Cash refund for unavailed Modvat credit on capital goods remains available when closure prevents re-credit in the CENVAT account.

Cash refund is permissible where Modvat credit on duty-paid capital goods cannot be re-credited because the unit has been closed and the excise registration surrendered. The Tribunal noted that Rule 57S of the Central Excise Rules, 1944 did not expressly cover this situation, but it reflected the principle that credit should not be denied when entitlement exists and the assessee is unable to avail it for reasons beyond control. Following earlier Tribunal rulings, it held that the assessee was entitled to cash refund and rejected the Revenue's appeal.

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Issues: Whether an assessee who had taken Modvat credit on capital goods but later closed down the unit and surrendered central excise registration, and therefore could not take re-credit in the CENVAT account, was entitled to cash refund of the amount.

Analysis: The respondents had been allowed re-credit after the original credit dispute was resolved in their favour, but they could not avail such re-credit because their unit had already been closed and registration cancelled. The Tribunal noted that although Rule 57S of the Central Excise Rules, 1944 did not expressly deal with this factual situation, the provision embodied the principle that where an assessee was otherwise entitled to credit on duty paid capital goods but was unable to avail it for reasons beyond its control, cash refund could be granted. The earlier Tribunal decisions supporting cash refund in similar circumstances were followed.

Conclusion: The respondents were entitled to cash refund, and the Revenue's appeal was rejected.

Ratio Decidendi: Where credit on duty paid capital goods cannot be availed because the assessee has closed the unit or otherwise become incapable of taking the credit, cash refund of the corresponding amount is permissible.

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