Recovery of money credit must rest on the correct enabling provision; notices under inapplicable provisions are unsustainable.

Money credit taken under rule 57K of the Central Excise Rules could not be recovered by invoking rule 57-I or section 11A of the Central Excise Act, because rule 57-I was confined to wrongly taken modvat credit on inputs and section 11A governed duty recovery. The Tribunal held that recovery must rest on the specific enabling provision applicable to the type of credit involved, and a notice founded on an inapplicable provision is not maintainable. The demand was therefore unsustainable and the issue was decided in favour of the assessee.

---

---

Issues: Whether money credit taken under rule 57K of the Central Excise Rules, 1944 could be recovered by invoking rule 57-I or section 11A of the Central Excise Act, 1944, instead of the specific provision applicable to such recovery.

Analysis: Rule 57-I was confined to recovery of modvat credit wrongly taken on inputs used in the manufacture of finished products, while section 11A dealt with recovery of duty. The demand in question related to money credit under rule 57K, and the Tribunal held that neither rule 57-I nor section 11A provided the correct jurisdictional basis for such recovery. The existence of separate recovery machinery for other credit-related situations reinforced the conclusion that a notice must be founded on the proper enabling provision and cannot be sustained under an inapplicable one.

Conclusion: The notices were not maintainable and the demand could not be upheld under rule 57-I or section 11A; the issue was decided in favour of the assessee.

---