Re-credit of wrongly reversed Cenvat credit in job-work clearances upheld under the exemption framework, without a refund claim.

Credit wrongly reversed on furnace oil used in job-work clearances under Notification No. 214/1986-C.E. could be re-credited, because the Tribunal treated the request as restoration of wrongly reversed credit rather than suo motu availment governed by the Larger Bench ruling relied on by the Revenue. The denial on the ground that the inputs were ineligible for credit and that no refund claim under Section 11B had been filed was unsustainable, especially where the assessee's earlier identical case had already been decided in its favour. The job-work exemption framework supported entitlement to re-credit, and the adverse order was set aside.

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Issues: Whether the assessee was entitled to re-credit of the amount wrongly reversed as Cenvat credit on furnace oil used in job-work clearances made under Notification No. 214/1986-C.E.; and whether rejection of the request on the ground that no refund claim under Section 11B of the Central Excise Act, 1944 had been filed was sustainable.

Analysis: The disputed credit related to furnace oil used in the manufacture of goods cleared on job work basis under the exemption scheme of Notification No. 214/1986-C.E. The denial was founded on the premise that inputs used for such clearances were not eligible for credit and that the assessee had not pursued refund under Section 11B. The Tribunal held that the assessee had not taken suo motu credit in the sense considered by the Larger Bench decision relied upon by the Revenue, but had sought permission to re-credit the amount that had been wrongly reversed. It also noted that the assessee's own earlier case on identical facts had already been decided in its favour, and that the exemption notification framework supported the entitlement where job work was undertaken under that notification.

Conclusion: The assessee was entitled to re-credit the reversed amount, and the order denying such benefit was unsustainable.

Ratio Decidendi: Where credit has been wrongly reversed and the assessee seeks re-credit, the matter is not governed by the principle applicable to suo motu credit; in a job-work arrangement under Notification No. 214/1986-C.E., credit cannot be denied on the asserted ground that inputs used in such manufacture are ineligible or that a refund claim under Section 11B is mandatory.

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