Re-credit of Cenvat credit after successful dispute resolution is permissible when the favourable order remains unchallenged.

Re-credit of Cenvat credit reversed under protest was treated as permissible where the underlying admissibility dispute on capital goods credit had already been decided in the assessee's favour and the favourable order was not challenged by Revenue. In that setting, restoring the credit after final success could not be branded irregular, and the demand for recovery of credit, interest, and penalties was unsustainable. The commentary also notes that the Tribunal distinguished the Larger Bench ruling cited by Revenue on facts and relied on High Court authority recognising the right to use the amount standing to credit after the dispute ends in the assessee's favour.

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Issues: Whether the appellant was entitled to take re-credit of Cenvat credit earlier reversed under protest after the proceedings on admissibility of credit on capital goods were dropped in its favour, and whether the demand of credit, interest, and penalties could be sustained.

Analysis: The entitlement to credit on the items treated as capital goods had already been decided in the appellant's favour by the order dropping the proceedings, and the revenue had not challenged that order. The credit now in dispute was taken only after that favourable conclusion. In these circumstances, the attempt to treat the re-credit as irregular was inconsistent with the earlier final determination on admissibility. The Tribunal distinguished the Larger Bench ruling relied upon by the revenue on the ground that the factual setting there was different, whereas here the credit was restored after the dispute had ended in the assessee's favour. The appellant's action was also supported by the Gujarat High Court decision recognising the right to utilise the amount lying to credit after success in proceedings.

Conclusion: The re-credit was held to be permissible, and the demands for recovery of credit, interest, and penalties were not sustainable.

Final Conclusion: The impugned order was set aside and the appeal succeeded with consequential relief.

Ratio Decidendi: Where credit reversed under protest during pending proceedings is restored only after the dispute is finally decided in favour of the assessee and the favourable order is left unchallenged, the assessee cannot be denied the corresponding re-credit on the ground that a refund claim ought to have been filed.

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