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Issues: Whether a show cause notice issued before the amendment of Rule 57-I but served after the amendment could be tested under the unamended rule, and whether the demand for reversal of Modvat credit was barred by limitation.
Analysis: Rule 57-I, as amended by Notification No. 28/88 dated 6-10-1988, required service of notice within six months from the date of credit in ordinary cases, and within five years only where there was wilful misstatement, collusion, or suppression of facts. The relevant distinction was between issue of notice and service of notice. Since the notice was served after the amended rule came into force, the amended limitation provision governed the matter. As the credit related to June 1987 and the notice was served on 6-10-1988, the normal six-month period had expired. No allegation of suppression, fraud, or similar conduct was made in the notice.
Conclusion: The demand was time-barred and the appeal was allowed.
Final Conclusion: The assessee succeeded on the limitation question, and the demand based on erroneous Modvat credit could not be sustained.
Ratio Decidendi: Where a statute requires service of notice within a prescribed period, the limitation must be tested with reference to the date of service, and a notice served after the governing amendment cannot escape the amended limitation regime in the absence of allegations attracting the extended period.
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