Limitation under excise credit rules must run from the date credit is taken, not from later utilisation for clearance.

Under Rule 56-A(5)(i) of the Central Excise Rules, the six-month notice period runs from the date credit is taken and entered in the RG 23 register, not from the later date of utilisation for clearance of finished goods. Limitation therefore had to be computed from the original date of credit, because counting from utilisation would depart from the statutory wording. The order was set aside and the matter remitted for fresh adjudication on the correct limitation basis, which was stated to be in favour of the assessee.

---

---

Issues: (i) Whether the six-month period under Rule 56-A(5)(i) of the Central Excise Rules ran from the date of taking credit in the RG 23 register or from the date of utilisation of such credit for clearance of finished goods.

Issue (i): The notice under Rule 56-A(5)(i) was required to be served within six months from the date of such credit. The record showed uncertainty as to whether the demand had been computed from the date credit was taken or from the date it was utilised. The limitation point therefore had to be examined on the correct statutory basis, namely the date on which credit was originally allowed and entered, not the later date of utilisation.

Analysis: The rule specifically ties the notice period to the date of credit. Counting limitation from utilisation would alter the statutory starting point and would not accord with the language of the provision. As the adjudication had proceeded on an unclear basis, the matter required fresh examination by the authority applying the correct point of time for reckoning limitation.

Conclusion: The demand could not be finally sustained on the basis adopted below, and the matter was sent back for re-adjudication on the correct limitation principle, which was in favour of the assessee.

Final Conclusion: The order was set aside and the matter remitted for reconsideration of the demand with the limitation period computed from the date of credit.

Ratio Decidendi: Where a rule makes limitation run from the date of credit, the notice period must be computed from the date credit is taken and not from the date of its subsequent utilisation.

---