Cenvat credit re-credit dispute: demand cannot survive if the same stock had already been cleared on duty payment.

A demand on suo motu re-credit of Cenvat credit over motor spirit stock turns on whether the same goods had already suffered duty on clearance. The Tribunal noted that the remand required verification of the assessee's claim, and the jurisdictional Superintendent's report, supported by RG-1, PLA and RT-12 records, stated that the disputed stock was cleared on payment of duty between 1.1.1999 and 6.1.1999. Because that material was not meaningfully examined by the lower authorities, the matter required fresh adjudication. If duty payment on the same stock is established, the demand cannot survive.

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Issues: Whether the demand arising from suo motu re-credit of Cenvat credit on motor spirit stock could be sustained when the assessee claimed that duty had already been paid on clearance of the same stock.

Analysis: The earlier remand had directed verification of the assessee's claim that the same stock on which credit was reversed and subsequently re-credited was cleared on payment of duty in January 1999. The record included the jurisdictional Superintendent's report based on RG-1, PLA and RT-12 entries, stating that the motor spirit de-bonded on 31.12.1998 and re-bonded on 1.1.1999 was cleared on payment of duty between 1.1.1999 and 6.1.1999. That report was not meaningfully considered by the lower authorities, despite its relevance to the remand direction.

Conclusion: The matter required fresh adjudication after proper verification of whether duty had already been paid on the same stock; if that fact is established, the demand cannot survive.

Final Conclusion: The appeal was allowed by way of remand for reconsideration of the factual verification relating to duty payment on the disputed stock.

Ratio Decidendi: A demand cannot be sustained if the same goods have already suffered duty, and a remand is warranted where a material verification directed by the Tribunal has not been properly undertaken.

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