Cenvat credit refund cannot be denied without reasons or proof of lack of nexus with output services.

Refund of unutilized Cenvat credit under Rule 5 could not be denied merely by asserting that certain input services lacked nexus with output services; the rejection had to rest on cogent reasons and a proper statutory basis. The order was found unsustainable because it did not explain why rent-a-cab, insurance, air travel, supply of tangible goods, event management, outdoor catering and parking charges were ineligible, and no objection had been raised when the credit was taken. In the absence of material showing personal use or employee consumption, the appellant's business-use explanation was accepted, and the disputed refund was due.

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Issues: Whether refund of unutilized cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004 could be denied on the ground that the disputed input services lacked nexus with the output services, and whether the authorities were justified in rejecting the refund without cogent reasons.

Analysis: The refund was rejected on the premise that certain services such as rent a cab, insurance, air travel, supply of tangible goods, event management, outdoor catering and parking charges were not used for providing output services. The order was found to be unsupported by reasons and did not explain the basis for holding the services ineligible. The Tribunal noted that no objection had been raised to the credit when taken, and that refund eligibility could not be denied after credit had been permitted unless the statutory basis and the absence of nexus were properly established. On the facts, and in the absence of material showing personal use or employee consumption in respect of the contested services, the appellant's explanation of business use was accepted.

Conclusion: The denial of refund was unsustainable. The appellant was entitled to the refund of the disputed cenvat credit.

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