1994 (7) TMI 199 - AT - Central Excise

Summary

Issues:
Appeal against Order-in-Appeal regarding time-barred Show Cause Notice under Section 11A of CESA, 1944.

Detailed Analysis:

Issue 1: Time-barred Show Cause Notice
The appeal was filed by the Revenue against the Order-in-Appeal allowing the Respondents' appeal, contending that the Show Cause Notice issued for recovery of duty was time-barred under Section 11A of the Act. The dispute arose from the classification of Glass Bonded Copper Strips under T.I. 68, which was later classified under T.I. 26A by the High Court, resulting in a refund to the supplier. The Revenue sought to recover an amount from the Respondents based on this reclassification. The Collector (Appeals) held that the Show Cause Notice was time-barred as it was issued beyond the six-month period stipulated under Section 11A. The main contention was whether the Show Cause Notice could attract the provisions of Section 11A and if it was within the statutory time limit.

Issue 2: Interpretation of Rule 56A
The Ld JDR for the Revenue argued that the action sought in the Show Cause Notice was permitted under proviso 3 to sub-rule (2) of Rule 56A and did not fall under short levy or non-levy, thus not invoking Section 11A. On the other hand, the Respondents' Advocate contended that the demand for reversal of credit was beyond the six-month period and relied on a previous judgment where demands issued beyond the statutory period were considered time-barred. The Respondents argued that the law should allow for payment adjustment in cases where recovery from customers was not feasible due to pricing considerations.

Issue 3: Application of Rule 56A and Section 11A
The Tribunal analyzed the facts and found that the dispute arose from a change in classification by the High Court, leading to a refund to the supplier and subsequent recovery demand from the Respondents. The Tribunal held that the adjustment of duty credit under Rule 56A was a self-contained mechanism, distinct from Section 11A, applicable when duty payment variations occurred. It was emphasized that no time limit was prescribed for such adjustments, and the demand was not time-barred as it was issued within a reasonable period of about 15 months after the High Court's decision.

Conclusion
The Tribunal allowed the Revenue's appeal, setting aside the Order-in-Appeal and restoring the Assistant Collector's order. It was noted that if the Supreme Court reversed the High Court's judgment, the Department would be obligated to restore the credit under Rule 56A. The decision highlighted the distinction between Rule 56A provisions and Section 11A, emphasizing the equitable nature of duty credit adjustments in cases of classification disputes.