Suo motu re-credit of mistaken or pre-deposit Cenvat amounts is permissible without a refund claim.

Amounts paid by mistake, or debited as a pre-deposit during litigation, are treated as deposits rather than duty paid in the ordinary course. On that basis, once the underlying demand is set aside or an excess debit is discovered, the assessee may restore the credit by suo motu re-credit without first filing a refund claim. The provisions on recovery of wrongly taken Cenvat credit were read as inapplicable where the debit itself arose from a mistaken or litigation-related payment later entitled to restoration. The commentary records that suo motu re-credit was held permissible and the show cause notices were found misconceived.

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Issues: Whether an assessee can take suo motu re-credit of duty or Cenvat credit debited in excess, including amounts paid during pendency of appeal or debited due to clerical mistake, without requiring a refund claim.

Analysis: The order applied the principle that amounts paid by mistake or as pre-deposit during litigation are not to be treated as duty payable in the ordinary course. It relied on the view that such amounts are in the nature of deposit and, once the underlying demand is set aside or the excess debit is discovered, the assessee is entitled to restore the credit by re-crediting the amount. The provisions relating to recovery of wrongly taken credit under the Cenvat Credit Rules were held not to require recovery where the credit itself represented a mistaken or pre-deposit debit later restored by the assessee.

Conclusion: Suo motu re-credit was held permissible, the show cause notices were held misconceived, and the assessees succeeded while the Revenue's appeal failed.

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