1. This is an appeal under Section 35-B of the Central Excises & Salt Act, 1944 filed by M/s. Finolex Cables Ltd. against the Order No.TC-305/81 dated 19.8.82 of the Collector of Central Excise Pune confirming the demand of duty amounting to Rs. 1,01,786.90 being the amount of illegal utilisation of proforma credit by the appellants. The appellants have advanced two-fold arguments. Firstly, they have contended that the Collector's show cause notice No. TC/305/81 dated 18.9.81 for review under Section 35-A(2) of the Central Excises & Salt Act 1944 of the Asstt. Collector Central Excise Pune-H's Order No.V(68)30-61/8O dated 22.9:80 was time barred as the same was issued after the time limit prescribed under old Section 35-A(3)(b) under which the notice should have been issued within the time limit specified in Section 11 A ibid. In support of this contention, the appellants relied on the judgment of the Delhi High Court in Civil Writ Petition 149/80 dated 17.4.80 in the case of Associated Cement Co. Ltd. v. The Union of India 1983 ECR 66D (Delhi). The second part of the appellant's argument is that the Collector's Order dated 19.8.82 is factually incorrect because as per the provisions of law, the appellants were entitled to claim the proforma credit of duty paid on raw-materials, under Notification No. 178/77 and its succession Notification No. 201/79 dated 4.6.79. They argued that the Collector's finding that the intermediate product P.V.C. compound was exempted from levy of duty and therefore the proforma credit was not available to them is wrong. In support of this contention, the appellants have relied on the judgment of Allahabad High Court in the case of Nagrath Paints v. Union of India 1978 ELT (J-19) and the Trade Notice No.100/.S0 dated 28.10.80 of the Collectorate of Central Excise Bombay.
The appellants, further, submit that the temporary irregularity of removing the raw-materials outside their factory premises was condoned by the Asstt. Collector on his personal visit to the factory as he was satisfied about the bona fides of the appellant. For the aforesaid reason they submit that the Collector of Central Excise Pune's order be set aside.
2. The departmental representative has argued that the time limit for the review under old Section 5-A is one year under Sub-section (4).
Therefore, the Collector's order was not hit by the limit. Besides, the appellants removed the raw-materials tot their sister concern's premises for the manufacture of P.V.C. compound and the process of manufacture was such that the P.V.C. compound was available in a - marketable form. The Central Excise Inspector's posting at the appellant's factory was not for any specific purpose of supervising the production but he was expected to carry out the duties assigned to him under the S.R.P. procedure. In this view, the Superintendent's demand for duty was legally correct.
3. The appellant's representative has opposed the submission of the departmental representative on the grounds of time bar. He has explained that though the time limit for review of the Asstt.
Collector's order is one year as per old Section 35-A(4), such review relating to demand of duty not paid or less paid or erroneously refunded has to be done within the time limit of Section 11-A. This was not done in the present case and hence the Collector's order is hit by the time bar under Section 11-A. Besides, the Collector's reliance on the demand dated 7.5.80 of the Supdt. was wrong as this demand was not relevant for the purpose of review proceedings. On being asked to explain as to whether reversal of the credit taken in the R.G. 23 account would be covered by Section 11-A, the appellants have explained that the present case comes in the category of non-levy of duty, as the Superintendent had issued the demand under then Rule 10 of the Central Excise Rules, 1944. The appellants have, therefore, reiterated their submissions for setting aside the Collector's order both on grounds of time bar and on merits.
4. We have examined the submissions of the appellants and the respondent. The first question to determine is whether this case falls within the purview of recovery of duties not levied, not paid, short levied, or short paid as envisaged, under Section 11-A of the Central Excises & Salt Act, 1944. From the order of the Assistant Collector of Central Excise Pune dated 22.9.80, it appears that this is a case under which benefit was given to the appellants of Notification No. 201/79 dated 4.6.79. This notification has been issued in terms of Rule 8 and it permits a manufacturer to take the credit of the duty paid on raw-material, components etc. towards payment of the duty leviable on the finished product. Therefore, in case the-credit has been wrongly taken or not taken or taken to a different extent than permissible under the notification, it becomes a matter falling within the purview of Section 11-A of the Act. Furthermore, the 3rd proviso to. Sub-rule (2) of Rule 56-A lays down that in case the credit allowed is varied subsequently, the adjustment of the credit taken has to be made and if this is not possible for any reason cash recovery has to be made from or refund given to the manufacturer. Since this amount of credit is thus taken as the duty of Central Excise for the purpose of recovery or refund, the time limits prescribed under Section 11-A and 11-B will come into operation. It is for this reason that the notice dated 7.5.80 of the Superintendent Central Excise Range X, Pune was issued in terms of the then Rule 10 of the Central Excise Rules, 1944. In this view, we have to examine whether the Collector's notice for review of the Asstt.
Collector's order was issued within the time limits prescribed under Section 35-A(3)(b) read with Section 11-A of the Central Excises & Salt Act, 1944. The Assistant Collector's order was issued on 29.9.80 while the notice to review the same was issued by the Collector on 18.9.81 which was much after the time limits prescribed for the purpose as discussed above. The proceedings culminating with Collector's order are. therefore, hit by the time limit and they are time barred. In view of this fact, it is not necessary for us to go into the merits of the appeal. Accordingly, we set aside the Collector's order dated 19.8.82 and allow the appeal.