1986 (9) TMI 250 - AT - Central Excise

Summary

Issues Involved:
1. Applicability of Section 11A of the Central Excises & Salt Act, 1944.
2. Limitation period for recovery of excess credit under Rule 56A(2) of the Central Excise Rules, 1944.
3. Validity of the demand notice dated 11-7-1984.

Issue-Wise Detailed Analysis:

1. Applicability of Section 11A of the Central Excises & Salt Act, 1944:
The primary issue was whether the time limit under Section 11A is applicable to a case governed by the proviso to Rule 56A(2). The Tribunal examined the provisions of Section 11A, which deals with the recovery of duties not levied, short-levied, or erroneously refunded, and found that it is broad in its application, covering all cases of recovery from the person chargeable with duty. The Tribunal reiterated the settled law that the provisions of the Act will prevail over those of the Rules. It was held that the time limit under Section 11A would apply to a case of recovery of duty under Rule 56A, as established in the case of M/s. Finolex Cables Ltd. Therefore, the demand issued by the Assistant Collector was time-barred, and the order of the Collector (Appeals) was confirmed.

2. Limitation Period for Recovery of Excess Credit under Rule 56A(2):
The Tribunal had to determine whether there is any period of limitation for cash recovery under Rule 56A(2). The Assistant Collector argued that there was no time limit prescribed for varying the credit under the said Rule. However, the respondents contended that recovery must be made within the period of six months as stipulated under Section 11A. The Tribunal found that the recovery contemplated by the proviso to sub-rule (2) of Rule 56A should be made within the period of limitation prescribed under sub-rule (5) of Rule 56A, which provides for two periods: six months for errors, omissions, or misconstructions by the officer, and five years for wilful misstatements, collusion, or suppression of facts by the manufacturer. Consequently, the Tribunal held that the recovery should be made within the prescribed time limits.

3. Validity of the Demand Notice Dated 11-7-1984:
The Tribunal examined whether the demand notice dated 11-7-1984 was valid and within the prescribed time limit. The Assistant Collector issued the notice for recovery of proforma credit taken by the respondents. The respondents argued that the demand was barred by time under Section 11A. The Tribunal noted that the refund to M/s. Devidayal Electronics & Wires Ltd. was ordered on 20-3-1984, and the demand notice was issued on 11-7-1984, within six months from the date of cause of action. Therefore, the demand was not barred by time, and the appeal was allowed, setting aside the order of the Collector (Appeals) and restoring the order of the Assistant Collector.

Conclusion:
The Tribunal concluded that the provisions of Section 11A are applicable to the recovery of excess credit under Rule 56A(2). The demand notice dated 11-7-1984 was found to be within the prescribed time limit. Consequently, the appeal filed by the Collector of Central Excise, Thane, was allowed, and the order of the Collector (Appeals) was set aside, restoring the order of the Assistant Collector.