ORDER
S. Kalyanam, Member (J)
Order No. 351/1987
1. This appeal is filed by the Collector of Central Excise, Madras, and directed against the order of the Collector of Central Excise (Appeals), Madras, dated 30.10.1986. Shri Sundaram, an employee of the Respondent, seeks an adjournment on the ground that the counsel is out of station. Since the scope of the appeal lies in a short compass and the question of law arising is covered by authorities, I propose to dispose of the appeal on merits.
2. The short question of law that arises for my consideration in the appeal is whether the recovery of the excess credit granted to a party is governed by the bar of limitation under Section 11A of the Central Excises and Salt Act, 1944. In the instant case the respondent was granted credit in terms of Notification No. 283/82, dated 27.11.1982 (Incentive Rebate). The authorities on verification found that the respondent had claimed the credit of duty paid in excess of 160% of the base clearances. Therefore, in terms of the Notification the Department instituted proceedings under Sub-rule (4) of Rule 56AA of the Central Excise Rules for recovery of the excess credit given, which ultimately resulted in the impugned order now appealed against.
3. The plea of the learned Senior D.R. is that credit was given to the respondent on the strength of Notification No. 283/82, dated 27.11.1982 issued under Rule 56AA of the Rules and any erroneous credit is governed by Sub-rule (4) of Rule 56AA, which does not prescribe any period of limitation. I am afraid I cannot accede to the plea of the learned Senior D.R. The question as to whether any rebate claim with reference to Notification conferring duty concession which is allowed by adjustment in PLA would amount to refund of duty has been considered in the ruling of the Special Bench in Shree Una Taluka Khedut Sahakari Khand Udyog Mandali Ltd. v. Collector of Central Excise, Bombay – reported in 1984 (15) E.L.T. 183 (Tribunal). In my opinion, as rightly held by the Collector (Appeals) under the impugned order, the principles in the ratio embedded in the said ruling are applicable to the facts and circumstances of the present case. The Division Bench of the Bombay High Court in the case of Zenith Tin Works Private Ltd. v. Union of India and others reported in 1986 (23) ELT 357, has taken the view that erroneous credit taken by a party even in terms of rule 56A can be called back by the Department only as a short-levy in terms of Rule 10 as it then stood. In my opinion the principles are applicable to the facts of the present case. I, therefore, hold that if a party is given an adjustment in the Personal Ledger Account after a claim was lodged with reference to a Notification conferring duty concession, it would amount to refund of duty paid and recovery of the same on grounds of erroneous payment can only be subject to the bar of limitation. A Division Bench in the Andhra Pradesh High Court in the case of Jay Engineering Works Ltd. v. Government of India and others reported in 1979 ELT (3.397) has held that in a situation where credit has been erroneously availed of in terms of Rule 56A the same can be recovered only subject to the provisions of limitation in terms of Rule 10 as it stood at the relevant time. It would be seen thus that notwithstanding the fact that Rule 56A did not specifically prescribe any period of limitation it has been held in the aforesaid rulings of the High Courts that the bar of limitation will always come into operation whenever excess credit taken by a person is sought to be recouped by the Department on grounds of error. I may also usefully advert to the ruling of the Special Bench in the case of Premier Tyres Ltd. v. Collector of Central Excise, Cochin reported in 1986 (26) ELT 42 wherein the applicability of the bar of limitation in respect of a wrong credit taken by a party in terms of Rule 56A has been upheld. If one were to take a contrary view, it would lead to a very anomalous situation of the Department being entitled to call back the excess credit taken on grounds of mistake or error without any bar of limitation at all. Irrespective of the appellation “credit”, the party who is permitted to take credit in the PLA virtually enjoys the benefit which a party who gets refund enjoys and, therefore, the contention of the Department that irregular or excess credit cannot be equated to sums of money refunded is not tenable. Therefore, on consideration of the facts and circumstances of this case and following the ratio in the decisions referred to supra. I am inclined to hold that the impugned order appealed against is sustainable in law and in this view of the matter the appeal is dismissed.
