1994 (10) TMI 164 - AT - Central Excise

Appeal Succeeds on Time Bar Grounds, Lower Orders Set Aside. Importance of Timely Demand Notices Emphasized.

The appeal succeeded solely on the ground of time bar, with the lower authorities' orders set aside. The judgment of the Bombay High Court in M/s. Swan ... Demand - Limitation Issues:- Eligibility for set-off under Notification No. 201/79-C.E.- Time bar of the demand for credit taken and utilized in December 1984.- Applicability of Section 11A in the case of reversal of credit under Notification No. 210/79-C.E.- Interpretation of demand for wrong availment of input relief under Notification No. 201/79.Analysis:1. Eligibility for Set-off: The appellants were availing exemption under Notification No. 201/79-C.E. for Cuprous Chloride used in manufacturing S.O. Dyes. The department disputed eligibility for set-off, claiming Cuprous Chloride was a catalyst, not a raw material or component. The Ld. Advocate did not contest on merits but argued on the time bar of the demand.2. Time Bar Issue: The Ld. Advocate argued that the demand, related to credit taken in December 1984, was time-barred as the Show Cause Notice was issued on 20-4-1987. The Collector (Appeals) relied on the notification for recovery, citing the Bombay High Court judgment in M/s. Swan Mills Ltd., but the Ld. Advocate contended it was not applicable.3. Applicability of Section 11A: The Ld. SDR referenced the Hindustan Aluminium Corporation case, stating Section 11A did not apply to credit reversal under Notification No. 210/79-C.E. However, the Ld. Advocate cited a Special Bench decision, emphasizing that Section 11A was applicable for any short levy due to wrong availment of Notification No. 201/79.4. Interpretation of Demand: The Bench considered whether the demand for wrong availment of input relief under Notification No. 201/79 fell under Section 11A or the notification itself. The Bench followed the principle that demands under Section 11A were required in such cases. It rejected the argument that the notification was self-contained for recovery, citing the Supreme Court's ruling in J.K. Spinning & Weaving. The demand was deemed to arise from non-eligibility for set-off, falling under Section 11A.5. Conclusion: The appeal succeeded solely on the ground of time bar, with the lower authorities' orders set aside. The judgment of the Bombay High Court in Swan Mills Ltd. was deemed inapplicable. The decision highlighted the importance of issuing demand notices under Section 11A within the permissible period for rectifying errors in eligibility for set-off under relevant notifications.