Limitation for Modvat credit reversal runs from the date credit is taken; late notice made the demand time-barred.

A demand for reversal of Modvat credit under Rule 57-I of the Central Excise Rules, 1944 was found time-barred because the six-month limitation period had to be counted from the date credit was taken. The record showed the credit was taken on 17-5-1994, and the show cause notice was issued after expiry of that period. Limitation was therefore established, and the impugned order was set aside.

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Issues: Whether the demand for reversal of Modvat credit was barred by limitation under Rule 57-I of the Central Excise Rules, 1944.

Analysis: The relevant show cause notice and the record disclosed the date on which credit was taken, namely 17-5-1994. Under Rule 57-I as it then stood, the period of six months had to be computed from the date of taking credit. Since the notice was issued beyond that period, the plea of limitation was established.

Conclusion: The demand was barred by limitation and the impugned order was set aside.

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