Limitation for Rule 196 duty demands does not follow Section 11A where recovery arises from misuse of concessional goods.

A demand raised under Rule 196 of the Central Excise Rules, 1944 was treated as distinct from a case of non-levy, short-levy or erroneous refund under Section 11A of the Central Excises and Salt Act, 1944. Because the goods had been cleared under Rule 192 at a concessional rate and the recovery arose from alleged non-accountal or improper use under Rule 196, the rule was held not to carry any prescribed time-limit. The third proviso to Section 36(2) was also found inapplicable, as the matter did not concern duty not levied or short-levied at the original assessment stage. The limitation objection was therefore rejected.

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Issues: Whether the show cause notice issued under Section 36(2) of the Central Excises and Salt Act, 1944 was barred by limitation, and whether the demand for differential duty arising under Rule 196 of the Central Excise Rules, 1944 attracted the time-limit in Section 11A of the Central Excises and Salt Act, 1944.

Analysis: The demand in the case arose from an alleged contravention of Rule 196, not from a case of non-levy, short-levy, or erroneous refund in the ordinary sense contemplated by Section 11A. The goods had been obtained under Rule 192 at concessional rate, and Rule 196 provided for recovery where such goods were not duly accounted for or were not used in the manner stated. The rule itself did not prescribe any time-limit for raising such a demand. The 3rd proviso to Section 36(2) was held inapplicable because the case was not one of duty not levied, short-levied, or erroneously refunded at the point of original assessment.

Conclusion: The preliminary objection based on limitation was rejected, and the notice was held to be not barred by time.

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