Refund under the substituted Cenvat credit scheme cannot be denied later on a fresh nexus test for input services.

Under the substituted Rule 5 refund framework for accumulated Cenvat credit, exporters are entitled to a simplified refund mechanism and the Revenue cannot reopen the availment of credit at the refund stage by insisting on a fresh nexus test between input services and exports. Where no objection was raised when the credit was taken, refund cannot be denied later on the ground that the services were intermediary services or that the required correlation was absent. The amended refund scheme and relevant notification support the export character of the services and the sanction of refund, so the rejection of refund was set aside and the refund restored.

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Issues: Whether refund of accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004 could be denied by examining the nexus of input services or by treating the activity as intermediary services when no objection was raised at the stage of availing credit.

Analysis: Refund under Rule 5 is governed by the scheme in force after substitution of the rule, which provides a simplified mechanism for exporters and does not require the same level of correlation between exports and input services that was relevant under the earlier regime. If the Revenue did not challenge eligibility at the time credit was taken, the refund stage is not the proper stage to reopen the availability of the credit or to impose a fresh nexus enquiry. The export character of the services and the refund formula were also supported by the relevant notification and the amended refund framework.

Conclusion: The refund could not be denied on the ground adopted in the impugned order, and the order rejecting refund was liable to be set aside.

Final Conclusion: The appeal succeeded and the original sanction of refund was restored.

Ratio Decidendi: Under the substituted Rule 5 refund mechanism, the Revenue cannot, at the refund stage, question the availment of credit or insist on a nexus test that was not raised when the credit was taken.

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