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Issues: (i) Whether the duty demand raised for the first time through a corrigendum was barred by limitation under the excise law. (ii) Whether penalty could survive once the duty demand itself was held to be time-barred.
Issue (i): Whether the duty demand raised for the first time through a corrigendum was barred by limitation under the excise law.
Analysis: The original show cause notice proposed only penalty and did not raise any duty demand. The duty demand was introduced later through a corrigendum, which was treated as the first demand for recovery. Since the corrigendum was issued after expiry of the statutory period under Section 11A of the Central Excise Act, 1944, the demand could not be sustained. A notice under Section 11A was held to be mandatory even where duty had been debited during investigation, and voluntary debit did not dispense with the statutory requirement for recovery and appropriation.
Conclusion: The duty demand was time-barred and was not maintainable.
Issue (ii): Whether penalty could survive once the duty demand itself was held to be time-barred.
Analysis: The penalty was imposed under Rule 173Q of the Central Excise Rules, 1944 in relation to the same duty demand. Once the underlying demand was held to be barred by limitation, the basis for penalty also failed. The penalty could not stand independently when the recovery itself was legally unsustainable.
Conclusion: The penalty was also unsustainable.
Final Conclusion: The impugned order was set aside and the appeals were allowed with consequential relief as permissible in law.
Ratio Decidendi: A duty demand cannot be validly raised for the first time beyond the statutory limitation period through a corrigendum, and where the underlying duty demand is time-barred, any penalty founded on that demand also fails.
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