In the latest chapter of a lengthy legal spat, the Federal Election Commission is suing the National Rifle Association's lobbying arm and its political action committee (PAC) for allegedly using corporate funds illegally in the 1988 election.

The suit charges the NRA's Institute for Legislative Action transferred $415,744.72 in corporate funds to the NRA Victory Fund on Oct. 20, 1988, two weeks before the election. At the time, the PAC had $50,522 in the bank.

Richard Gardiner, an NRA attorney, said the money was used to pay the costs of soliciting the group's membership for donations to the PAC, a use of corporate money permitted by law.

He said the FEC claimed the NRA violated a technical provision of the law by not making the transfer to the PAC within 30 days, the maximum time allowed under the regulation. The group could have paid a small fine to settle the case, he added, but refused to agree it had violated the law.

"We are bolder in exercising our First Amendment rights than most groups," he said. "We will push and stretch the limits" of the law. The FEC took the NRA to court in 1981 on a similar charge, and continued that case in 1985.

FEC records show that during the 1988 election cycle, the NRA PAC made more than $770,000 in contributions to congressional candidates. It spent another $1.5 million in independent expenditures, most advocating the defeat of Democratic presidential candidate Michael S. Dukakis.

The effect of the disputed transfer shortly before the election was that the NRA PAC suddenly had a lot more money to try to affect the outcome. "There's no question it {the transfer} benefited the PAC," Gardiner said. "It was nice for it to have another $415,000."

The $415,745 transfer amounted to nearly half the $902,000 the PAC reported receiving in the five-week period starting Oct 20. The records show that the PAC spent more than $190,000 against Dukakis in the period. It donated another $262,555 directly to congressional candidates, and more than $200,000 to state legislative candidates.

According to the lawsuit, the alleged violation took a circuitous route. The legislative institute first paid vendors directly the nearly $416,000 for production and postage costs of PAC fund-raising letters in March and July. On Aug. 1, the Victory Fund reimbursed the amount to the institute.

The FEC challenged neither of those transactions, but based the suit on the Oct. 20 transfer from the institute back to the PAC. Gardiner said the PAC probably paid the institute back in August, but realized later it still needed the money for the fall campaign.