ORDER

K. Sankararaman, Member (T)

1. This is an appeal filed by the Collector of Central Excise, Calcutta-II challenging the decision of the Collector of Central Excise (Appeals), Calcutta whereby he allowed the appeal filed before him by M/s Remington Rand of India Ltd., who are the respondents in the present proceedings, and set aside the demand for a sum of Rs. 7067.10 confirmed by the Assistant Collector of Central Excise, Howrah South Division in terms of Rule 571 of the Central Excise Rules, 1944. The Collector (Appeals) allowed the appeal and set aside the Assistant Collector's order on the limited ground of limitation as the demand for the deemed credit availed by them in March, 1986 and April 1986 was issued only in April, 1987.

2. In the appeal before this Bench it has been submitted that the credit wrongly availed by the assessee had been correctly ordered to be realised from them by the Assistant Collector under Rule 571 which provision had no time-limit built into it for issue of the notice, at the material time. Only subsequently, in terms of Notification No. 28/88, dated 6-10-88, the time-limit factor had been inserted in Rule 571. Hence the notice was not time barred as wrongly held by the Collector (Appeals). Further, the question of limitation was not raised by the assessee at any stage during adjudication proceedings. Hence this point could not have been raised at the appeal stage and the Collector (Appeals) should not have considered the said plea of limitation. It has, therefore, been pleaded that the impugned order of the Collector (Appeals) may be set aside and the order of the Assistant Collector restored.

3. When the appeal was called, Shri A. Choudhuri, Departmental Representative appeared for the appellant Collector and Shri S.K. Poddar, Consultant and Shri N.N. Kapoor, Law & Administrative Officer of the respondent company appeared for them. Shri Choudhuri, learned D.R. reiterated the points raised in the appeal and pleaded that the appeal may be allowed.

4. In reply, Shri S.K. Poddar, learned Consultant referred to the submissions made by them in the Cross Objection. He relied upon the following decisions in support of their contention that the time-limit laid down for issue of notice for duty short levied or non-levied will hold good for reversal of credit of duty alleged to have been wrongly availed:

(1) Zenith Tin Works Pvt. Ltd. v. Union of India -MANU/MH/0178/1984 : 1986 (23) ELT 357 (Bombay)

(2) Premier Tyres Limited v. Collector of Central Excise, Cochin -MANU/CE/0105/1986 : 1986 (26) ELT 42 (Tribunal)

(3) S.M. Energy Teknik & Electronics v. Collector of Central Excise -MANU/CM/0042/1989 : 1989 (42) ELT 700 (Tribunal)

On the question raised in the appeal that the plea of limitation had not been taken by them at the adjudication stage and hence it was not open to them to have raised it at the appeal stage, Shri Kapoor submitted that this is a question of law and can be raised by them in the appeal. It was, therefore, pleaded by them that the appeal may be dismissed.

5. I have considered the submissions made by both the sides. The amount of credit sought to be reversed and recovered by the demand is only Rs. 7067.10 which being less than Rs. 10,000/-, it would have been within the Tribunal's right not to admit the appeal in terms of the second proviso to Section 35B(1) of the Central Excises & Salt Act, 1944. However, considering the principles of law raised in the appeal, the appeal has not been shut out at the threshold stage but taken up for decision on the questions whether the Collector was right in considering the fresh plea of time-limit action advanced by the present respondents in their appeal before him and secondly whether the time-limit laid down under Section 11A of the Central Excises & Salt Act, 1944 would apply to the present case which had been decided by the Assistant Collector under Rule 571 as it stood prior to its amendment on 11th October, 1988.

6. I find no support for the proposition in the appeal that it was not open to the respondents to have raised the plea of limitation in their appeal before the Collector (Appeals) as they had not agitated this point before the Assistant Collector during the initial adjudication proceedings. In terms of Section 35A(2) of the Central Excises & Salt Act, 1944, the Collector (Appeals) may, at the hearing of an appeal allow an appellant to go into any ground of appeal hot even specified in the grounds of appeal if he is satisfied that its omission therefrom was not wilful or unreasonable. Under Section 35A(3) ibid, he may, pass such, order as he thinks fit confirming, modifying or annulling the decision. There is nothing in these provisions to prohibit the specifying of new grounds not taken in the original proceedings. On the contrary, the Tribunal and the Courts have been liberal in allowing new points constituting questions of law where the facts are not in dispute to be raised before them. The Hon'ble Supreme Court had taken the above view in Ajmer Singh and Ors. v. State of Haryana and Ors. reported vide 1990 (26) ECR 463 (SC). The Special Bench 'B' of the Tribunal had, in Collector of Central Excise v. Hiper reported vide MANU/CE/0226/1989 : 1989 (41) ELT 322 (Tribunal), held that the plea of limitation being legal plea can be raised for the first time before the Appellate authority on the basis of material on record. The Tribunal relied upon the decision of the Hon'ble Andhra Pradesh High Court in the case of Commissioner of Income Tax, A.P. v. Gangappa Cables Ltd. reported vide MANU/AP/0194/1978 : 116 ITR 778 holding that the Appellate Tribunal disposing of an appeal under the Income Tax Act has got the power to allow the assessee to put forward a new claim, notwithstanding the fact that such a claim was not raised by him before the I.T.O. or the A.A.C. provided there is sufficient material on record to allow such a claim.

