Cenvat credit - refund of unutilized credit

[kiran kujur]

under Rule 5A of Cenvat Credit Rule, 2004, if the units availing notification no. 20/2007 dated 25.4.2007 is unable to utilize the credit of inputs, he will get the refund of balance amount of unutilised credit on inputs. what is the scope of unable to utilize, pl illustrate examples. whether any clarification has been issued by cbec or not,pl make a reference to.

[Rama Krishana]

There may be various combinations of the various situations for availing and utilizing cenvat credit as per notification no. 20/2007 read with rule 5A of the cenvat credit rules, 2004. A simple can be: (i) duty payable on the finished goods = Rs. 5000/- (ii) cenvat credit available on Inputs = Rs. 6000/- (this may be due to higher rate of duty on inputs or SAD on import or previous rate of duty i.e. 14% or 10% as the case may be.) (iii) manufacture is not able to utilize the credit of Rs. 1000/- [Suppose the condition of value addition as per the notification no. 20/2007] he can file refund claim under rule 5A.

AI Summary

Refund of unutilised Cenvat credit where input credit exceeds duty and cannot be utilised due to value addition requirement. Where input credit available to a unit covered by the notification exceeds duty payable on finished goods and the unit is unable to utilize the surplus owing to the notification's conditions (such as a value addition requirement), the regulatory scheme permits filing a refund claim for the unutilised credit under the rule governing refunds of Cenvat credit.