Refund of Cenvat credit on VCES-paid service tax held admissible under the Credit Rules for export services.

Cenvat credit attributable to service tax paid under the Voluntary Compliance Encouragement Scheme could not be denied refund merely because the underlying dues were discharged under that scheme. The claim was for refund of unutilised credit lawfully accrued after payment, so Section 109 of the Finance Act, 2013 did not bar relief; entitlement remained governed by the Cenvat Credit Rules, 2004, including Rule 5 for export services. CBEC circulars and FAQs were treated as binding on departmental officers and confirmed that credit admissibility had to be tested under the Rules. The refund was therefore held admissible to the assessee.

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Issues: Whether Cenvat credit attributable to service tax paid under the Voluntary Compliance Encouragement Scheme could be denied refund merely because the underlying tax dues were paid under that scheme.

Analysis: The eligibility to avail and refund Cenvat credit was held to be governed by the Cenvat Credit Rules, 2004 and not displaced by the refund bar in Section 109 of the Finance Act, 2013, because the claim was not for refund of the tax dues paid under the scheme but for refund of credit that had lawfully accrued after such payment. The departmental clarification in the CBEC circular and FAQs was treated as binding on the departmental authorities, and it clarified that admissibility of credit had to be examined under the Cenvat Credit Rules. Rule 5 of the Cenvat Credit Rules, 2004 was applied to export services, and the earlier view taken in the appellant's own case and in the cited precedent was followed for consistency.

Conclusion: The denial of refund of the unutilised Cenvat credit was unsustainable and the refund was held admissible in favour of the assessee.

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