Procedural lapse cannot defeat CENVAT refund where debit compliance is substantively proved, with interest payable on delay.

Refund of unutilised CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004 could not be denied for an alleged procedural defect in debiting the refund amount under Notification No. 27/2012-CE(NT), where the ledger, returns, reconciliation statements and chartered accountant's certificate showed that the debit requirement was in substance met and no dual benefit arose. The refund rejection was therefore unsustainable. Interest was also payable on the delayed sanction of the refund because the amount remained unpaid beyond the prescribed three-month period from receipt of the refund application, attracting statutory interest.

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Issues: (i) whether the refund of unutilised cenvat credit could be denied for alleged non-compliance with the debit requirement under Notification No. 27/2012-CE(NT) dated 18/06/2012; (ii) whether interest was payable on delayed sanction of the refund.

Issue (i): whether the refund of unutilised cenvat credit could be denied for alleged non-compliance with the debit requirement under Notification No. 27/2012-CE(NT) dated 18/06/2012.

Analysis: The refund claim was examined in the context of Rule 5 of the CENVAT Credit Rules, 2004 and the debit condition in the notification. The record contained the cenvat ledger, ST-3 returns, reconciliation statements and a chartered accountant's certificate showing that the refund amount had been debited, with an excess debit in the earlier period also available. The rejection by the authorities below was found to be overly technical and based on an incomplete appreciation of the documents, while the substantive condition against dual benefit stood satisfied.

Conclusion: The refund could not be denied on the alleged debit defect, and the assessee was entitled to the refund of unutilised cenvat credit.

Issue (ii): whether interest was payable on delayed sanction of the refund.

Analysis: Interest on delayed refund was considered with reference to the principle that once a refundable amount is not disbursed within the prescribed period, interest follows from the expiry of three months from receipt of the refund application. The refund remained unpaid beyond that period, so the delay attracted statutory interest.

Conclusion: Interest on the delayed refund was payable in favour of the assessee.

Final Conclusion: The refund rejection was unsustainable, and the assessee succeeded in obtaining both refund relief and consequential interest for delay.

Ratio Decidendi: A refund of unutilised credit cannot be denied on a mere procedural lapse when the substantive conditions are satisfied and documentary evidence shows compliance with the debit requirement; delayed refund carries interest after expiry of the statutory three-month period.

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