Suo motu CENVAT credit restoration is permissible in principle, but documentary support must verify the revised credit claim.

Suo motu restoration of reversed CENVAT credit was treated as permissible in principle where the entitlement is otherwise established, because mere reversal of a credit entry does not involve an outflow of funds and does not by itself trigger refund requirements under Section 11B of the Central Excise Act, 1944. The decisive factual question remained whether the revised credit was supported by cenvatable duty-paying documents, and whether those documents matched the service tax credit statement. As the record did not conclusively establish full documentary support, the disallowance was not finally sustained and the matter was remanded for fresh verification.

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Issues: Whether the appellant was entitled to take suo motu CENVAT credit after reversal of the earlier credit, and whether the credit could be denied for want of immediate refund proceedings or on the ground of limitation.

Analysis: The credit earlier taken was reversed and a revised credit was thereafter taken on the appellant's own records. The decisive question was whether the revised credit was supported by cenvatable documents and whether any rule prescribed a time limit for taking such credit. Reliance was placed on the principle that reversal of credit entry does not involve outflow of funds so as to attract refund principles under Section 11B of the Central Excise Act, 1944, and that credit can be restored where the entitlement is otherwise established. However, the record before the Tribunal did not conclusively establish that the entire revised credit was supported by the same and additional duty-paying documents reflected in the service tax credit statement.

Conclusion: Suo motu credit was held to be permissible in principle, but the matter required verification of the supporting cenvatable documents. The disallowance was not sustained finally and the issue was remanded for de-novo examination.

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