ORDER
U.L. Bhat, J. (President)
1. Respondent, manufacturer of two-wheeler motor vehicles falling under Chapter Heading 8711 of the Schedule to the Central Excise Tariff Act, 1985 was availing Modvat credit on inputs. The dispute in this appeal relates to the period from 6-7-1992 to 20-7-1992. Notice was issued to the respondent stating that Modvat credit was not available to the respondent for the reasons indicated in the notice and proposing reversal of the Modvat credit under Rule 57-1 of the Central Excise Rules (for short, the Rules). The respondent resisted the notice. However, the Assistant Collector confirmed the demand except in regard to a minor portion. Collector (Appeals) set aside the order on the ground of limitation except in regard to a minor portion. Department being aggrieved by the finding that the bulk of the claim is barred by limitation has filed this appeal.
2. Rule 57-1 of the Rules deals with recovery of credit wrongly availed of or utilised in an irregular manner. The rule as it existed prior to the amendment effective from 6-10-1988 enabled the proper officer, where credit of duty paid on inputs was taken wrongly, to disallow the credit taken leading to the consequence of adjustment in the credit account or current account of the amount so disallowed or cash recovery. Rule 57-1, as it originally stood, did not contain a specific provision for issue of show cause notice. The amendment introduced to the Rule with effect from 6-10-1988 incorporated a specific provision for issue of show cause notice within six months from the date of such credit or five years from the date of such credit, as the case may be. The starting point of period of limitation was changed from the date of filing of RT 12 return by amendment effecting from 16-3-1995.
3. It is the contention of the Department that both before 6-10-1988 and after 6-10-1988 the provisions in Section 11A of the Central Excise Act, 1944 (for short, the Act) should be read into Rule 57-1 of the Rules and, therefor, the date from which the period of limitation is to be reckoned would be the date of filing of RT 12 return even in a case arising prior to 6-10-1988 and, therefore, the notice in the present case would not be barred by limitation as it was issued within six months from the date of filing of RT 12 return, though it was issued after the expiry of six months from the date of availing Modvat credit. The High Court of Gujarat in Torrent Laboratories Pvt. Ltd. v. Union of India, 1991 (55) E.L.T. 25 (Guj.) held to the contrary, making it clear that provision of Section 11A of the Act cannot be imported into the scheme of Rule 57-1 of the Rules, but that principles of natural justice should be read into the Rule and therefore, the show case notice within a reasonable time-frame will be necessary.
4. We are not in this case concerned with Modvat credit availed prior to 6-10-1988. The disputed Modvat credits in this case really were availed after 6-10-1988 and 16-3-1995. In Asia Insulated Wires Pvt. Ltd. v. Collector of Central Excise, Patna, 1993 (44) ECR 131 (Tribunal), Collector of Central Excise, Meerut v. Jagdamba Electronics, 1993 (68) E.L.T. 144 (Tribunal) and Commissioner of Central Excise, Meerut v. Delta Factors India (P) Ltd., 1997 (18) RLT 494 (Tribunal), the Tribunal has held that case of wrongful availing of Modvat credit after 6-10-1988 and before 16-3-1995 is governed by Rule 57-1 of the Rules, as it stood at the relevant time, and the commencement of period of limitation would be the date of availing Modvat credit.
5. Shri Sethi, SDR referred to the decision of the High Court of Karnataka in Thungabhadra Steel Products Ltd. v. Supdt. of Central Excise, 1991 (56) E.L.T. 340 (Kar.), the decision of the High Court of Madras in Advani Oerlikon Ltd. v. Assistant Collector of Central Excise, 1993 (63) E.L.T. 427 (Mad.) and the decision of the Tribunal in Collector of Central Excise v. Bharat Containers Ltd., 1990 (48) E.L.T. 520 and other decisions. In the Thungabhadra Steel Products Ltd. case, the High Court was required to consider a case which arose prior to 6-10-1988 and the learned Single Judge held that Section 11A had to be read into Rule 57-1, as it stood originally, and the amendment was to bring the Rule in conformity with the spirit and scope of Section 11 A. In Advani Oerlikon Ltd. case the High Court of Madras was also required to consider the Rule as it stood originally. The High Court took the view that the Rule as it originally stood did not absolve the department of the obligation to serve notice in terms of Section 11A of the Act. The Courts in the two aforesaid decisions were not called upon to consider the effect of amendment introduced to the Rule with effect from 6-10-1988. In the decisions of the Tribunal referred to by Shri Sethi, JDR also the question arose in the context of the original Rule 57-1 of the Rules.
6. My attention is also invited to a decision of the larger Bench of the Tribunal in Breaks India Ltd. v. Collector of Central Excise, Madras, 1996 (15) RLT 68. The larger Bench which was required to consider a case which arose prior to 6-10-1988 held that though the original Rule did not postulate service of notice or period of limitation notice was required to be served within a reasonable time, which was held to be six months and five years, as the case may be, following the pattern of Section 11A of the Act. It was further held that the date of commencement of the period of limitation would be the date of filing RT 12 return. This decision, I would like to reiterate, was given in the context of the unamended Rule.
7. So far as the amended Rule is concerned, the provisions of Rule are clear and unambiguous and admit of no doubt. The Rule requires service of show cause notice within a period of six months ordinarily and within a period of five years in certain extraordinary situations contemplated therein, the period of limitation being reckoned from the date of Modvat credit. The Rule-making authority had before it the pattern of Section 11A of the Act but deliberately departed from the pattern by providing the date of Modvat credit to be the date of commencement of the period of limitation. It may be noticed that with effect from 16-3-1995 the Rule was again amended stipulating the date of commencement of the period of limitation as the date of filing of RT 12 return. Both these departures made in 1988 and 1995 appear to be deliberate and there was no warrant to hold the amendment in 1995 to be clarificatory or retrospective in nature. The present case deals with the situation in the interregnum, namely, subsequent to 6-10-1988 and prior to 16-3-1995 which is squarely covered by the provisions of Rule as amended in 1988. Under this Rule, as it stood at the relevant time, date from which the period of limitation is to be reckoned is the date of Modvat credit and not the date of filing monthly RT 12 return. If time is reckoned from the date of Modvat credit, the notice is barred by limitation in respect of Modvat credit taken during the period under dispute, namely, 6-7-1992 to 20-7-1992. Therefore, the view taken by the Collector (Appeals) is correct.
8. I find no ground to interfere and accordingly dismiss the appeal.