Pre-deposit under protest cannot be taken as Modvat credit; refund is the proper remedy after a successful appeal.

An amount paid under protest as a pre-deposit to pursue an appeal does not constitute duty of excise and, without express statutory or rule-based authority, cannot be taken suo motu as Modvat credit in RG 23A Part II. The Modvat scheme permits credit only of duty paid on inputs, not of other deposits or payments. After success in appeal, the proper remedy is to claim refund of the pre-deposit as consequential relief, not to self-adjust it as credit. The denial of suo motu credit was therefore upheld.

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Issues: Whether the assessee was entitled to take suo motu Modvat credit of the amount paid under protest by way of debit in PLA, after its earlier appeal succeeded, and whether such amount could be treated as duty eligible for credit in RG 23A Part II.

Analysis: The amount paid under protest was treated as a pre-deposit made for pursuing the appeal against the original adjudication order. Amounts deposited in that manner do not constitute duty of excise. Credit under the Modvat scheme in RG 23A Part II was available only in respect of duty paid on inputs, and not for any other amount. In the absence of any provision under the Central Excise Act or the Central Excise Rules permitting suo motu taking of such credit, the proper course after success in appeal was to seek refund of the pre-deposit as consequential relief.

Conclusion: The assessee was not entitled to avail suo motu Modvat credit of the pre-deposit amount. The denial of credit was upheld and the appeal failed.

Ratio Decidendi: An amount paid as pre-deposit or under protest, not being duty of excise, cannot be taken suo motu as Modvat credit unless the statute or rules expressly permit such availment; the remedy lies in refund.

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