7. The above ratio will apply in equal measure to the first appeal made before the Collector (Appeals) and I hold that the present respondents were well within their rights to raise the plea of limitation in their appeal, irrespective of whether they had taken that plea in the original adjudication proceedings or not and the Collector (Appeals) was right in deciding the matter with reference to their plea in this regard.

8. Coming to the next question raised in the appeal that the time-limit stipulated in Section 11A was not applicable to the present case relating to availment of mod-vat credit which the department holds to be wrongful as there is a separate .and specific provision therefore in the shape of Rule 571 of the Central Excise Rules, 1944, which at the material time was free of any time-limit restrictions, such a position entering into the scheme of things only with the amendment brought about by Notification No. 28/88 with effect from 6-10-88,1 find that different Benches of the Tribunal including ours have taken a consistent stand that even for alleged wrongful availment of modvat credit the notice for recovery of such amounts should be issued within the timeframe provided under Section 11A. This would be the position even before 6-10-88 prior to the amendment of Rule 571 to make it apparently self-contained in this regard. The respondents have cited the decisions of the Tribunal in Premier Tyres Limited v. Collector of Central Excise, Cochin, MANU/CE/0105/1986 : 1986 (26) ELT 42 (Tribunal) and in S.M. Energy Teknik & Electronics v. Collector of Central Excise -MANU/CM/0042/1989 : 1989 (42) ELT 700 (Tribunal) in support of their stand that the time-limit for demands laid down in the relevant provisions would apply for demands arising from wrongful availment of credit. While the latter decision is in respect of Modvat credit the former one is in respect of exemption under Notification 201/79. It was held therein that where set off of duty had been erroneously availed under the abovesaid Notification with intimation to the Department, notwithstanding the fact that no time-limit had been provided in the said Notification to issue show cause notice in such cases, the limitation of Section 11A of Central Excises & Salt Act, 1944 would apply even if show cause-notice had been issued under Rule 11 of the Central Excise Rules, 1944. The Tribunal relied upon the decision of a Division Bench of the Bombay High Court reported in MANU/MH/0178/1984 : 1986 (23) ELT 357 (Bom.) when they went into the applicability of Central Excise Rule 10 in a situation where credit had been erroneously availed of under Rule 56A. The Court held that where credit had been erroneously given under Rule 56A, the product is under assessed to duty and there is short levy. The assessment has to be reopened. Rule 10 was held to be applicable and Rule 10A excluded. The Tribunal also referred to another judgment reported in 1979 (4) ELT J 307 where a Division Bench of the Andhra Pradesh High Court held in Jay Engineering Works Ltd. v. Govt. of India and Ors. that in the case of recovery of credit erroneously availed of applying Rule 56A, the provisions of Rule 10 would apply. This case pertains to a period prior to the amendment of Rule 56A to provide for a time-limit for recoveries. Accordingly, it was held by the Tribunal that the demand for recovery of credit alleged to be erroneously availed of amounts to short levy and hence the notice was hit by limitation.

9. The facts of the present case, as far as the question of the notice for recovery of the sum alleged to have been wrongly availed of being hit by limitation would be squarely covered by the Tribunal decision cited above. I respectfully follow the same and hold that the decision of the Collector (Appeals) allowing the appeal on the question of limitation cannot be faulted though he should have been categoric in his finding about the notice being hit by limitation instead of hedging it with the stipulation "subject to the aforesaid contention being found correct". It was for him to be satisfied with this aspect before passing the order. Anyway, as I find that the facts are as stated by the respondents, the decision of the Collector (Appeals) has to be endorsed. Accordingly, I dismiss the appeal with consequential reliefs for the respondents.

10. The Cross Objection filed by the respondents is actually by way of comments on the appeal and is not a Cross Objection in the real sense as it has not challenged any point of the orders of the Collector (Appeals) as it was totally in their favour. The said Cross Objection stands disposed of with the dismissal of the appeal.

11. The operative part of this order was pronounced in the open Court on 22-10-1990 when the appeal was heard.