Limitation and adjudicatory jurisdiction for irregular duty credit under excise notification recovery

Irregularly availed duty credit under Notification No. 201/79-C.E. was treated as a short-levy type recovery matter for limitation purposes, so a notice issued after six months was considered to fall within the extended machinery under the proviso to Section 11A. After the December 1985 amendment, adjudicatory power in such matters vested in the Collector rather than the Assistant Collector, and the transfer provision in Section 8 of the Central Excises and Salt (Amendment) Act, 1985 supported that position. Notification credit and proforma credit were treated as pari materia for this purpose. The demand was therefore time-barred and the Assistant Collector lacked jurisdiction.

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Issues: Whether the demand for irregularly availed duty credit under Notification No. 201/79-C.E. was barred by limitation and whether the Assistant Collector had jurisdiction to adjudicate the case under Section 11A of the Central Excises and Salt Act, 1944 after the 1985 amendment.

Analysis: The credit taken on the inputs was treated as a matter amounting in substance to short levy. The notice for recovery was issued more than six months after the credit was taken, and in such a situation the extended machinery under the proviso to Section 11A applied. After the amendment brought into force in December 1985, the power to adjudicate such matters vested in the Collector and not the Assistant Collector. The transfer provision in Section 8 of the Central Excises and Salt (Amendment) Act, 1985 also supported the conclusion that pending matters of this nature were not to remain with the Assistant Collector. The notification and proforma credit were treated as pari materia for this purpose.

Conclusion: The demand was held to be time-barred and the Assistant Collector lacked jurisdiction to pass the order. The appeal succeeded.

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