Limitation and bona fide belief restricted excise recovery, with prior deposits adjusted and penalties set aside.

Extended limitation could not be invoked for the disputed clearances because the Tribunal accepted the assessees' bona fide belief and confined recovery to the normal six-month period. The exemption under Notification No. 64/95-C.E. was already found inapplicable, but the excess demand beyond limitation was barred. For the small portion surviving within limitation in one matter, the original authority was directed to quantify the duty after adjusting the 8% amount already deposited under Rule 57CC. As the time-barred demand could not stand, the penalties on the manufacturers and other appellants were also set aside.

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Issues: Whether the demands raised by the Revenue beyond the normal period of limitation were barred, and whether the amount already deposited under Rule 57CC could be adjusted against the duty liability for the limited period surviving within limitation.

Analysis: The exemption under Notification No. 64/95-C.E. dated 16-3-1995 had already been held inapplicable to the disputed clearances, but the Tribunal found no justification for invoking the longer period of limitation. Relying on prior decisions concerning the same notification and the assessees' bona fide belief, it held that only the normal period of six months could be sustained. In the case where a small part of the demand fell within limitation, the original authority was directed to quantify the demand after adjusting the 8% amount already deposited under Rule 57CC. Since the demand beyond limitation could not survive, the penalties imposed on the manufacturers and other appellants also could not be sustained.

Conclusion: The demands were held barred by limitation except to the limited extent falling within the normal period in one case, with adjustment of the amount already paid under Rule 57CC permitted, and the penalties were set aside.

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