S. Kalyanam, Member (J)

1. This appeal is directed against the order of the Collector of Central Excise (Appeals), Madras dated 24-10-84 confirming the order of the Assistant Collector of Central Excise, Madras dated 7-6-84. Maduranthagam Co-op. Sugar Mills is the appellant and the issue that arises for determination is with reference to the duty payable and paid by the appellant in respect of the clearances of sugar effected during the period from 1-3-1983 to 26-4-1983. Originally, Notification No. 99/81-CE dated 3-4-1981 was in operation in respect of the basic excise duty and additional excise duty payable on levy and free sale sugar. This notification was later amended by Notification Nos. 28 and 29/CE of 1983 dated 1-3-1983 under which the rate of basic excise duty and additional excise duty payable on the clearances of levy sugar was fixed at Rs. 19/- per quintal. It should be noted, in this context that the said two notifications, namely 28 and 29 of 1983 dated 1-3-1983 dealt only with the basic excise duty and additional excise duty on clearances of levy sugar and did not deal at all with the clearance of free sale sugar. In respect of the free sale sugar, the original notification No. 99/81 dated 3-4-1981 referred to supra under which 8.50% ad valorem and 4.25% ad valorem respectively by way of basic excise duty and additional excise duty leviable continued to remain in operation. The appellants, presumably, on a misapprehension that the rate prescribed in respect of clearances of levy sugar under Notification Nos. 28 and 29 of 1983 dated, 1-3-1983 covered also the clearance of free sale sugar, filed the monthly returns before the Central Excise authorities. The Central Excise authorities also approved of the correctness of the appellant's stand in the said monthly returns and finalised RT 12 assessment in April and May 1983 in respect of the returns filed for March and April 1983. Subsequently, the Department, finding that the appellant was liable to pay more by way of duty on the clearances of free sale sugar in terms of Notification No. 99/81 referred to supra issued a notice of demand on 12-8-83 demanding a sum of Rs. 9046.14 as short levy due from the appellant in respect of basic excise duty. The appellant responded to the said demand stating that if the Department were to claim Rs. 9046.16 from the appellant as alleged short levy towards basic excise duty, the Department should refund the excess amount paid by the appellant in a sum of Rs. 8339.93 by way of additional excise duty in respect of the clearances effected on free sale sugar. The Department without adjusting the excess amount paid by the appellant rejected the appellant's plea after some correspondence and then issued a show cause notice dated 16-12-83 under Section 11A of the Act. The contention of the appellant to the show cause notice was not accepted by the Department and ultimately the original order was confirmed under the impugned order out of which the present appeal arises.

2. The learned Counsel for the appellant Shri Narasimhan contended that under the law, the Department cannot issue a notice of demand without assessment. The Show Cause Notice of the Department dated 16-12-83 is clearly barred by limitation within the meaning of Section 11(A) of the Act. Having regard to the fact that the amount claimed as duty from the appellants relates to the period 1-3-83 to 26-4-83, if the Department on consideration of equity is not inclined to adjust the excess amount paid by the appellant towards the amount due from the appellant to the Department, then the Department should have issued a show cause notice within the statutory period of limitation and proceeded against the appellant in accordance with law. It was therefore, urged that the very Show Cause Notice itself is legally not sustainable on grounds of limitation and consequently it was contended that the impugned order would stand vitiated.

3. The learned SDR urged that the notice of dema