1987 (5) TMI 183 - AT - Central Excise

CEGAT rules on limitation for recovery of excess credit under Central Excises Act

The Appellate Tribunal CEGAT, Madras, held that the recovery of excess credit granted to the respondent under Notification No. 283/82 was subject to the ... Incentive rebate in excess availed of erroneously Issues:Recovery of excess credit granted under Notification No. 283/82 - Bar of limitation under Section 11A of the Central Excises and Salt Act, 1944.Analysis:The appeal before the Appellate Tribunal CEGAT, Madras, involved the recovery of excess credit granted to a party under Notification No. 283/82 and the applicability of the bar of limitation under Section 11A of the Central Excises and Salt Act, 1944. The Tribunal considered whether the recovery of excess credit given to the respondent was governed by the bar of limitation. The Department initiated proceedings under sub-rule (4) of Rule 56AA of the Central Excise Rules for the recovery of the excess credit granted to the respondent. The Tribunal noted that the Department sought to recoup the excess credit based on the erroneous claim made by the respondent, which was beyond the permissible limit of 160% of the base clearances as per the Notification.The Tribunal examined the contention raised by the Senior D.R. that the credit was granted to the respondent under Notification No. 283/82 without any prescribed period of limitation for recovery under sub-rule (4) of Rule 56AA. However, the Tribunal disagreed with this argument and referred to previous rulings to support its decision. The Tribunal cited the ruling of the Special Bench in Shree Una Taluka khedut Sahakari Khand Udyog Mandali Ltd. v. Collector of Central Excise, Bombay, which addressed the issue of rebate claims under duty concession notifications. The Tribunal also referenced the Division Bench of the Bombay High Court in Zenith Tin Works Private Ltd. v. Union of India, which held that erroneous credit taken by a party can only be recovered as a short-levy under Rule 10, subject to the bar of limitation.Further, the Tribunal mentioned the ruling of the Andhra Pradesh High Court in Jay Engineering Works Ltd. v. Government of India, which emphasized the application of the bar of limitation when excess credit is sought to be recouped due to an error. The Tribunal highlighted that despite the absence of a specific period of limitation in Rule 56A, the bar of limitation would come into play when excess credit is to be recovered. The Tribunal also referred to the ruling of the Special Bench in Premier Tyres Ltd. v. Collector of Central Excise, Cochin, which upheld the applicability of the bar of limitation in cases of wrong credits taken by parties under Rule 56A.In conclusion, the Tribunal held that the recovery of excess credit granted to the respondent was subject to the bar of limitation under Section 11A of the Central Excises and Salt Act, 1944. The Tribunal emphasized that allowing the Department to recoup excess credit without any limitation would create an anomalous situation. Therefore, based on the principles established in previous rulings and considering the facts of the case, the Tribunal upheld the impugned order and dismissed the appeal filed by the Collector of Central Excise, Madras.