Accumulated Cenvat credit refund turns on utilisation capacity in the claim quarter, while drawback verification was remanded.

Accumulated Cenvat credit was refundable in cash where, during the quarter for which refund was claimed, the credit could not be utilised against duty on final products; the relevant test was present utilisation capacity, not possible use in later quarters. On the facts, exports under bond and low domestic clearances left the credit unabsorbed, so the refund was admissible on merits. The separate question whether drawback or rebate had also been claimed on the exports could not be resolved on the existing record and was remanded for verification with shipping bills and AR-4s by the jurisdictional Assistant Commissioner or Deputy Commissioner.

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Issues: (i) whether the assessee was entitled to cash refund of accumulated credit under Rule 57AC(7) when the credit could not be utilised in the relevant quarter; (ii) whether the claim was to be rejected for want of verification of drawback or rebate, or remanded for verification.

Issue (i): whether the assessee was entitled to cash refund of accumulated credit under Rule 57AC(7) when the credit could not be utilised in the relevant quarter.

Analysis: The accumulated credit arose because the major part of production was exported under bond and the clearances for home consumption were much lower than export clearances. The relevant test was the capacity to utilise the credit during the quarter for which refund was claimed, not any possible future utilisation in subsequent quarters. On the facts found, the credit could not be utilised for payment of duty on final products in the quarter in dispute, and the condition for refund was satisfied.

Conclusion: The refund was admissible on merits and the assessee was entitled to cash refund of accumulated credit.

Issue (ii): whether the claim was to be rejected for want of verification of drawback or rebate, or remanded for verification.

Analysis: The record was insufficient to establish whether drawback or rebate had been claimed in respect of the exports that generated the accumulated credit. Verification with reference to the shipping bills and AR-4s for the relevant period was therefore necessary.

Conclusion: The drawback or rebate aspect was remanded to the jurisdictional Assistant Commissioner or Deputy Commissioner for verification.

Final Conclusion: The refund claim succeeded on merits, but the connected question regarding drawback or rebate required departmental verification before the matter could be finally concluded on that limited aspect.

Ratio Decidendi: For refund of accumulated credit under the relevant excise rule, the decisive test is whether the credit was capable of utilisation in the period for which refund is claimed, and not whether it might be utilisable in a later period.

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