Cenvat credit refund under Rule 5 cannot be refused on nexus objections alone without a separate challenge to credit availment.

Refund of unutilised Cenvat credit under Rule 5 cannot be denied merely on an alleged lack of nexus between input services and exported output service when the department has not separately challenged the underlying credit under Rule 14. Rule 3 governs availment and utilisation of credit, Rule 14 provides the recovery mechanism for wrongly availed or utilised credit, and Rule 5 operates as a distinct export-refund provision limited to its own conditions and formula. In the absence of any identified breach of Rule 5 requirements, the refund objection based only on nexus was unsustainable, and the refund claim was allowed.

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Issues: Whether refund of unutilised Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004 could be denied on the ground of alleged lack of nexus between input services and the exported output service, when the department had not separately proceeded under Rule 14 of the Cenvat Credit Rules, 2004 to question the availment of credit.

Analysis: Rule 3 of the Cenvat Credit Rules, 2004 enables availment and utilisation of credit, while Rule 14 provides the machinery for recovery where credit is wrongly availed or utilised by applying the relevant recovery provisions mutatis mutandis. Rule 5 operates as a distinct refund provision for export cases and is concerned with compliance with its own prescribed conditions and formula. The issue of nexus or admissibility of the underlying credit could not be imported into the refund proceeding in the absence of a separate challenge to the credit itself. The authorities below had denied the refund only on the nexus objection and had not identified any breach of the Rule 5 conditions.

Conclusion: The refund could not be denied on the stated ground, and the assessee was entitled to the refund claim.

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