Excise demand barred by limitation where open removals showed no evasion and the special time limit under Rule 173PP(10) expired.

Clearances of steel plant by-products made openly and with departmental knowledge did not justify recovery as a contravention-based excise demand, because the record showed no secrecy, deception, or mala fide intent to evade duty. The Tribunal also applied the special limitation provision in Rule 173PP(10), under which the demand had to be issued within the stipulated period from the close of the accounting year. As the notice was issued after that period, the demand was barred by limitation and could not be sustained; the appeal was allowed and the lower order was set aside.

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Issues: Whether the excise demand was barred by limitation and whether recovery could be sustained under the rule governing removals in contravention of the prescribed procedure.

Analysis: The demand related to clearances of by-products from the steel plant which had been made openly and with the department's knowledge. The record showed no material suggesting secrecy, deception, or mala fide intention to evade duty. In those circumstances, the demand could not be justified as a case of contravention of the rule governing removals without compliance with the prescribed procedure. The Tribunal further held that the special limitation provision under Rule 173PP(10) controlled the matter and required the demand to be issued within the stipulated period from the close of the accounting year. Since the notice was issued after that period, the demand was barred by limitation.

Conclusion: The demand was time-barred and unsustainable. The appeal was therefore allowed and the order of the Appellate Collector was set aside.

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