Cash refund of Cenvat credit pre-deposit is permissible when the refund demand loses its foundation.

Refund of a pre-deposit made through Cenvat credit could be granted in cash where the assessee was unable to utilise the credit, and the refund claim was supported by the applicable exemption regime. The refund demand also failed because it rested entirely on an earlier Tribunal order that was later set aside by the High Court, and the Revenue's appeal after remand was withdrawn. Once the foundation for the show cause notice and lower orders disappeared, no basis remained for recovery. The sanction order allowing cash refund had attained finality and was not challenged by the Revenue.

---

---

Issues: Whether the appellant was entitled to cash refund of the pre-deposit amount made through Cenvat credit, and whether the refund demand survived after the foundational appellate order was set aside and the departmental appeal was withdrawn.

Analysis: The refund demand had been raised entirely on the basis of an earlier Tribunal order which had allowed the Revenue's appeal. That order was subsequently set aside by the High Court and the Revenue's appeal, after remand, was withdrawn. Once the very basis of the show cause notice and the orders of the lower authorities disappeared, nothing survived for recovery. The sanction order granting cash refund had attained finality and had not been challenged by the Revenue. On merits, the amount paid through Cenvat credit could be refunded in cash where the assessee was unable to utilise the credit, and the appellant's claim was supported by the exemption regime under which it was operating.

Conclusion: The appellant was entitled to cash refund of the pre-deposit amount, and the refund demand was unsustainable.

Ratio Decidendi: When the foundation of a refund demand disappears and the assessee cannot utilise the Cenvat credit used for pre-deposit, cash refund is permissible.

---