Recovery of CENVAT credit paid under protest requires a timely show cause notice; time-barred retention was unsustainable.

Amounts paid under protest towards alleged wrongful CENVAT credit cannot be finally retained or appropriated without a timely show cause notice and compliance with the statutory recovery process. Where the department sought recovery after the limitation period had expired, and the record showed that the debit was made under protest, the later correspondence did not erase that protest or cure the missing notice. The refund claim was therefore admissible, and rejection of the refund was set aside in favour of the assessee.

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Issues: Whether the refund of the amount debited and adjusted against the appellant's claim was refundable when no show cause notice was issued for recovery and the demand had become time-barred.

Analysis: The appellant had reversed CENVAT credit on the department's intimation, and the record showed that the amount was paid under protest. The recovery was sought without issuance of a show cause notice within the permissible period. The subsequent letter relied upon by the department did not extinguish the earlier protest, and the statutory process required for appropriation/recovery had not been followed. In the absence of a valid notice and with limitation having expired, the recovery could not be sustained.

Conclusion: The refund claim was held to be admissible, and the rejection of refund was set aside in favour of the assessee.

Ratio Decidendi: Amounts paid under protest cannot be finally appropriated or retained towards recovery of allegedly wrongful CENVAT credit without issuance of a timely show cause notice in accordance with law.

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