Limitation applies to excise credit recovery where adjusted input duty status triggered reversal under Notification No. 201/79-C.E.

Credit originally taken on duty-paid Malt Extract was held to become variable when the input later lost its dutiable character after refund to the supplier, because proviso 3 of Notification No. 201/79-C.E. required corresponding adjustment. Even so, the department's recovery claim remained a demand for reversal of credit and was therefore subject to the limitation period under Section 11A of the Central Excise Act, 1944. As the demand was raised beyond the applicable time limit, it was barred by limitation and the assessee succeeded.

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Issues: Whether the demand for reversal/recovery of credit taken on duty-paid Malt Extract, later rendered non-dutiable upon refund to the supplier, was barred by limitation under Section 11A of the Central Excise Act, 1944.

Analysis: Credit had originally been taken when the input was duty paid and the department had accepted the position at that time. The later refund to the input manufacturer altered the duty position of the input, attracting proviso 3 of Notification No. 201/79-C.E. dated 04-06-1979, under which the credit was required to be varied accordingly. The demand nonetheless remained a demand by the department for recovery of the amount, and such recovery was held to be governed by the statutory limitation applicable to demands under Section 11A of the Central Excise Act, 1944.

Conclusion: The demand was barred by limitation and the appeal was allowed in favour of the assessee.

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