Differential excise duty must be recomputed with the available notification benefit; extended limitation and penalty fail without intent to evade.

Excess excise duty paid on some clearances could not be automatically adjusted against short-paid duty on other clearances because the liabilities arose from separate clearances and the assessments were not provisional; the proper remedy for excess payment was refund, not set-off. Where differential duty was later demanded on valuation, the assessee remained entitled to the benefit of Notification No. 53/2001-C.E. (N.T.) already available on the original clearances, so the demand had to be recomputed after that benefit. The extended limitation period and penalty were not sustainable in the absence of mala fide intent to evade duty, and recomputation was directed within the normal limitation period with no penalty surviving.

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Issues: (i) whether excess excise duty paid on some clearances could be adjusted against short-paid duty on other clearances; (ii) whether the benefit of Notification No. 53/2001-C.E. (N.T.) dated 29-6-2001 was available to the differential duty demand; (iii) whether the extended period of limitation and penalty were sustainable.

Issue (i): whether excess excise duty paid on some clearances could be adjusted against short-paid duty on other clearances.

Analysis: The duty liability arose from separate clearances and the assessments were not provisional. The excess payment on some clearances did not permit automatic neutralisation against short-payment on other clearances. The assessee's remedy for excess payment lay in seeking refund rather than set-off against the confirmed demand.

Conclusion: The issue was decided against the assessee.

Issue (ii): whether the benefit of Notification No. 53/2001-C.E. (N.T.) dated 29-6-2001 was available to the differential duty demand.

Analysis: The assessee had already availed the notification benefit at the time of original clearances on the duty then paid. When the Revenue later sought to recover additional duty on the differential valuation, that demand had to be worked out after extending the same statutory benefit. The notification could not be denied merely because the additional demand arose later.

Conclusion: The benefit of the notification was held to be available to the assessee.

Issue (iii): whether the extended period of limitation and penalty were sustainable.

Analysis: The demand related to a period beyond the normal limitation period. The variation in job charges was a matter within the assessee's business process, but the record showed that in cases of reduced job charges the assessee had paid duty at a higher amount, indicating an error rather than a deliberate attempt to evade duty. In the absence of mala fide intention, the extended period could not be invoked and penalty was not justified.

Conclusion: The extended period of limitation was held to be unavailable to the Revenue and penalty was set aside.

Final Conclusion: The demand was ordered to be recomputed within the normal limitation period after granting the notification benefit, with interest remaining consequential, and no penalty survived.

Ratio Decidendi: A post-clearance differential excise duty demand must be recomputed after granting the applicable notification benefit already available on the original clearances, and the extended period of limitation cannot be invoked in the absence of intent to evade duty.

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