Actual non-availment of CENVAT credit under EPCG satisfies refund conditions; notional credit cannot defeat the claim.

Non-availment of CENVAT credit on capital goods procured under the EPCG scheme satisfied the refund-condition under Notification No. 56/2002-C.E. because the relevant test was actual credit taken, not a notional credit that could have been taken. The supplier's entitlement to terminal excise duty refund under the Export-Import Policy, 2004-2009 did not by itself defeat the recipient's refund claim where the recipient itself had not availed credit. The stated principle is that, when the governing framework requires non-availment or exhaustion of credit, actual non-availment meets the condition and does not render the refund inadmissible.

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Issues: Whether non-availment of CENVAT credit on capital goods procured under the EPCG scheme disentitled the appellant from refund under Notification No. 56/2002-C.E. when the supplier was entitled to terminal excise duty refund under the Export-Import Policy, 2004-2009.

Analysis: The appellant procured capital goods from domestic suppliers under the EPCG scheme and did not avail CENVAT credit, consistent with the condition in Paragraph 8.5 of the Export-Import Policy, 2004-2009. The condition in the notification was understood to require exhaustion of credit actually available and taken by the appellant, not a notional credit that was never availed. The supplier-side refund arrangement under the policy did not create a violation by the recipient so long as the recipient did not take credit. The earlier decision in the appellant's own case, on similar facts, also supported the view that non-availment of credit did not amount to excess or inadmissible refund.

Conclusion: The appellant was not disentitled from refund merely because CENVAT credit on the capital goods was not availed, and the impugned orders could not be sustained.

Ratio Decidendi: Where the governing exemption framework requires non-availment or exhaustion of credit, the condition is satisfied by the assessee's actual non-availment of CENVAT credit; a notional credit that could have been taken does not defeat the refund claim.

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