Excise demand notices held time-barred and unsustainable where authority relied on the wrong statutory regime.

Show cause notices for recovery of excise duty were ex facie time-barred where they were issued in November 2001 for clearances made during 1993 to 1996, beyond the five-year period under Section 11A of the Central Excise Act, 1944, and the demand was therefore legally unsustainable. The proceedings also could not be supported by reference to a customs bond or the Customs Act, 1962 because the notices themselves were issued under the Central Excise Act and the statutory basis could not be shifted after issuance. The impugned notices were accordingly set aside as unsustainable in law.

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Issues: (i) Whether the show cause notices proposing recovery of excise duty were barred by limitation under Section 11A of the Central Excise Act, 1944; (ii) Whether the proceedings could be sustained under the Central Excise Act, 1944 when the respondent sought to rely on the bond and the Customs Act, 1962.

Issue (i): Whether the show cause notices proposing recovery of excise duty were barred by limitation under Section 11A of the Central Excise Act, 1944.

Analysis: The notices related to clearances for the periods 1993 to 1996 and were issued only in November 2001. On the face of the notices, the demand was raised well beyond the statutory period of five years. Since the notices themselves invoked the Central Excise Act, recovery had to conform to the limitation prescribed under that Act. The delay was apparent from the record and rendered the demand legally unsustainable.

Conclusion: The notices were held to be time-barred under Section 11A of the Central Excise Act, 1944.

Issue (ii): Whether the proceedings could be sustained under the Central Excise Act, 1944 when the respondent sought to rely on the bond and the Customs Act, 1962.

Analysis: The notices expressly proceeded under the Central Excise Act, 1944 and did not invoke the Customs Act, 1962 in their opening part. If the department intended to proceed on the basis of breach of the bond executed under the customs regime, appropriate action had to be taken under the Customs Act and not under the Central Excise Act. The statutory basis chosen in the notices could not be shifted after issuance to justify the demand.

Conclusion: The proceedings could not be sustained on the asserted customs-bond basis while the notices were issued under the Central Excise Act, 1944.

Final Conclusion: The writ petitions succeeded, and the impugned show cause notices were set aside as unsustainable in law.

Ratio Decidendi: A show cause notice issued under a taxing statute is liable to be interfered with in writ jurisdiction when the demand is ex facie time-barred or when the authority proceeds under an incorrect statutory regime without jurisdiction.

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