Limitation bars recovery of wrongly taken central excise credit when the show cause notice is issued after six months.

Demand for reversal of wrongly taken central excise credit was held barred by limitation because the show cause notice was issued beyond the normal six-month period. The Tribunal applied the Larger Bench view that recovery of such credit is subject to the ordinary limitation period under the Central Excise Rules. As the notice was delayed beyond that period, the demand could not be sustained and the department's appeal was rejected.

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Issues: Whether the demand for reversal of credit was barred by limitation under the applicable Central Excise Rules.

Analysis: The respondents had sought transfer of credit under Rule 57H(3) and the department proceeded on the footing that the credit had been wrongly taken while the respondents were operating under Rule 56A. The Tribunal relied on the Larger Bench view that the normal limitation period applicable to such a demand was six months. Since the show cause notice was issued beyond that period, the demand could not be sustained.

Conclusion: The demand was held to be time-barred and the department's appeal was rejected.

Ratio Decidendi: Where a demand for recovery of wrongly taken credit is issued beyond the normal six-month limitation period, it is barred by limitation and cannot be sustained.

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