CENVAT credit dispute requires fresh factual enquiry where entitlement is contested and material records remain unexamined.

Where the foundational entitlement to CENVAT credit is itself disputed, the controversy cannot be resolved on an incomplete record or by mechanically applying earlier precedent. The Madras HC noted that the department had challenged the basis of availment of credit on SKO transactions, while the factual position regarding dealer registration, invoice validity, supplementary invoices and the relevance of prior authority had not been properly examined. As those material facts remained unresolved, the matter had to be sent back for fresh factual enquiry. The case was remitted to the adjudicating authority for de novo consideration, and the appeal was allowed to that extent.

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Issues: Whether the assessee was entitled to suo motu recredit of the excise duty earlier reversed, and whether the matter required remand for fresh factual consideration.

Analysis: The entitlement to credit was not an admitted position, because the department had disputed the very basis of availment of CENVAT credit on the SKO transactions. The appellate authority had misread the original order as if the assessee's right to credit was never in dispute. Since the factual foundation concerning the dealer registration status, the validity of the invoices, the effect of the supplementary invoices, and the applicability of the earlier precedent had not been properly examined, the controversy could not be finally resolved on the existing record. In these circumstances, the earlier decisions could not be applied mechanically without first determining the factual matrix.

Conclusion: The matter was required to be remitted to the adjudicating authority for de novo consideration, and the assessee's appeal was allowed to that extent.

Ratio Decidendi: Where the foundational entitlement to CENVAT credit is itself disputed and material facts have not been properly examined, the dispute must be decided on a fresh factual enquiry and not by mechanically applying precedent.

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