closed and the assessee had come out of the Modvat/Cenvat scheme. On that footing, the contrary view of the Larger Bench was not followed.

Conclusion: The refund claim was held admissible and the rejection was set aside.

Final Conclusion: The assessee succeeded in obtaining refund of the accumulated Cenvat credit with consequential relief.

Ratio Decidendi: Refund of accumulated Cenvat credit under Rule 5 is allowable when the credit remains unutilised in relation to exports and the unit has closed, especially where binding jurisdictional or higher court precedent supports such refund.

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