Limitation for duty recovery: a delayed show cause notice could not revive a refund-based demand raised out of time.

Duty recovery was treated as time-barred because the claim had originally been raised through DD-2 forms without an accompanying show cause notice, and a later notice issued years after the alleged excess production could not cure that defect. The note states that the rebate for excess production incentive was in substance a refund of duty, so any recovery action had to be initiated within the statutory limitation period under the erstwhile Rule 10 of the Central Excise Rules. On that basis, the demand was considered unsustainable for limitation.

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Issues: Whether the demand of duty was barred by limitation.

Analysis: The demand was originally raised through DD-2 forms and no show cause notice was issued at that stage. A later show cause notice issued years after the alleged excess production could not cure the original defect. The rebate allowed for excess production incentive was treated as a refund of duty, so any recovery action had to be taken within the statutory period under the erstwhile Rule 10 of the Central Excise Rules.

Conclusion: The demand was hit by limitation and could not be sustained.

Ratio Decidendi: Where a rebate is in substance a refund of duty, recovery proceedings must be initiated within the prescribed limitation period, and a belated show cause notice does not cure the initial failure to proceed within time.

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