Cash refund of unutilised Cenvat credit on factory closure permitted, with release conditioned on surrender of registration certificate.

Accumulated Cenvat credit remaining unutilised on closure of a factory is refundable in cash under Rule 5 of the Cenvat Credit Rules, 2004. The procedural fact that the registration certificate had not yet been surrendered did not negate the substantive entitlement; instead, surrender could be required before release of the refund. The matter was remanded to the Original Authority for implementation of the cash refund after completion of that procedural step.

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Issues: Whether accumulated Cenvat credit was refundable in cash on closure of the factory and whether the matter required remand pending surrender of the registration certificate.

Analysis: The assessee's factory had closed, and the refund claim arose from debit made from the Cenvat account after the duty demand was set aside. The decision recognised that cash refund of unutilised credit is permissible in the closure situation under Rule 5 of the Cenvat Credit Rules, 2004. Since the registration certificate had not yet been surrendered because the unutilised PLA balance had only then been refunded in cash, the proper course was to remand the matter with a direction that cash refund be granted once surrender of the registration certificate was completed.

Conclusion: Cash refund of the accumulated Cenvat credit was held admissible in principle, and the matter was remanded to the Original Authority for implementation upon surrender of the registration certificate.

Ratio Decidendi: Where accumulated Cenvat credit remains unutilised due to closure of the factory, refund in cash is permissible under Rule 5 of the Cenvat Credit Rules, 2004, and procedural completion such as surrender of registration may be directed before release of the refund.

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