Cash refund of accumulated Cenvat credit on factory closure held admissible when credit cannot be utilised

Unutilised Cenvat credit lying in the assessee's account on closure of the factory was held refundable in cash. The Tribunal followed its consistent view that where an assessee exits the Modvat scheme or the unit is closed, accumulated credit does not lapse and cash refund is admissible. Rejection of the refund claim solely on the ground that no specific provision authorised cash refund was found unsustainable. The refund claim was therefore allowed and the impugned order set aside in favour of the assessee.

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Issues: Whether unutilized Cenvat credit remaining in the assessee's account on closure of the factory is refundable in cash.

Analysis: The Tribunal noted that it had consistently held that when an assessee goes out of the Modvat scheme or when the unit is closed, the refund claim of accumulated credit is eligible and the amount has to be refunded in cash. In light of that consistent view, the rejection of refund merely on the ground that there was no provision to grant cash refund was not sustainable.

Conclusion: The refund claim was held admissible and cash refund was directed; the impugned order was set aside, in favour of the assessee.

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