Modvat credit restoration after lapse permits only book adjustment, not cash refund or fresh transferable credit.

Where Modvat credit was debited before the statutory lapse date and the show cause proceedings were later dropped, the proper relief is restoration of the debit by book adjustment in RG 23C Part II, not cash refund or transfer to a fresh account. The article notes that the credit would have lapsed in any event, and absent proof that the debit forced payment through PLA or caused actual loss of usable credit, no monetary refund or equivalent fresh credit is warranted. The accounting entry alone is required to be made good.

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Issues: Whether the appellant was entitled to refund of the debited Modvat credit in cash or in a new account, or whether the debit entry had to be restored only by book adjustment in RG 23C Part II in view of the lapse provision.

Analysis: The disputed amount had been debited before adjudication, during pendency of the show cause notice. On the proceedings being dropped, the appellant became entitled only to have the debit entry made good. The credit would in any event have lapsed on 1-8-1997, and the appellant did not establish that the debit caused any compulsory payment through PLA or any actual loss of usable credit. In these circumstances, the proper course was restoration by book adjustment in RG 23C Part II, not cash refund or transfer to a new account.

Conclusion: The appellant was not entitled to cash refund or equivalent fresh credit, and the book adjustment ordered below was .

Final Conclusion: The appeal failed because the disputed amount could only be restored by accounting adjustment, and no legal infirmity was found in the orders of the authorities below.

Ratio Decidendi: Where Modvat credit had been debited before the statutory lapse date and the assessee later succeeded on adjudication, the entitlement is only to reversal of the debit by book adjustment, not to a fresh cash refund or transferable credit.

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