Cash refund of MODVAT credit upheld where adjustment was not practically possible and no substantial question of law arose.

Cash refund was held appropriate where MODVAT credit had been debited but could not be effectively utilised because no workable RG 23A Part-II account was available for the finished goods and the exemption position prevented meaningful adjustment. The Tribunal's view was accepted, and the existence of analogous precedent reinforced that result. The Revenue's challenge did not raise any substantial question of law, so reference was not justified.

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Issues: Whether the amount deposited through MODVAT account could be refunded in cash instead of being adjusted in RG 23A Part-II account, and whether any substantial question of law arose for reference.

Analysis: The amount had been debited from the MODVAT account, but the respondent had no available RG 23A Part-II account in respect of the finished goods and, because of the exemption position, could not meaningfully utilise the credit. In these circumstances, the Tribunal's view that cash refund was warranted was accepted. The Court also noted that the same issue had already been considered in analogous precedent and found no reason to differ. Since the Revenue's objection did not disclose any substantial question of law, reference was not justified.

Conclusion: The cash refund direction was upheld and the request for reference was rejected.

Ratio Decidendi: Where a pre-deposit or credit entry cannot be effectively utilised in the relevant account, cash refund may be directed, and no reference lies in the absence of a substantial question of law.

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