Cenvat credit refund: denial for nexus or minor procedural defects impermissible where credit was unchallenged at availment.

Rejection of refund of unutilized Cenvat credit on nexus and minor procedural grounds is impermissible where the credit's correctness and admissibility were not challenged at the time of availment. Applying the statutory framework for Cenvat credits and extant clarifications, the authorities cannot deny refund under Rule 5 for lack of nexus or defects such as missing registration identifiers or non-issuance on registered premises when receipt and use of input services for exported output services are established. Reliance on prior Tribunal reasoning supports allowance of the refund; accordingly the impugned orders rejecting the refund were set aside and the appellant granted the claimed refund.

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Issues: Whether rejection of refund of unutilized CENVAT credit on the grounds of absence of nexus and minor procedural defects is sustainable where the CENVAT credit, when availed, was not objected to by the department.

Analysis: The legal framework for the claim is Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 05/2006-CE (N.T.) dated 14.03.2006 and Section 11B of the Central Excise Act, 1944, together with clarifications in Circular No. 120/01/2010-ST dated 19.01.2010. The authorities had not challenged the correctness or admissibility of the CENVAT credit at the time of its availment and no proceedings under Rule 14 of the Cenvat Credit Rules, 2004 were initiated to disallow the credit. Binding and persuasive precedents, including the Tribunal's earlier decision in the appellant's own case and the Qualcomm line of decisions, hold that where credit availed is not questioned at the time of availment, denial of refund under Rule 5 on grounds of nexus or minor procedural defects is impermissible; procedural infirmities such as absence of service tax registration number, PAN-based registration number or non-issuance on registered premises do not justify denial of refund if the receipt and use of input services for exported output services is established. Applying these principles to the facts, the input services involved correspond to recognized input services in prior decisions and the department raised no substantive objection at the stage of availment.

Conclusion: The impugned orders upholding rejection of refund are set aside and the appeal is allowed; the appellant is entitled to the refund of the unutilized CENVAT credit as claimed.

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