Recovery of excess PLA credit requires proper notice, provisional assessment basis and compliance with limitation.

Recovery of excess PLA credit was held unsustainable because the demand was issued by letter rather than by a show cause notice under the excise rules. No provisional assessment under Rule 9B, or order making the sanction provisional, was shown on record, and the assessee had given no undertaking to refund any excess amount, making estoppel-based reliance inapplicable. The Tribunal also treated the prescribed procedure and limitation period as mandatory for such recovery, and the demand was therefore found invalid in favour of the assessee.

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Issues: Whether the demand for recovery of excess credit allowed in the PLA was sustainable in the absence of a show cause notice and in the absence of any provisional assessment or undertaking, and whether the demand was barred by limitation.

Analysis: The demand was raised by a letter and not by a show cause notice under the relevant excise rules. The record did not show any provisional assessment under Rule 9B of the Central Excise Rules or any order making the sanction provisional. The appellants had also not given any undertaking that excess amount would be refunded, so the estoppel-based reasoning in the Bombay High Court decision cited for the Revenue was inapplicable. The Tribunal followed the earlier Supreme Court and Tribunal rulings relied on by the appellants, which supported recovery only in accordance with the prescribed procedure and within the limitation period.

Conclusion: The demand was not valid and the appeal was allowed in favour of the assessee.

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