Limitation for short-levy excise duty ran from the due payment date, and later enlargement could not revive a time-barred notice.

Short-levy or non-levy of central excise duty under Rule 10 had to be actioned within the limitation period then in force, counted from the date duty ought to have been paid on removal of the goods. Because the goods were cleared under an approved classification list, the matter did not fall within Rule 9(2), and the notice dated 7-4-1975 was beyond the three-month limit for the entire demand period. A later amendment extending limitation could not operate retrospectively to validate an already time-barred notice, so the demand was barred by limitation and the recovery action invalid.

---

---

Issues: Whether the demand of duty could be sustained under Rule 10 of the Central Excise Rules, 1944, and whether the show cause notice dated 7-4-1975 was barred by limitation.

Analysis: The goods were cleared in accordance with an approved classification list, so the case did not involve removal of excisable goods in contravention of Rule 9(1); Rule 9(2) was therefore inapplicable. On the other hand, Rule 10 applied to a case of short-levy or non-levy caused by inadvertence or error on the part of the departmental officer. However, under Rule 10 as it stood at the relevant time, notice had to be issued within three months from the date on which duty was paid, which, on the facts, meant the date when duty ought to have been paid on removal of the goods. The notice issued on 7-4-1975 was beyond that period for the entire demand covering 20-2-1974 to 18-10-1974. The later amended rule with a longer limitation period could not be applied retrospectively to validate the earlier notice.

Conclusion: The demand was barred by limitation and the recovery action was invalid.

Final Conclusion: The writ petition succeeded, the impugned order was quashed, and the duty demand for the entire period in question failed.

Ratio Decidendi: A demand for short-levied or non-levied central excise duty must be initiated within the limitation period prescribed by the rule in force on the date of notice, and a later enlargement of limitation does not revive an already time-barred demand.

---