Invalid show cause notice under a defunct Modvat recovery rule cannot sustain demand for wrongly availed credit.

A show cause notice issued under erstwhile Rule 57-I could not sustain recovery of wrongly availed Modvat credit after that rule had ceased to exist on the statute book. The Tribunal followed its earlier view that a notice founded on a provision which had become non est is invalid for recovery purposes. Because the demand rested entirely on that defunct provision, the notice failed at the threshold and the Revenue's challenge was rejected.

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Issues: Whether a show cause notice issued under the erstwhile Rule 57-I, after that rule had ceased to be on the statute book, could validly sustain a demand for recovery of wrongly availed Modvat credit.

Analysis: The notice in question had been issued for recovery of Modvat credit by invoking an erstwhile provision that was no longer in force. The Tribunal followed its earlier view that a notice founded on a provision which had become non est cannot be treated as a valid notice for recovery. Since the demand was entirely predicated on that invalid invocation, the preliminary objection went to the root of the appeal.

Conclusion: The show cause notice was held to be invalid and the Revenue's appeal failed.

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