Non-accountal demand notice survives wrong rule citation but fails where recovery is not initiated within a reasonable period.

A demand for alleged non-accountal of inputs was treated as substantively referable to the provision governing goods not accounted for, so a mistaken citation of the credit-correction rule did not by itself invalidate the notice where the charge was clearly disclosed. However, recovery under the non-accountal provision had to be initiated within a reasonable period even though no express limitation was prescribed. On the facts, the notice issued in December 1985 for shortages spanning March 1981 to January 1984 was held delayed beyond a reasonable time, and the duty demand could not be sustained.

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Issues: (i) Whether a demand initiated under Rule 56A(5)(i) of the Central Excise Rules, 1944 could be sustained when the substance of the charge fell under Rule 56A(3)(v) of the Central Excise Rules, 1944; (ii) Whether the demand for alleged non-accountal of inputs was barred by limitation.

Issue (i): Whether a demand initiated under Rule 56A(5)(i) of the Central Excise Rules, 1944 could be sustained when the substance of the charge fell under Rule 56A(3)(v) of the Central Excise Rules, 1944.

Analysis: The notice referred to recovery under Rule 56A(5)(i), which concerns correction of credit allowed due to error, omission, or misconstruction on the part of an officer. On the facts, credit had been correctly allowed and the dispute arose from the alleged non-accountal of quantities received in the RG-23 account. That situation fell within Rule 56A(3)(v), which deals with goods not accounted for as required. The charge was clearly stated in the notice, and a mere reference to a wrong provision did not invalidate the proceeding when the substance of the allegation and the authority to act under the correct provision were both present.

Conclusion: The proceeding was not vitiated merely because the notice cited Rule 56A(5)(i); the matter properly fell under Rule 56A(3)(v).

Issue (ii): Whether the demand for alleged non-accountal of inputs was barred by limitation.

Analysis: Rule 56A(3)(v) itself did not prescribe a specific time limit, but recovery had to be made within a reasonable period. The relevant entries were available in the RT-12 returns and accompanying RG-23 statements, and the alleged shortages related to the period from March 1981 to January 1984. The notice was issued only in December 1985. Applying the principle that statutory power must be exercised within a reasonable time, and taking the time limit available under central excise recovery provisions as the appropriate guide, the demand was held to be delayed beyond a reasonable period for the entire period covered by the notice.

Conclusion: The demand was time-barred.

Final Conclusion: The appeal succeeded on limitation, and the duty demand could not be sustained.

Ratio Decidendi: Where a demand is substantively referable to the provision dealing with non-accountal of goods, a mistaken citation of another provision does not invalidate the notice if the charge is clearly disclosed, but recovery under a provision prescribing no express limitation must still be initiated within a reasonable period.

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