1991 (12) TMI 169 - AT - Central Excise

Summary

Issues:
1. Time bar under Rule 57-I for recovery of erroneous Modvat credit.

Analysis:
The appeal before the Appellate Tribunal CEGAT, Bombay was against the order of the Collector (Appeals) rejecting the appellants' appeal regarding the objection raised by the Department on the credit of duty paid on inputs received under the Modvat scheme. The Department contended that the Gate Passes did not bear the name of the appellants or endorsements in their favor, leading to a show cause notice issued under Rule 57-I of the Central Excise Rules. The demand was confirmed in adjudication proceedings, and the appeal was rejected, prompting the present appeal. The appellants argued that the show cause notice was received after the amended Rule 57-I came into effect, which required the notice to be served within six months. The Department, however, argued that the notice was issued before the amendment, and thus, no time limit applied under the unamended rule.

The crucial point to be decided in this appeal was whether the show cause notice issued on 5-10-1988 but served on the appellants on 6-10-1988, regarding the period from 1-6-1987 to 30-6-1987 under Rule 57-I, was time-barred. The original Rule 57-I did not specify a time limit for recovery of erroneous Modvat credit, but an amendment on 6-10-1988 introduced a six-month time frame for serving such notices. The Tribunal analyzed the applicability of the amended rule to the case at hand, considering the date of issuance and service of the notice. Referring to relevant case law, the Tribunal emphasized the distinction between "issue of notice" and "service of notice," concluding that the notice served after the amendment must adhere to the amended rule's provisions. Since the notice was served after the amendment and no allegations of suppression or fraud were made, the normal time limit of six months applied. As the notice was served on 6-10-1988 for credits taken between 1-6-1987 to 30-6-1987, the demand was deemed time-barred, leading to the appeal being allowed.

This judgment highlights the significance of procedural timelines in excise matters, emphasizing the need for strict adherence to statutory provisions regarding the service of show cause notices within specified time frames. The decision underscores the importance of aligning enforcement actions with the prevailing legal framework to ensure procedural fairness and compliance with statutory requirements.