Modvat re-credit requires prior permission; suo motu restoration after debit was not permitted on these facts.

An assessee could not suo motu re-credit Modvat credit in RG 23C Part-II after having already debited it, where no fresh duty-paying documents supported the credit and no prior permission from the jurisdictional Assistant Commissioner was obtained. The earlier authority relied on by the assessee was distinguished because re-credit there had been sought with permission and followed departmental direction. On these facts, the Modvat framework was treated as requiring prior approval for re-credit, and the disallowance of Modvat credit was upheld.

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Issues: Whether an assessee, after having once debited Modvat credit, could suo motu re-credit the same amount in RG 23C Part-II without prior permission of the jurisdictional Assistant Commissioner.

Analysis: The credit had earlier been taken, debited on the assessee's own view that it was not admissible, and then re-credited without any fresh supporting duty-paying documents or permission from the competent authority. The earlier decision relied upon by the assessee was found inapplicable because, in that case, permission for re-credit had been sought and the credit was reversed under departmental direction. In the present case, there was no material to show that the re-credit was based on any fresh entitlement or that prior permission had been obtained. The applicable Modvat framework was treated as requiring prior permission for such re-credit.

Conclusion: Suo motu re-credit after prior debit was not permissible on these facts, and the disallowance of Modvat credit was upheld against the assessee.

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