Credit reversal debit amounts are not recoverable as duty without express machinery provision, even on mistaken computation.

An amount required to be debited under a credit reversal provision is not recoverable as duty or Modvat credit where the Act or Rules contain no express machinery for recovery. The Tribunal applied its earlier ruling and held that, even if the department had computed the amount on an incorrect price base, the legal character of the debit did not change. Recovery, interest and penalty were therefore not sustainable, and the departmental order was set aside.

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Issues: Whether the amount debited at 8% of the price of exempted clearances, though computed on a mistaken valuation basis, was recoverable along with interest and penalty in the absence of a specific machinery provision for recovery.

Analysis: The issue was treated as covered by the Tribunal's earlier decision holding that the amount required to be debited under the relevant credit reversal provision is neither Modvat credit nor duty and, if not debited, cannot be recovered in the absence of machinery provisions in the Act or the Rules. The present case involved only a difference in computation of the price base, not a different legal question, and the same principle was held applicable.

Conclusion: The demand for recovery, interest, and penalty was not sustainable and the order of the Commissioner was set aside in favour of the appellant.

Final Conclusion: The appeal succeeded because the impugned recovery was held to be governed by the earlier Tribunal ruling and therefore unenforceable on the facts and legal basis adopted by the department.

Ratio Decidendi: A debit amount required under a credit reversal provision is not recoverable as duty or Modvat credit in the absence of an express machinery provision authorising its recovery.

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