Proforma credit reversal under excise law was held time-barred when the demand was issued beyond limitation.

Recovery of proforma credit taken under Notification No. 201/79 was held subject to Section 11A of the Central Excises and Salt Act, 1944. The Tribunal found the facts materially similar to an earlier decision and held that the supplier's later payment of duty under protest did not change the position. Once proforma credit had been allowed, any demand for its reversal had to be issued within the statutory limitation period. As the notice was issued beyond the permissible time, the demand was time-barred and the matter was decided in favour of the assessee.

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Issues: Whether the demand for reversal of proforma credit taken under Notification No. 201/79 was barred by limitation under Section 11A of the Central Excises and Salt Act, 1944.

Analysis: The assessee had availed proforma credit on inputs used in the manufacture of transformers under Notification No. 201/79. The input supplier later obtained refund after the inputs were held non-excisable, and the department sought to recover the credit. The Tribunal held that the facts were materially similar to the earlier decision relied upon, and that the supplier having paid duty under protest did not alter the position. Once proforma credit had been allowed, recovery of the same had to be tested under Section 11A, and the notice issued beyond the permissible period was time-barred.

Conclusion: The demand was barred by limitation and the issue was decided in favour of the assessee.

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