Unutilised CENVAT credit refund allowed for fully exported production; export cannot carry domestic duty burden.

Unutilised CENVAT credit was considered refundable under Rule 5 where inputs suffered duty but the manufacturer exported the entire production and could not use the accumulated credit. The analysis applied the settled principle that exported goods should not bear domestic duty burden, and relied on precedent recognising that credit on inputs used in exempt, nil-duty, or fully exported goods may still be claimed as refund when it remains unusable. The refund claim was held admissible, the denial was set aside, and consequential relief followed.

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Issues: Whether refund of accumulated CENVAT credit was admissible under Rule 5 of the CENVAT Credit Rules, 2004 where the appellant manufactured goods cleared without duty in the domestic market but exported the entire production and was unable to utilize the credit.

Analysis: The entitlement to refund was examined in the context of export of the entire output and accumulation of credit on inputs. The applicable rule and notification governing refund of unutilised credit were read with the settled principle that exported goods should not suffer domestic duties. The reasoning relied on precedent holding that a manufacturer of exempt or nil-duty goods can still take credit of duty paid on inputs and claim refund when such credit remains unusable, and that export under bond is legally permissible without exporting duties.

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

Final Conclusion: The common order denying refund could not be sustained, and all three appeals were allowed with consequential relief.

Ratio Decidendi: Where inputs suffer duty and the resultant goods are wholly exported, unutilised CENVAT credit is refundable under Rule 5 of the CENVAT Credit Rules, 2004, and export policy does not permit exporting domestic duty burden.

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