Cenvat credit verification after an upheld demand does not amount to de novo remand, but liability must be recomputed.

An appellate order that upheld the demand while directing verification of cenvat credit was not treated as a de novo remand, so the recovery proceedings could still fall within arrears under the applicable circular. At the same time, the original authority was bound to implement the appellate direction by examining the taxpayer's credit documents, determining eligibility for admissible cenvat credit, and recomputing the liability accordingly. The demand recovery position therefore remained intact, but the credit-verification exercise had to be completed before final enforcement.

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Issues: (i) Whether the recovery proceedings could be treated as falling within the category of arrears under the relevant circular when the appellate order affirmed the demand but directed verification of eligibility for cenvat credit; (ii) Whether the original authority was required to examine the petitioner's claim for cenvat credit and compute the liability accordingly.

Issue (i): Whether the recovery proceedings could be treated as falling within the category of arrears under the relevant circular when the appellate order affirmed the demand but directed verification of eligibility for cenvat credit.

Analysis: The appellate order did not set aside the demand or direct a de novo adjudication. It only modified the original order to the extent that eligibility for cenvat credit was to be verified and, if admissible, extended. The appellate order had attained finality, and the circular excluded only cases involving remand for fresh adjudication.

Conclusion: The classification of the case as arrears was upheld and this issue was decided against the assessee.

Issue (ii): Whether the original authority was required to examine the petitioner's claim for cenvat credit and compute the liability accordingly.

Analysis: Since the appellate direction on cenvat credit had not been implemented, the original authority was required to give effect to that order. The petitioner's documents were therefore to be considered for determining eligibility, after which the admissible credit, if any, was to be extended and the amount payable recomputed.

Conclusion: The matter was remitted for examination of the cenvat credit claim and this issue was decided in favour of the assessee.

Final Conclusion: The demand recovery position was not disturbed, but the authority was directed to verify and give effect to the petitioner's cenvat credit entitlement before final computation of liability.

Ratio Decidendi: An appellate order that sustains the demand but requires verification of cenvat credit is not a remand for de novo adjudication, and the case may still be treated as arrears, while the authority remains bound to implement the credit-verification direction before enforcing recovery.

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