1. Appeal under Section 35B of the Central Excises and Salt Act, 1944 praying that in the circumstances stated therein, the Tribunal will be pleased to set aside the orders of the lower authorities with direction to refund the duty collected from the appellants.
2. This appeal coming up for orders upon perusing the records and upon hearing the arguments of M/s. Joseph and Kuriyan, Advocates for the appellants and upon hearing the arguments of Shri S.K. Choudhury, Senior Departmental Representative for the respondent, the Tribunal makes the following order : 3. The appellant-firm filed a revision application before the Government of India against the order-in-appeal No. V/27/9/78 dated 31-12-1979 of the Appellate Collector of Central Excise, Madras, rejecting their appeal against the Order C. No. V/27/30/309/77/427 dated 8-12-1977 passed by the Assistant Collector of Central Excise, Ernakulam I Division, Cochin. The said revision application has been transferred to the Tribunal in terms of Section 35P of the Act to be heard as an appeal.
4. Under the abovesaid order dated 8-12-1977, the Assistant Collector of Central Excise, Ernakulam I Divn. confirmed a demand for payment of Rs. 21,696.27 made on the appellants under Rule 10A of the Central Excise Rules, 1944; he found that sum was wrongly credited by the appellant in the proforma account and utilised by them towards payment of duty on goods subsequently cleared. Broadly, the demand arose under the following circumstances.
5. Aluminium ingots weighing 4.003 M.Ts. had been cleared from the factory of the appellants on sale to M/s. Standard Motor Products of India Ltd., Madras. As the goods were not taken delivery of by the consignee, the same were taken back into the factory premises. At the time of such receipt, it was thought that the provisions of Rule 56A will apply to such receipts and the formalities prescribed under Rule 56A such as intimation to the department, verification of particulars in the relevant D. 3, were not gone through. The amount was taken credit in the RG 33 account. Later on the Department thought that in a situation of this type, provisions of Rule 56A will not apply; the correct rule would have been 51 A. Hence the availing of proforma credit under Rule 56A was not correct. An appeal to the Appellate Collector of Central Excise, Madras was rejected by him on a finding that the impugned order (of the Assistant Collector) cannot be called to question on facts and in law.
6. Before us a number of points were raised by the advocate for the appellants such as the aptness of applying Rule 56A to the case, the fact that Rule 10A has been struck down by the Madras High Court as ultra vires of the Act and the fact that there is no clandestine removal in the present case, even if the provisions of Rule 10A will apply. We do not traverse these points as we are disposing of the appeal on another legal issue.
7. The advocate for the appellants argued that in terms of Rule 56A(5) if proforma credit has been availed of due to error, inadvertence etc., a notice should be served on the assessee to whom such credit has been allowed within six months from the date of such credit. It is common ground that the notice in the present case was not served within the period of six months. We note, in passing, that there is no factual data to justify the extension of the period of six months to five years. We, therefore, find that the demand, though made in terms of Rule 56A(5) read with Rule 10A and confirmed under Rule 10A should really be one under Rule 56A(5). In that event, it is barred by limitation. We, therefore, allow the appeal and set aside the order of the Assistant Collector confirming the demand for a sum of Rs. 21,696.27; the demand if paid, shall be refunded.