Strict construction of benefit notifications limits money credit to ethyl alcohol content, while silent limitation rules may imply a reasonable period.

Money credit under Notification No. 231/87-C.E. was confined to ethyl alcohol used in denatured spirit for PVC resin manufacture, because exemption and benefit notifications must be strictly construed and cannot be extended beyond their clear terms. The denaturant content was therefore outside the credit benefit. Where the relevant rule prescribed no limitation period, a reasonable period had to be implied in the absence of suppression, fraud or wilful misstatement. On those facts, six months was treated as the reasonable period, and the demand was time-barred.

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Issues: (i) Whether money credit under Notification No. 231/87-C.E. was admissible on the denaturant content of denatured spirit used in the manufacture of PVC resin. (ii) Whether the demand was barred by limitation in the absence of any prescribed period under the relevant rule.

Issue (i): Whether money credit under Notification No. 231/87-C.E. was admissible on the denaturant content of denatured spirit used in the manufacture of PVC resin.

Analysis: The notification referred to ethyl alcohol only and did not refer to ethyl alcohol under Heading 22.04 of the Tariff. Denatured spirit contained 99% ethyl alcohol and 1% denaturant. The notification granting money credit had to be construed strictly. In case of ambiguity in an exemption or benefit notification, the benefit cannot be extended beyond its clear terms.

Conclusion: The credit was admissible only on the ethyl alcohol content and not on the denaturant content.

Issue (ii): Whether the demand was barred by limitation in the absence of any prescribed period under the relevant rule.

Analysis: No allegation of suppression, fraud or wilful misstatement was made in the show cause notice. Where no limitation period is expressly provided, a reasonable period must be read into the provision. On the facts, six months was treated as the reasonable period.

Conclusion: The demand was barred by limitation.

Final Conclusion: The department succeeded on the merits of admissibility of credit, but the demand could not be sustained because it was time-barred.

Ratio Decidendi: An exemption or benefit notification must be strictly construed, and where the statute or rule is silent on limitation, a reasonable period is to be implied in the absence of suppression, fraud or wilful misstatement.

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