Clerical correction in excise PLA records upheld; refund limitation and penalty inapplicable, and new grounds could not support demand.

A bona fide clerical correction in excise account records by a contra entry in the PLA was treated as a permissible rectification, and it could not be refused merely because it was not supported by a TR-6 challan payment. The text further states that limitation under refund provisions was inapplicable because the amount reversed under the Modvat/Cenvat scheme was not duty, and no prior departmental permission was required to correct the accounting mistake. It also emphasises that a demand cannot rest on a ground not set out in the show cause notice, and that penalty would not be warranted where the corrective entry was valid.

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Issues: Whether a credit entry in the PLA, made to rectify an earlier clerical excess debit arising from reversal of the prescribed percentage on exempted clearances, could be denied on the ground that only TR-6 challan payments can be credited and that the claim was barred by limitation under refund provisions.

Analysis: The dispute centred on a mistaken calculation in the reversal amount and the subsequent suo motu correction by way of a contra entry in the PLA. The adjudicating authority relied on dutiability of the exempted goods and treated the corrected amount as duty, but that basis was not part of the notice issued to the assessee. A finding beyond the show cause notice cannot be sustained. The amount reversed under the relevant Modvat/Cenvat scheme was not duty, and therefore the refund limitation under Section 11B was not attracted. The record also disclosed no rule requiring prior departmental permission to correct a clerical mistake in the PLA, and the correction was treated as a permissible accounting rectification to maintain true and correct books. The insistence that only TR-6 challan payments could be credited was rejected.

Conclusion: The credit entry was valid, the demand could not be sustained, and the penalty was unwarranted.

Final Conclusion: The assessee succeeded on the legality of the corrective PLA entry and on the inapplicability of the refund limitation and consequential penalty.

Ratio Decidendi: A bona fide clerical correction in excise account records by a contra entry cannot be denied merely because it is not a TR-6-based payment, and a demand founded on grounds not set out in the notice is unsustainable.

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