Limitation under excise law barred a short-levy demand on free sale sugar cleared under completed assessments.

A short-levy demand on free sale sugar was held unsustainable where the show cause notice was issued beyond the six-month limitation under Section 11A. The monthly RT-12 assessments had already been completed, and the later notifications applied only to levy sugar, so the earlier notification continued to govern free sale sugar. Rule 9(2) of the Central Excise Rules, 1944 did not apply because the goods were not removed in contravention of Rule 9(1) without payment of duty, but were cleared under assessment under a mistaken view of the applicable rate. The demand was therefore time-barred and legally untenable.

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Issues: Whether the demand for short levy of central excise duty on free sale sugar was sustainable when the show cause notice was issued beyond the period prescribed by limitation and the case did not fall within Rule 9(2) of the Central Excise Rules, 1944.

Analysis: The duty dispute arose from clearances of free sale sugar for which the applicable notification continued to be the earlier notification, while the later notifications operated only for levy sugar. The monthly RT-12 assessments had already been completed, and the later demand was initiated only after the department noticed a short levy. Section 11A required a notice for short levy to be issued within six months from the relevant date. Rule 9(2) applied only to removals in contravention of Rule 9(1), typically where excisable goods were removed without payment of duty, and not to a situation where duty had been paid under assessment and the parties were under a misapprehension about the applicable rate.

Conclusion: The demand was time-barred and Rule 9(2) had no application. The short-levy demand was not legally sustainable.

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