The recovery of credit wrongly availed of should be subject to the provisions of Rule 11a, as indicated by the subsequent amendment to Rule 57-1, and governed by Section 11a of the Central Excise Act.

S. R. RAJASEKHARA MURTHY, J.

( 1 ) THE petitioner is a public-sector undertaking engaged in the manufacture, assembly and erection of hydraulic gates, hoists, cranes and pen-stock pipes which are eligible to levy under the Central Excise Act ('the Act' ). The petitioner filed classification list 1/86 effective from 21-3-1986 giving particulars of all excisable goods manufactured by the petitioner. The classification list, a copy of which is produced as Annexure-'c' to the writ petition gives the full description of each item manufactured/warehoused by the petitioner. Item-2 in the said form gives the particulars of parts of components of hydraulic structure, etc. , manufactured by the petitioner-company.

( 2 ) AFTER the Modvat Scheme was introduced by the Central Government in the year 1986, the petitioner availed of the benefit of modvat in respect of the finished excisable goods. The petitioner, accordingly, filed a declaration before the jurisdictional Assistant Collector of Central excise, as required under the Rules and started availing of the benefit under the Modvat Scheme. Monthly returns were filed and a credit account in Form No. RG 23a Part I and II was also maintained. The Classification List was approved by the Assistant Collector effective from 21-3-1986 as per the Endorsement made in Annexure-C.

( 3 ) BY letter dated 4-5-1987 (Annexure-D), the Superintendent of Central Excise, Hospet, called upon the petitioner to resubmit the declaration in form-I giving better particulars of the final products as also the inputs used in the manufacture of the products. The petitioner sent a reply dated 21-5-1987, as per Annexure-'b' stating that the petitioner was manufacturing and fabricating in their factory only parts of components of hydraulic structural such as, gates, hoists etc. , for assembly at the site. It was also submitted in the said reply that the petitioner had, in the list sent by them in accordance with Rule 57-I, furnished all the details required in the proforma. A copy of the declaration is filed under Rule 57g is produced as Annexure-'f' to the writ petition. Not being satisfied with the reply, two endorsements - H and HI, were issued by respondent-1 on 8-7-1987 and 16-7-1987 directing the petitioner to pay the Modvat availed on such inputs by debiting the same to PLA Account and not to avail of the modvat credit until the particulars were furnished.

( 4 ) THE petitioner has challenged the grounds for issue of Annexures-H and HI and has asserted in the writ petition that in the classification list filed all the particulars of excisable goods manufactured and the inputs used were furnished. The learned Counsel for the petitioner has pointed out Item 2 in Column No. 2 in Classification List-I/86, (Annexure-C), indicating the "parts of components of hydraulic structure etc". , in the entry pertaining to manufactured goods, and the proper officer, after being satisfied about the declaration, which was in accordance with law, approved the same. In the statement of objections filed on behalf of the respondents this factual assertion is not disputed.

( 5 ) THE grievance of the petitioner is that the Endorsement-H and HI were issued on a misconception of the factual position and on an improper reading of the declaration.

( 6 ) THE other legal ground on which the two endorsements are challenged is : That such recovery without issue of a show cause notice and without any limitation as to the period for which such recovery could be made is ultra vires the provisions of Section 11a and violative of the procedure laid down for recovery under the Act. It was argued that any recovery of credit wrongly availed of (without admitting it) ultimately is a recovery under 11a of the Act, which provides for procedure to issue show cause notice, and adjudication in addition to embargo as to limitation.

( 7 ) THE contention of Sri Ashok Harnahally, the learned Standing Counsel for the Department is that under the Scheme of

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