ORDER
V.P. Gulati, Member
1. This appeal is against the order of the Collector of Central Excise, Bangalore, dated 10.6.1988, Brief facts of the case are that the appellants were found to have availed of proforma credit in excess of that permissible under Rule 56A of the Central Excise Rules and were called upon to pay the amount equal to the excess credit availed of by them during the period 1.1.1979 to 30.9.1981 amounting to Rs. 6,91,217.72 by the issue of show cause notice dated 29.6.1984. The demand was raised under Section 11A of the Central Excises and Salt Act, 1944 and an annexure in the nature of work-sheet showing the quantum which was required to be paid from January, 1979 to September, 1981 was also appended to the show cause notice. The appellants were availing of the proforma credit under Rule 56A in respect of Acetic Acid used in the manufacture of Acetic Anhydride falling under Tariff item 68. The Acetic Anhydride manufactured by them was consumed internally by the appellants for the manufacture of goods falling under Tariff Item 15A and was also cleared from the factory without payment of duty as drug intermediate. The demand was raised as under Rule 56A in case the finished goods are exempted from payment of duty and cleared at the NIL rate of duty the protorma credit taken in respect of the same is required to be debited back, it is seen from the record of proceedings that appellants were debiting back the proforma credit taken based on a certain formula and the Departmental authorities were also aware of the same. This calculation for working out the debit of the proforma credit earlier availed of was found fault with by the authorities and the amount was required to be calculated based on the formula indicated by the authorities in the show cause notice and excess availment of credit and short payment of duty of Rs. 6,91,217.72 was indicated. The lower authority in this regard has held as under:
7. Firstly on the correctness of the formula adopted by the factory and as claimed by the department, 1 find that the factory has taken into account the quantity of Acetic Acid from Acetic Anhydride during the process of manufacture of goods falling under T.I. 15A of erstwhile Central Excise Tariff namely CAMG in arriving at the average rate of duty of Acetic Acid adopted, to calculate the duty to be debited. From this method, the quantity of Acetic Acid by which the duty credit to be demanded gets inflated and consequently the duty credited to be debited gets reduced. I am therefore unable to understand as to how the factory contends that the method adopted by them is correct. I therefore uphold the stand taken by the Department that to arrive at the average rate of duty on Acetic Acid, the total credit on Acetic Acid availed in a month should be divided by the quantity of Acetic Acid received during the month only.
8. The next point is the question of time bar raised by the factory. From the records I did not find that the factory has furnished the actual mode of calculation of the duty to be reversed, thereby the actual data is withheld from the department and hence the extended period under Section 11A invoked in the show cause notice is in order and the show cause notice is maintainable.
The appellants, it is seen, had also utilised the proforma credit in respect of the inputs which finally resulted in the manufacture of goods falling under Tariff item 15A and also item described as CAMG and Secondary Acetate. In respect of the proforma credit availed of in the case of CAMG and Secondary Acetate the Collector has allowed the credit as having been correctly availed of and has otherwise upheld the demand as raised in the show cause notice.
2. The learned Consultant, Shri Ramakrishna, for the appellants, pleaded that the appellants received duty paid Acetic Acid and manufactured Acetic Anhydride which was partly used for manufacture of the final product in their factory and no duty was paid in respect of that portion which were utilised in the factory in view of the exemption Notification No. 118/75 dated 30.4.1975. However, in respect of that portion which was cleared outside the factory as drug intermediate the proforma credit availed of in respect of Acetic Acid, which was relatable to Acetic Anhydride cleared, was worked out for the purpose of making a debit in the RG-23 register based on a formula which was declared to the Department and which was accepted by the Department for a long time and R.T. 12 were assessed regularly. He pleaded that, without going into the merits of the demand, the demand was hopelessly time-barred as the same was raised much beyond the period of 6 months. He pleaded that no suppression of fact or fraud etc. has been made against the appellants in the snow cause notice and the Collector has merely stated in his order that the factory had not furnished the actual mode of calculation and that, therefore, there was withholding of information from the Department and hence the applicability of the longer time period. He pleaded that inasmuch as on this ground alone the lower authority’s order cannot be upheld the appellants’ appeal should be allowed.
3. The learned Senior D.R., Shri Bhatia, generally adopted the reasoning given by the Collector in his order.
4. We observe that a reading of the show cause notice shows that no allegation regarding suppression of fact or withholding of any information or fraud etc. has been alleged against the appellants. All that has been stated is that due to the adoption of wrong procedure, the average duty worked out and debited in RG-23, Part II, by the appellants has resulted in short payment of duty of Rs. 6,91,217.72 for the period in question. It is a settled law that unless these ingredients which are spelt out under Section 11A for invoking the longer period of 5 years, are set out in the show cause notice the longer period of time cannot be invoked. In this connection we find that the Tribunal in their order, , in the case of Collector of Customs, Meerut v. J.G. Glass Ltd., have held as under:
We also find substantial force in the contention of the learned advocate for the respondent company that substantial portion of the demands would be time-barred because no allegation or suppression of fact has been alleged in the show cause notices and that the company had been working with the approval of the department under the procedure of Rule 173H. The original authority’s finding and the contention of the appellant-Collector that the respondent company misstated the process of manufacture is untenable in view of the detailed letter dated 22/30.4.1976 of the respondent company mentioned supra.
In the present case, we find no facts are on record to even imply that there had been any suppression on the part of the appellants. It has not been controverted as pleaded by the appellants that the RT-12s had been regularly assessed and that the Department was aware of the formula, which the appellants were adopting for debiting the amount of the proforma credit. In view of this we hold that the findings of the learned Collector that there had been any suppression of fact warranting the applicability of longer time period are not maintainable. We, therefore, hold the demand raised was barred by limitation and allow the appeal of the appellants with consequential relief.