Refund of unutilized Cenvat credit upheld where manufacturing had ceased after closure and Rule 5 could not bar relief.

Where manufacturing activity had ceased after closure, Rule 5 of the Cenvat Credit Rules, 2004 did not permit rejection of refund of unutilized Cenvat credit. The Court relied on an earlier Division Bench view that refund remained admissible when the assessee had shut down operations and no manufacture was taking place, and the Tribunal was justified in following that binding precedent on the same facts. The question of law was answered in favour of the assessee and against the revenue, and the refund claim was upheld.

---

---

Issues: Whether refund of unutilized Cenvat credit was admissible when the assessee had suspended manufacturing operations and no manufacture took place, and whether the Tribunal was justified in applying the earlier decision allowing such refund.

Analysis: The Court noted that the earlier Division Bench decision had held that where the company had closed down and manufacture had ceased, Rule 5 of the Cenvat Credit Rules, 2004 could not be invoked to deny refund of the unutilized credit. The Tribunal had relied on that binding view, and the earlier order had also not been disturbed in further challenge. On the same facts and legal setting, no reason was found to depart from that conclusion.

Conclusion: The question of law was answered in favour of the assessee and against the revenue. The Tribunal was held justified in granting the refund by following the earlier decision.

Final Conclusion: The assessee's entitlement to refund of unutilized Cenvat credit was upheld and the revenue's challenge failed.

Ratio Decidendi: Where manufacturing activity has ceased on account of closure, Rule 5 of the Cenvat Credit Rules, 2004 does not justify rejection of refund of unutilized Cenvat credit.

---