Limitation for Modvat recovery notice turns on when departmental knowledge arose, not merely on the return date filed.

Under Rule 57-I as it stood before the 1988 amendment, the six-month period for issuing notice for recovery of wrongly availed Modvat credit ran from the date the Department acquired knowledge of the incorrect availment. The dispute over whether that knowledge arose from the September 1987 return or the October 1987 return depended on when the Department could, on the facts, discover the alleged irregular credit. Because the issue turned on factual determination rather than a pure question of law, it was not referable to the High Court, and reference was declined.

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Issues: Whether the question regarding the relevant RT 12 return for computation of limitation for recovery of Modvat credit was referable to the High Court as a question of law.

Analysis: The limitation issue was governed by the principle applied in the cited larger bench decision that, under Rule 57-I as it stood before the 1988 amendment, the six-month period for issuing notice ran from the date on which the Department came to know that credit had been incorrectly availed of. On the facts, the point whether such knowledge arose from the September 1987 return or the October 1987 return depended on the factual inquiry as to when the Department could discover the wrongful availment. As the controversy turned on factual determination rather than a pure legal issue, it did not warrant a reference.

Conclusion: The question was not a referable question of law and the request for reference was declined.

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