Refund of unutilized MODVAT/CENVAT credit and the precedential effect of SLP dismissal remain open for larger Bench review.

The article examines whether unutilized MODVAT/CENVAT credit can be refunded in cash when manufacturing activity has ceased or the credit cannot otherwise be used, and whether dismissal of an earlier special leave petition amounts to a declaration of law binding on later disputes. It surveys conflicting authorities on refund, merger, and the precedential effect of SLP dismissal, and notes that the relevant legal question was left open in the later Supreme Court order. The Court records a prima facie disagreement with the earlier coordinate Bench view and states that the issue requires consideration by a larger Bench; no final ruling on refund is rendered, and the matter is referred for consideration of a larger Bench.

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Issues: Whether cash refund of unutilized MODVAT/CENVAT credit is permissible where the assessee has closed manufacturing activity or cannot utilize the credit, and whether the effect of dismissal of the earlier special leave petition operated as a declaration of law binding on the present controversy.

Analysis: The order undertakes a detailed survey of the competing authorities on refund of unutilized credit, including the treatment of dismissal of special leave petitions, the doctrine of merger, and the extent to which earlier orders concerning closure of factory and out-of-scheme credit bind later benches. The Court records that the question of law arising in the present appeals had been kept open in the later Supreme Court order, and notes that the issue requires consideration by a larger Bench because it disagrees prima facie with the earlier coordinate Bench view.

Outcome: No final adjudication on the refund question was rendered in this order; the matter was directed to be placed before the Hon'ble Acting Chief Justice for consideration of reference to a larger Bench.

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