Suo motu duty credit is impermissible where refund must follow statutory procedure; recovery and penalty remain sustainable.

An assessee cannot unilaterally take suo motu credit of duty paid on a confirmed demand and treat it as a refund. Where refund is claimed to have arisen after an appellate order, the prescribed refund procedure must be followed and sanction obtained from the competent authority. Because the assessee bypassed that process and adjusted the amount on its own, recovery of the credit and the consequential penalty were held sustainable. The legal position is that self-refund or unilateral appropriation of duty in accounts is not permitted; only credit supported by recognised duty-paying documents and lawful refund sanction can be taken.

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Issues: Whether the assessee was entitled to take suo motu credit of duty paid after the original demand was confirmed, and whether recovery of such credit with penalty was justified.

Analysis: The payment made by the assessee was of duty confirmed by the original authority and was not a pre-deposit ordered by the appellate authority. Credit in RG-23A or PLA could be taken only on the basis of recognised duty-paying documents, and the legal scheme did not permit an assessee to effect self-refund or suo motu adjustment of an alleged amount due from the Department. If refund was claimed to have become due because of the appellate order, the assessee had to follow the prescribed refund procedure and await sanction by the competent authority. Since the assessee bypassed that procedure and unilaterally took credit, recovery of the credit and the consequential penalty were sustainable.

Conclusion: The suo motu credit was not permissible, and the order directing recovery of the credit and imposing penalty was in law.

Final Conclusion: The appeal failed as the assessee could not lawfully grant itself refund by taking credit on its own, and the departmental order was sustained.

Ratio Decidendi: An assessee cannot unilaterally appropriate or refund duty paid by taking suo motu credit in its accounts; any refund must be claimed and sanctioned through the statutory procedure.

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