Transitional excise credit and limitation in return-based recovery were examined; discrimination plea failed and demand was timely.

Transitional excise credit on inputs lying in stock when goods became excisable was examined under Rule 57AB(1A), which permits credit only where statutory conditions are satisfied. The plea that denial of credit caused discrimination between existing and new assessees was rejected because the rule itself did not support that distinction. On limitation, the demand was held within time because, in a return-based regime, the relevant date is the filing of the periodic return; the credit was taken in the January 2002 return and the notice issued on 31-1-2003 was therefore timely. Relief was denied and the appellate order was sustained.

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Issues: (i) Whether credit was admissible under Rule 57AB(1A) of the erstwhile Central Excise Rules on inputs lying in stock when goods became excisable. (ii) Whether the demand was barred by limitation under Section 11A of the Central Excise Act, 1944.

Issue (i): Whether credit was admissible under Rule 57AB(1A) of the erstwhile Central Excise Rules on inputs lying in stock when goods became excisable.

Analysis: Rule 57AB(1A) permits credit in respect of inputs lying in stock, in process, or contained in final products on the date goods cease to be exempted or become excisable. The claimed discrimination between existing and new assessees was rejected as not flowing from the rule. On the facts, the denial of credit on the ground that the goods were already dutiable was not accepted.

Conclusion: The credit was not held to be admissible on the plea of discrimination.

Issue (ii): Whether the demand was barred by limitation under Section 11A of the Central Excise Act, 1944.

Analysis: For cases where a periodical return is required, the relevant date is the date on which such return is filed. Since the credit was taken in the return for January 2002 and the show cause notice was issued on 31-1-2003, the demand fell within the limitation period.

Conclusion: The demand was not barred by limitation.

Final Conclusion: The challenge to the appellate order failed and the denial of relief was sustained.

Ratio Decidendi: Where credit is claimed under a transitional excise credit provision, admissibility depends on the statutory conditions, and limitation for recovery in a return-based regime runs from the filing of the relevant return.

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