Limitation for recovery of wrong Modvat credit applies under Section 11A when credit is sought as duty recovery.

In disputes over wrongful Modvat credit, Rule 57-I governs the disallowance or expunction of inadmissible credit, but recovery of duty after reversal or recovery through the RG 23A Part 2 account is treated as a proceeding under Section 11A of the Central Excise Act, 1944. On that basis, the limitation period in Section 11A applies to recovery action for wrong Modvat credit. The assessee's plea on limitation was upheld and the Revenue's challenge to the recovery was rejected.

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Issues: (i) Whether the time limit under Section 11A of the Central Excise Act, 1944 applied to recovery of wrong Modvat credit under Rule 57-I of the Central Excise Rules, 1944.

Analysis: The dispute concerned expunction and recovery of credit taken under the Modvat scheme in the RG 23A Part 2 account. The reasoning accepted that while Rule 57-I governed the disallowance or expunction of inadmissible Modvat credit, the actual recovery of duty, once the credit had been reversed or recovered through the account, fell within the scope of Section 11A. On that basis, the limitation under Section 11A was held applicable to the recovery action.

Conclusion: The time limit under Section 11A applied, and the order allowing the assessee's plea on limitation was upheld.

Final Conclusion: The appeals challenging the application of limitation to recovery of wrong Modvat credit were rejected, and the Revenue's challenge failed.

Ratio Decidendi: Where inadmissible Modvat credit is sought to be recovered as duty, the recovery proceeding is governed by Section 11A even if the credit is initially regulated under Rule 57-I.

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