Cenvat credit reversed under protest is refundable in cash when proceedings are dropped and the amount cannot be utilised.

Cenvat credit reversed under protest during pending proceedings was held refundable in cash after the show cause notices were dropped. The credit had been reversed to meet contested proceedings, and the factory had closed before the proceedings ended, so the amount was not available for utilisation. The Larger Bench ruling cited by the Revenue was distinguished because it concerned unutilised credit at factory closure, not reversal under protest in the course of pending proceedings. On that basis, the refund granted by the appellate authority was upheld and the Revenue's challenge failed.

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Issues: Whether the respondent was entitled to cash refund of Cenvat credit reversed under protest after the proceedings initiated by the show cause notices were dropped.

Analysis: The refund claim arose from reversal of Cenvat credit made during pending proceedings initiated after Notification No. 24/2012-CE (N.T.) had recognised entitlement to avail credit. The reversal was made under protest to meet the pending proceedings, and the factory had closed before the proceedings concluded, so the amount was not available for utilisation by the respondent. The cited Larger Bench decision was distinguished because it dealt with unutilised credit at factory closure, whereas the present case concerned reversal under protest in the course of contested proceedings.

Conclusion: The respondent was entitled to refund in cash, and the denial of refund was not sustainable.

Final Conclusion: The refund granted by the appellate authority was upheld and the Revenue's challenge failed.

Ratio Decidendi: Where Cenvat credit is reversed under protest during pending proceedings and the demand is ultimately dropped, the amount is refundable in cash if it was not legally recoverable or available for utilisation.

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