Refund of Cenvat credit and SEZ service tax claims cannot be denied by reopening credit admissibility or citing a different notification.

Refund of accumulated input-service credit cannot be denied at the refund stage on a fresh nexus objection unless the underlying credit has first been challenged and disallowed; where credit was lawfully taken and remained unassailed, refund could not be refused by reopening its admissibility. For services used in authorized SEZ operations, refund was held admissible under Section 11B of the Central Excise Act, 1944 as applied to service tax by Section 83 of the Finance Act, 1994, and could not be denied merely because the claim was said to fall under a different notification. The appeals were allowed and the Revenue's challenge failed.

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Issues: (i) Whether refund of accumulated Cenvat credit could be denied on the ground of lack of nexus between input and output services without first challenging the admissibility of the credit; (ii) Whether refund relating to services used for authorized operations in the SEZ unit could be denied on the ground that the claim ought to have been made under a different notification.

Issue (i): Whether refund of accumulated Cenvat credit could be denied on the ground of lack of nexus between input and output services without first challenging the admissibility of the credit.

Analysis: The credit had been taken following due procedure and was reflected in the Cenvat account. The Revenue had not objected to availment of the credit or taken any proceedings to deny it on the ground of absence of nexus. Once credit is permitted and has not been assailed, the refund of unutilized credit cannot be refused by re-agitating its admissibility at the refund stage. The Tribunal relied on the settled principle that different yardsticks cannot be applied for permitting credit and for granting refund.

Conclusion: The objection based on nexus was unsustainable and the assessee succeeded on this issue.

Issue (ii): Whether refund relating to services used for authorized operations in the SEZ unit could be denied on the ground that the claim ought to have been made under a different notification.

Analysis: The services were used in relation to authorized operations in the SEZ. The Tribunal followed the view that such refund is admissible under Section 11B of the Central Excise Act, 1944 as made applicable to service tax by Section 83 of the Finance Act, 1994, and that it cannot be rejected merely because the claim was said to fall under another notification. The issue was treated as no longer res integra.

Conclusion: The Revenue's challenge failed and refund was held admissible on this issue.

Final Conclusion: The assessee's appeals were allowed with consequential relief, the Revenue's appeals were rejected, and the cross-objections stood disposed of.

Ratio Decidendi: Refund of accumulated input-service credit cannot be denied at the refund stage unless the underlying credit is first questioned and disallowed, and refund for services used in authorized SEZ operations cannot be refused merely because a different notification is invoked where the substantive entitlement is otherwise established.

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