K.L. Rekhi, Member (T)

1. The facts of this case, in brief, are that the appellants were held entitled for the exemption from duty in terms of Notification No. 108/78-Central Excises, dated 28-4-1978 (commonly known as incentive rebate for higher production of sugar) for the period from 1-5-1978 to 15-8-1978. The rebate was sanctioned to them by the Assistant Collector and credited into their Personal Ledger Account on 20-3-1979. Some 2 1/2 years later, the Department felt that some excess amount had been paid to the appellants. Accordingly, a demand by way of show cause notice was issued to the appellants on 24-10-1981. The Assistant Collector, on adjudication of the matter, dropped the demand on the ground that it was hit by the time-limit of six months laid down in Section 11-A of the Central Excises and Salt Act, 1944. The Collector felt that the Assistant Collector's order was not proper, legal and correct and he, accordingly by issue of his show cause notice dated 6-9-1982, initiated proceedings to revise the Assistant Collector's order under the then Section 35A(2) of the Act. On conclusion of the proceedings, the Collector held that the excess payment made to the appellants was not refund of duty but a deposit and hence the time- limit under Section 11A did not apply to it. The Collector further held that the time-limit of three years from the date of discovery of the mistake as under the common law of limitation was applicable to the facts of the case and on that basis the demand was within time. Accordingly, the Collector set aside the Assistant Collector's order and directed him to decide the matter afresh in the light of his observations. The appellants are in appeal before us against this Order-in-Revision of the Collector.

2. We have heard both sides and carefully considered the matter. The Department's case, as reiterated by Shri Verma, is that Section 11A applies to duty short-levied or non-levied or to refund of duty erroneously granted and not to deposits and that the present case was one of erroneous deposit since the amount was credited into the appellants' Personal Ledger Account soon after the excess production of sugar in their factory came to be known and in anticipation of the actual clearance of the excess quantity of sugar on payment of duty. As such, argued the learned Department's Representative, the Collector was right in holding that the time-limit of three years under the common law was applicable in this case and hence the demand was not time-barred.

3. We do not agree with the Department's view. First, no evidence has been laid before us to show that the amount paid to the appellants was advance deposit. On the other hand, the record shows that the excess production pertained to the period from 1-5-1978 to 15-8-1978 while the rebate was granted to the appellants some seven months later, on 20-3 1979. Secondly, the strict legal position is that there is no provision for any advance deposit or credit in the notification. It is an exemption notification issued under Rule 8(1) to allow a duty reduction in respect of the sugar produced in excess over the base period. In the normal course, the reduced duty, as against the normal higher duty, was payable when the eligible sugar was cleared from the factory. If the department happened to allow a greater amount of reduction in duty than what it thinks was warranted, the excess payment has, in law, to be treated as nothing else but erroneous refund of duty. The authority and procedure for recovering back such excess payment by the Department are laid down in Section 11A of the Act. If the Department chose to issue a demand for such recovery under Section 11A, it cannot, in the same breath, say that it is not bound by the time-limit laid down in that section. If, on the contrary, the department's stand is that Section 11A did not apply and the limitation under the common law applied, as held by the Collector, then the Collector himself had no jurisdict