Countervailing duty set-off and pending recovery proceedings survive legal change where the new provision replaces the old regime.

Set-off of countervailing duty was rejected because the notification did not permit the credit in the manner claimed; prior departmental allowance affected limitation only, not the substantive legality of the set-off. Recovery proceedings were also held to survive the deletion of Rule 10 because Section 11A was treated as its replacement, so pending notices were not extinguished by the statutory change. The Tribunal accepted the more persuasive High Court view for all-India administration and upheld the demand in full.

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Issues: (i) whether the appellants were entitled to the set-off of countervailing duty under the notification invoked by them; and (ii) whether the proceedings for recovery could continue after the deletion of Rule 10 and the coming into force of Section 11A.

Issue (i): whether the appellants were entitled to the set-off of countervailing duty under the notification invoked by them.

Analysis: The set-off had been availed under the relevant notification, but the notification did not permit such credit in the manner claimed. The wrong availment of set-off was not displaced by the fact that it had earlier been allowed by departmental officers. That circumstance was relevant only to limitation, not to the substantive legality of the credit.

Conclusion: The appellants were not entitled to the set-off and the demand on that score was sustainable.

Issue (ii): whether the proceedings for recovery could continue after the deletion of Rule 10 and the coming into force of Section 11A.

Analysis: The Tribunal preferred the view that Section 11A replaced Rule 10 and that the omission of Rule 10 did not extinguish proceedings already initiated. The contrary view of the Allahabad High Court was distinguished, while the reasoning of the Madhya Pradesh High Court was accepted as applicable. The Tribunal also noted that it could choose between conflicting High Court views on an all-India basis and was not bound to apply a different High Court view merely because the assessee fell within that jurisdiction.

Conclusion: The proceedings were validly continued under Section 11A and the demand was not barred.

Final Conclusion: The demand was upheld in full and the appeal was rejected.

Ratio Decidendi: Where a recovery notice is issued under the predecessor exemption or recovery regime, substitution of the statutory provision does not terminate pending proceedings, and an appellate tribunal may prefer the more persuasive view among conflicting High Court decisions for all-India administration.

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