Suo motu Cenvat re-credit is permissible when a mistaken reversal is corrected and duty-paid final products result.

Cenvat credit reversed by mistake may be re-credited suo motu as a book adjustment where the assessee later verifies that the reversal was erroneous and there is no element of unjust enrichment. On these facts, a refund claim under Section 11B of the Central Excise Act, 1944 is not required. Rule 6(1) of the Cenvat Credit Rules, 2004 does not bar the re-credit when the job-worked goods are ultimately used in the manufacture of duty-paid final products by the principal manufacturer. The disallowance of re-credit and the related demand therefore do not survive.

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Issues: Whether the assessee could take suo motu re-credit of Cenvat credit earlier reversed by mistake in respect of furnace oil used for job-worked goods, and whether Rule 6 of the Cenvat Credit Rules, 2004 barred such re-credit.

Analysis: The credit reversed was found to have been taken again only as a book entry after the assessee ascertained that the earlier reversal was mistaken and that the final excisable goods manufactured out of the job-worked goods had suffered duty at the principal manufacturer's end. On those facts, the credit reversal and re-credit did not involve any unjust enrichment and there was no requirement to file a refund claim under Section 11B of the Central Excise Act, 1944. The embargo in Rule 6(1) of the Cenvat Credit Rules, 2004 was held inapplicable because the job-worked goods were ultimately used in the manufacture of duty-paid final products by the principal manufacturer.

Conclusion: Suo motu re-credit was permissible, and the denial of re-credit under Rule 6(1) was unsustainable.

Final Conclusion: The disallowance of Cenvat re-credit and the related demand did not survive.

Ratio Decidendi: Where Cenvat credit is reversed by mistake and later re-credited only as a book adjustment, and the job-worked goods are used in the manufacture of duty-paid final products, suo motu re-credit is permissible and Rule 6 of the Cenvat Credit Rules, 2004 does not bar such credit.

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