Refund of unutilised CENVAT credit allowed where factory closure prevented adjustment and no express bar existed.

Rule 5 of the Cenvat Credit Rules, 2002 was read as permitting refund of unutilised CENVAT credit where adjustment was not possible, and the absence of an express refund bar did not defeat the claim. Because the assessee had closed the factory, ceased manufacture, and exited the Modvat scheme, the rule was treated as inapplicable as a ground to reject refund. The absence of production or clearance, together with closure of business, supported entitlement to refund, and the claim was allowed in favour of the assessee.

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Issues: Whether refund of unutilized CENVAT credit could be denied on the ground that Rule 5 of the Cenvat Credit Rules, 2002 contained no express provision for such refund and the assessee had ceased production on closure of the factory and exit from the Modvat scheme.

Analysis: Rule 5 was read as permitting refund where adjustment of credit was not possible, and the Court found no express prohibition against refund. Since the assessee had ceased manufacture because the company had closed and was no longer functioning as a manufacturer, the rule was held inapplicable as a ground to reject the claim. The absence of production or clearance, coupled with the closure of the factory and exit from the Modvat scheme, supported the entitlement to refund.

Conclusion: The refund claim was held to be allowable and the questions of law were answered against the Revenue and in favour of the assessee.

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