1983 (3) TMI 280 - AT - Central Excise

Summary

Issues:
1. Refund claim for excise duty
2. Time-barred demand for excise duty
3. Interpretation of Rule 10 of Central Excise Rules

Analysis:

Issue 1: Refund claim for excise duty
The appeal was against the order of the Appellate Collector of Central Excise, Bombay, regarding the refund claim for excise duty filed by the appellants. The appellants manufactured industrial tyres and filed a fresh classification list for re-classification, which was approved by the Assistant Collector of Central Excise. The refund claims for the period between 14-6-1971 to 5th March, 1974 were partially allowed by the Assistant Collector, but the balance amount was deemed time-barred. A show cause notice was issued to the appellants regarding the refund amount not passed on to customers, leading to a demand for additional excise duty. The appeal challenged the rejection of their contentions by the Appellate Collector.

Issue 2: Time-barred demand for excise duty
The Appellate Collector contended that the demand was not time-barred as it was sanctioned by the Assistant Collector before the notices were issued. However, the appellants argued that the date of the issue of the cheque, i.e., 20th May, 1975, was the relevant date for the limitation period under Rule 10 of the Central Excise Rules. Citing a Bombay High Court decision, the Tribunal agreed with the appellants that the show cause notice issued after one year from the cheque issue date was time-barred. Consequently, the demand for additional excise duty was set aside.

Issue 3: Interpretation of Rule 10 of Central Excise Rules
The interpretation of Rule 10 of the Central Excise Rules was crucial in determining the limitation period for issuing show cause notices for recovery of erroneously granted refunds. The Tribunal followed the Bombay High Court decision, emphasizing that the date of the issue of the cheque was pivotal for calculating the limitation period, not the date of encashment. This interpretation led to the conclusion that the show cause notice in this case was time-barred, resulting in the discharge of the demand for additional excise duty.

In conclusion, the Tribunal partially accepted the appeal, setting aside the demand for additional excise duty based on the time-barred show cause notice. The order of the Collector was modified accordingly, and the appeal was disposed of in favor of the appellants.