CENVAT refund on unutilised credit cannot be cut down by export-turnover proportion when entitlement has already attained finality.

Rule 5 of the CENVAT Credit Rules, 2004 does not permit refund of unutilised credit to be restricted proportionately by reference to export turnover or by requiring a one-to-one correlation between inputs and exported goods. The Tribunal also noted that, where an earlier order had already settled entitlement to refund in principle and had attained finality without any Revenue challenge, the lower appellate authority could not reopen that issue and reduce the refund on a different basis. The proportionate restriction was therefore unsustainable, and the refund sanctioned by the original authority was restored with consequential benefits according to law.

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Issues: Whether refund of unutilised CENVAT credit under Rule 5 of the Cenvat Credit Rules, 2004 could be restricted proportionately on the basis of export turnover, and whether the revenue appeal could survive after the earlier remand order had attained finality.

Analysis: Rule 5 permits refund where credit cannot be utilised for the specified purposes, and the Tribunal held that the provision does not impose a cap based on export turnover or require a one-to-one correlation between inputs and exported goods. The Tribunal also noted that its earlier order had already held the assessee entitled in principle to refund and had remanded the matter only for arithmetic quantification, and that no appeal had been filed by the Revenue against that order. In that situation, the Commissioner (Appeals) could not reopen the settled issue and reduce the refund on a different basis.

Conclusion: The proportionate restriction on refund was not sustainable, and the assessee was entitled to the full refund as sanctioned by the original authority.

Final Conclusion: The appeal was allowed and the order-in-original was restored, with consequential benefits to follow in accordance with law.

Ratio Decidendi: Refund of unutilised CENVAT credit under Rule 5 cannot be curtailed on a proportionate export-turnover basis when the credit is otherwise eligible and the earlier appellate determination on entitlement has attained finality.

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