Export credit refund cannot be refused on valuation objections alone; entitlement depends on proof it relates only to exported goods.

Refund of unutilised Cenvat credit under the export incentive scheme cannot be denied merely because the department raises valuation objections or because duty on inputs was paid provisionally or under protest. Credit is to be supported by the prescribed documents and statutory records. At the same time, refund remains confined to credit shown to relate exclusively to inputs used in goods exported under bond or LUT; credit linked to clearances for home consumption does not qualify. Where that factual linkage is unclear, the original records must be verified before entitlement is determined.

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Issues: Whether refund of unutilised credit under Rule 57AC(7) of the Central Excise Rules, 1944 and Rule 5 of the Cenvat Credit Rules, 2002 could be denied on the grounds of valuation objections and provisional assessment, and whether the factual basis for linkage of the claimed credit to exported goods required verification.

Analysis: Refund under the export incentive scheme could not be denied merely because the department questioned the valuation of inputs or finished goods, since credit is to be taken on the duty shown in the prescribed documents and maintained in the statutory records. The objection that duty on inputs had been paid provisionally and under protest was also not accepted as a ground by itself to reject refund. At the same time, the entitlement to refund depended on whether the accumulated credit claimed was attributable only to inputs used in the manufacture of goods exported under bond or LUT, because credit relating to goods cleared for home consumption would not qualify. The factual position on this aspect had not been properly ascertained and required verification from the original records.

Conclusion: The denial of refund was not upheld in principle, but the matter had to be re-examined for verification of whether the claimed credit related exclusively to exported goods; the appeals were therefore allowed by way of remand.

Final Conclusion: The refund dispute was sent back for fresh factual determination, with the assessee obtaining a remand for reconsideration of entitlement in accordance with law.

Ratio Decidendi: Refund of accumulated export-related credit cannot be denied on valuation objections alone, but it must be confined to credit demonstrably attributable to inputs used in exported goods and not to home-consumed clearances.

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