Modvat credit restoration follows when duty on transferred capital goods is later paid and double recovery cannot stand.

Modvat credit reversed from RG 23A Part II was held to be restorable where duty on the transferred capital goods was subsequently deposited through a TR 6 challan. Since the duty burden had already been discharged for the same clearance, the reversal could not be sustained on the basis of double payment for the same capital goods transaction. The credit was directed to be restored, with the issue decided in favour of the assessee.

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Issues: Whether the Modvat credit reversed from RG 23A Part II was liable to be restored after the duty on the capital goods transferred from one unit to another was subsequently deposited through TR 6 challan.

Analysis: The duty amount had been discharged by deposit in the bank through TR 6 challan. In these circumstances, reversal of credit already utilised for the same clearance could not be sustained, since the same duty burden cannot be treated as paid twice for the same capital goods clearance.

Conclusion: The credit reversed from RG 23A Part II was directed to be restored, and the issue was decided in favour of the assessee.

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