Suo motu Cenvat re-credit for wrongly paid duty is impermissible; refund must follow statutory limitation and unjust enrichment safeguards.

Duty paid voluntarily and without protest could not be taken back by suo motu re-credit in the Cenvat account. The assessee was required to pursue the statutory refund mechanism under Section 11B of the Central Excise Act, 1944, because wrongly paid duty is subject to the refund safeguards, including limitation and unjust enrichment. As the re-credit was taken after expiry of the refund period, the credit was impermissible. The Revenue's challenge succeeded, the order permitting re-credit was set aside, the adjudication order disallowing credit was restored, and the penalty was upheld.

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Issues: Whether duty paid without protest could be re-credited suo motu in the Cenvat account instead of seeking refund under the statutory refund procedure.

Analysis: The payment of differential duty was made voluntarily and was not under protest. Once the assessee realised that the duty was not payable, the proper course was to seek refund under Section 11B of the Central Excise Act, 1944. The re-credit was taken after the refund period had expired. There is no provision in central excise law permitting suo motu credit of duty paid wrongly, and any such re-credit has to satisfy the statutory refund safeguards, including limitation and unjust enrichment. The rule requiring strict compliance with statutory conditions was applied.

Conclusion: Suo motu re-credit was impermissible and the Revenue's challenge succeeded.

Final Conclusion: The order allowing re-credit was set aside, the adjudication order disallowing credit was restored, and the penalty was upheld.

Ratio Decidendi: Wrongly paid duty cannot be taken back by suo motu re-credit in the Cenvat account and must be claimed through the statutory refund mechanism, which is subject to limitation and other prescribed conditions.

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