Refund limitation for valid Cenvat re-credit must run from reversal and claim, not only the original payment date.

A valid suo motu Cenvat credit entry used to correct an unwarranted debit was treated as legally sustainable, so limitation for the refund claim could not be measured only from the original service tax payment date. The Tribunal held that where duty had been paid twice and the department had required reversal of credit, the relevant timing for limitation had to be assessed with reference to the reversal and refund claim. On that basis, the refund was not time-barred and the assessee was entitled to re-credit of the reversed amount.

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Issues: Whether the refund claim was barred by limitation and whether the appellant was entitled to re-credit of the amount reversed in the Cenvat credit account.

Analysis: The disputed service tax had been paid twice, and the later credit entry was treated as a legally sustainable suo motu credit. Once that credit was accepted as valid, the relevant date for limitation could not be confined to the original payment date alone. The Tribunal relied on its earlier decisions holding that a taxpayer may take such credit where the earlier debit was not warranted, and that a subsequent refund claim cannot be rejected merely by treating the original payment date as decisive. The reversal of credit at the instance of the department also supported the appellant's claim that the refund should be examined from the date of reversal and claim, not from the first payment date.

Conclusion: The refund claim was not time-barred, and the appellant was entitled to re-credit of the amount reversed in the Cenvat credit account.

Final Conclusion: The appeal succeeded and the rejection of refund on limitation was set aside, with consequential entitlement to the claimed credit amount.

Ratio Decidendi: Where a credit entry is legally sustainable as a correction of an unwarranted debit, limitation for refund cannot be computed solely from the original payment date and must be tested with reference to the valid reversal and refund claim.

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