CENVAT credit is a set-off mechanism, not a cash refund entitlement, so unused credit cannot be monetised on closure.

Unutilised CENVAT credit remaining after closure of business and surrender of registration is not refundable merely because manufacturing has ceased. The Tribunal treated CENVAT credit as a statutory set-off mechanism for adjusting duty liability in the production chain, not as a scheme that converts unused credit into cash. It distinguished cases on refund of duty collected without authority of law, noting that those authorities involved different facts and ongoing liability disputes. On that basis, closure of the unit did not create any entitlement to monetise accumulated credit, and rejection of the refund claims was sustained.

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Issues: Whether refund of unutilised CENVAT credit balance remaining after closure of business and surrender of registration is permissible.

Analysis: The refund claim arose from credit accumulated in the CENVAT account and not from any cash payment of duty by the assessee. The scheme of the CENVAT Credit Rules, 2004 was examined as a mechanism for setting off duty liability against credit taken in the production chain, not as an exemption scheme providing monetisation of unused credit. The Tribunal distinguished authorities dealing with refund of duty collected without authority of law, noting that those cases involved ongoing business and disputes concerning duty liability itself. It further held that closure of the factory does not create a right to convert unused credit into cash, because refund would amount to treating the duty paid at the preceding stage as having been collected without authority of law, which is not the nature of CENVAT credit.

Conclusion: Refund of unutilised CENVAT credit on closure of the unit is not permissible, and the rejection of the refund claims was upheld in favour of the Revenue.

Final Conclusion: The appeals failed and the orders rejecting refund of unutilised CENVAT credit were sustained.

Ratio Decidendi: CENVAT credit is a statutory set-off mechanism and not a refundable cash entitlement on closure of business, so unused accumulated credit cannot be monetised by way of refund merely because manufacturing has ceased.

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