Modvat re-credit after long delay requires statutory refund procedure; unilateral restoration was not permitted and demand stood upheld.

Suo motu re-credit of Modvat credit reversed more than three years earlier was held impermissible where the assessee did not follow the statutory refund or recovery procedure. The Tribunal treated Sections 11A and 11B as the governing framework and noted that, if the earlier debit was disputed, the proper course was to seek adjudication and pursue the prescribed remedy. It distinguished authorities dealing with original Modvat credit or prompt re-credit, and upheld the demand on the footing that a unilateral re-credit after such delay had no legal basis.

---

---

Issues: Whether the assessee could validly take suo motu re-credit of Modvat credit reversed more than three years earlier, without following the refund procedure or obtaining departmental permission.

Analysis: The dispute concerned re-credit of an amount earlier debited in 1991 and restored by the assessee in 1994. The Tribunal held that there is no provision in law permitting an assessee to re-credit such amount on its own after a long lapse of time. It was observed that, if the assessee disputed the earlier debit, the proper course was to seek adjudication and, if necessary, pursue the remedy under the statutory procedure for recovery or refund. The Tribunal treated Sections 11A and 11B as the governing provisions and distinguished the cited precedents on the ground that they dealt with original Modvat credit or re-credit within a reasonable period, not a unilateral re-credit after three years.

Conclusion: The assessee was not entitled to take re-credit after three years on its own, and the demand sustained by the lower authorities was upheld.

---