Appeal No. 1359/LB of 2001, decided on 6th February, 2002. Versus

MIAN ABDUL QAYYUM, MEMBER (JUDICIAL).‑‑ ‑This appeal has been filed by Messrs Qadira Board Mills Ltd., Sheikhupura against Order‑in‑Original No.174 of 2001, dated 30‑4‑2001 passed by the Additional Collector, Sales Tax and Central Excise (Adjudication), Lahore whereby the learned Adjudicating Officer has directed the appellants to pay central excise duty of Rs.10,129 alongwith additional duty under section 3‑B of the Central Excises Act, 1944 besides a penalty of Rs.5,000.

2. The aforesaid demand has been raised on the ground that the appellants under valued the paper and paper board supplied to Messrs Sindh Text Book Board during the year 1994‑95 by not including miscellaneous charges amounting to Rs.2,02,591 in assessable value of the goods and, thus, short paid an amount of Rs.10,129 on account of central excise duty.

3. The appellants have assailed the impugned order as being illegal and liable to be set aside mainly on the following two grounds:

(i) That the show‑cause notice issued on 12‑9‑2000 demanding duty in respect of a supply made in January, 1995 is badly barred by time in terms of Rule 10 of the Central Excise Rules, 1944 and therefore the order passed in consequence thereof is also illegal and untenable in the eyes of law. The Adjudicating Officer has not addressed this issue although it was duly agitated before her.

(ii) That the amount of Rs.2,02,591 was received by the appellants from Sindh Text Book Board on account of incidental expenses e.g., transportation, octroi, loading/unloading and packing etc. incurred by them on behalf of the buyers which do not form part of the value as defined in the Central Excises Act, 1944.

4. Learned counsel for the Department has opposed the appeal on merit but could not offer any plausible explanation to the appellant's contention about the show‑cause notice being time‑barred.

5. We have given due consideration to the facts on records and the submissions made by the appellants. While there is no force in their contention that the amount received on account of incidental charges does not form part of the assessable value of the goods. We find considerable merit in their contention regarding limitation period: prescribed for raising demand of short paid amount of duty. In the instant case the show‑cause notice was issued by the learned Adjudicating Officer 5 years and 8 months after the clearance of the goods. Sub‑rule (3) of rule 10 of the Central Excise Rules, 1944 provides for a period of 10 years for issuing notice but this sub‑rule can be invoked only in cases where short levy takes place by reason of a false document, counterfeit seal or impression, fraud or any other heinous offence while in the show‑cause notice issued in this case, we do not find any allegation to this effect or specific mention of this sub‑rule. We therefore, find that the show‑cause notice having been issued after the time period of one year/three years as prescribed under sub‑rules (1) and (2) of the rule 10 ibid, is time‑barred and the order issued in consequence thereof is not sustainable in the eye of law.

6. The appeal is accordingly accepted and the impugned order is set aside.

C.M.A./725/Tax (Trib.) Appeal accepted.