BUENOS AIRES — The extradition of former SS Capt. Erich Priebke to Italy to stand trial for war crimes will ultimately be decided by Argentina's Supreme Court.

By a 2-1 margin, an appellate court in the city of Roca Wednesday of last week overruled the Nazi's extradition on the grounds that the statute of limitations for murder under Argentine law expired long ago.

Priebke, who was the wartime deputy to Herbert Kappler, the Gestapo chief during the Nazi occupation of Rome, is wanted by Italy for his role in the massacre of 335 men, including 75 Jews, at the Ardeatine Caves near Rome on March 23, 1944. He also was reportedly involved in the deportation of thousands of Italian Jews to concentration camps.

Priebke emigrated to Argentina after the war.

Last year, after nearly 50 years of quiet life in Bariloche, a picturesque ski resort in southern Argentina with a sizable German colony, Priebke was arrested after being tracked down by ABC Television, which located him with the help of the Simon Wiesenthal Center.

Italy's extradition request had been granted by Argentine Judge Leonidas Moldes on May 4, 1995.

Priebke has since been under house arrest awaiting the outcome of his appeal.

The Italian Justice Ministry said it would appeal to the Argentine Supreme Court for a reversal of the decision.

In Rome, Jews reacted angrily to the court's decision.

"We must revise our position," Tullia Zevi, president of the Union of Italian Jewish Communities, said. "We assumed he would be extradited."

Italian television called the decision "a slap in the face to Italy" as well as to Argentine President Carlos Menem, who had supported the extradition.

Voting against extradition, appellate court Justices Carlos Muller and Carlos Perez Petit rejected the argument that the murders were war crimes.

They said the extradition treaty between Argentina and Italy "does not make any distinction between homicide, war crimes and crimes against humanity. Thus, we consider the case as one of homicide or manslaughter, already prescribed."

They further declared that the alleged crimes took place 51 years ago, way beyond the 15-year statute of limitations for murder under Argentine law.

Court President Miguel Vilar, who dissented with his vote to uphold the original extradition order, said he considered the case one "of war crimes committed during a war and in occasion of a war, thus unprescribable."

Argentine Interior Minister Carlos Corach called the court's decision "a step back in our struggle to make human rights stronger in this country. It damages Argentina's image abroad."

The Argentine district attorney handling the case, Martin Barba, vehemently rejected the 70-page court decision.

"The risk now is that Priebke could be released," Barba said.

He hinted at the possibility that the 82-year-old German would then "disappear."

"That's ridiculous; he will not run away," said Priebke's lawyer, Pedro Bianchi. "The Italian case is absurd, incoherent. Priebke will remain in Argentina. He has nothing to fear."

Sergio Widder, the Wiesenthal Center representative in Argentina, reacting to the court's decision, said: "The findings are absolutely unacceptable. Shooting civilians in a cave as a reprisal is the kind of crime that cannot be prescribed."

According to Widder, "The only chance we have to stop Priebke's release is for Germany to hurry up and ask for his extradition right away."

Germany was expected to ask for Priebke's extradition within days of the appellate court's ruling.