Re-credit of capital goods duty debit allowed where appellate relief restored eligibility and unjust enrichment objection failed.

Capital goods credit taken under Rule 57Q and later debited after show cause proceedings could be re-credited where the appellate order had already modified the original denial and accepted eligibility to the extent of the amount debited. The earlier debit was treated as uncalled for, so restoration by re-credit was permissible without awaiting further sanction because the appellate order had not been stayed or set aside. The objection based on unjust enrichment, and the argument that refund formalities were incomplete, was rejected on the facts stated.

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Issues: Whether the assessee was entitled to re-credit of the duty debited pursuant to the show cause notice and to refund of the amount already reversed, and whether the claim could be denied on the ground of unjust enrichment or for want of completion of the refund formalities.

Analysis: The appeal concerned capital goods credit taken under Rule 57Q and later debited by the assessee after initiation of proceedings. The appellate order had already modified the original denial and accepted eligibility to the extent of the amount debited. In that situation, the subsequent re-credit was only to restore a debit that was found to be uncalled for. The denial based on unjust enrichment and other procedural objections was not sustainable in the facts of the case. The operative appellate order in favour of the assessee was not shown to have been stayed or set aside, so the re-credit need not await any further sanction.

Conclusion: The assessee was entitled to re-credit and the refund objection based on unjust enrichment was rejected.

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