Cash refund of unutilised MODVAT credit from exports is permissible when utilisation within the prescribed period is not shown.

Rule 57F(3) and Notification No. 85/87-C.E. create a self-contained scheme permitting cash refund of MODVAT credit only when the credit cannot be utilised. On the facts noted, the credit accumulated because of exports, and it was not shown that the assessee could have used it within the quarterly period contemplated by the notification. The existence of clearances for home consumption did not, by itself, defeat the conclusion that the accumulated credit remained unutilised and incapable of timely adjustment. Refund was therefore held admissible, and the Revenue's challenge failed.

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Issues: Whether refund of accumulated MODVAT credit attributable to inputs contained in exported goods was admissible under Rule 57F(3) and Notification No. 85/87-C.E. where the assessee also had clearances for home consumption.

Analysis: Rule 57F(3), read with Notification No. 85/87-C.E. dated 1-3-1987, provides a self-contained scheme for cash refund of MODVAT credit only where the credit cannot be utilised. The admitted position was that the credit accumulated because of exports, and the Revenue did not establish that the respondent could have utilised the credit within the quarterly period contemplated by the notification. The existence of home-consumption clearances did not, by itself, displace the finding that the accumulated credit remained incapable of utilisation within the prescribed time.

Conclusion: Refund was admissible and the Revenue's challenge failed.

Final Conclusion: The order allowing refund of accumulated MODVAT credit was sustained and the Revenue appeal stood dismissed.

Ratio Decidendi: Where MODVAT credit attributable to exports remains unutilised and is not shown to be capable of utilisation within the quarterly period contemplated by the notification, cash refund is permissible under Rule 57F(3).

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