Mandatory excise notice and limitation requirements defeat a direct demand for captive-consumption duty recovery.

Retrospective excise liability for captive consumption remained subject to the mandatory notice, adjudication and limitation scheme under the excise law. A straight demand letter, without a show cause notice or determination after considering objections, did not satisfy the statutory procedure, so the demand was invalid. The earlier view that arrears could be recovered despite limitation was no longer good law after later Supreme Court decisions; the department still had to issue notice within the prescribed period after the stay ended. Because no valid notice was issued in time, the demand was barred by limitation and could not be sustained.

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Issues: (i) Whether the earlier directions of the Court in the prior writ petition ceased to be good law in view of the Supreme Court decisions in Gokak Patel and J.K. Cotton Mills; (ii) whether the demand raised by the department was a valid demand made in accordance with Section 11A of the Central Excises and Salt Act; (iii) whether the demand was barred by limitation under Section 11A(1).

Issue (i): Whether the earlier directions of the Court in the prior writ petition ceased to be good law in view of the Supreme Court decisions in Gokak Patel and J.K. Cotton Mills.

Analysis: The later Supreme Court decisions made it clear that, even where the levy was otherwise attracted and the rules had retrospective effect, recovery of duty not levied or not paid remained subject to the statutory scheme of Section 11A. The earlier observation that arrears could be recovered ignoring limitation could not survive once the mandatory notice and adjudication requirements were applied to the facts.

Conclusion: The earlier observations were not good law and were held not binding on the department.

Issue (ii): Whether the demand raised by the department was a valid demand made in accordance with Section 11A of the Central Excises and Salt Act.

Analysis: Section 11A requires a show cause notice followed by determination of the duty payable after considering objections. The department issued only a straight demand letter without issuing notice or making the required adjudication. The procedure under the self-removal rules did not dispense with the statutory requirement under Section 11A.

Conclusion: The demand was not valid in accordance with Section 11A and was illegal.

Issue (iii): Whether the demand was barred by limitation under Section 11A(1).

Analysis: The period of stay extended the time for issuing notice, but it did not eliminate the requirement of notice within the statutory period after the stay ended. No notice was issued within six months from the relevant date after dismissal of the earlier writ petition, and the demand was made directly instead of by the prescribed process.

Conclusion: The demand was barred by limitation under Section 11A(1).

Final Conclusion: The impugned demand could not be sustained because recovery of the captive-consumption duty had to follow the mandatory notice, adjudication, and limitation requirements of the excise law.

Ratio Decidendi: A demand for excise duty not levied or not paid cannot be enforced without compliance with the statutory notice, adjudication, and limitation requirements under Section 11A, and retrospective amendments do not override that procedure unless the legislature expressly so provides.

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