JUDGMENT

AHMADI, J.:— This appeal, on certificate, is directed against the decision of the High Court of Andhra Pradesh which has quashed the imposition of duty and levy of penalty on the ground that the show cause notice was issued after the expiry of the period of six months from the accrual of the cause of action. The facts leading to this appeal are as follows:

The respondent M/s. Ramdev Tobacco Company, a sole proprietary concern, was at all material times a dealer in tobacco having a licenced warehouse at Guntur. The dealer was liable to pay duty on the tobacco received at his warehouse and transported to another dealer. On August 30, 1972 the appellant issued a notice calling upon the respondent to show cause why duty should not be demanded under Rule 160 of Central Excise Rules, 1944 (the Rules hereafter) on 64,444 kgs. of VFC Farmash Tobacco removed from his warehouse and not accounted for in the warehouse register maintained under the Rules. The respondent was also asked to show cause why penalty should not be imposed for infraction of Rules 151 and 32(1) of the Rules for illicit removal of the aforementioned quantity of tobacco. This show cause notice was founded on allegation that in 1970 the respondent obtained six transport permits (T.P. 2) dated January 13, 1970, February 10, 1970, March 26, 1970, May 16, 1970, July 24, 1970 and August 5, 1970 and transported under each permit more than the quantity of tobacco allowed thereunder in contravention of the aforementioned rules. The respondent sent a detailed reply to the said show cause notice on November 4, 1972. After giving a personal hearing to the respondent on September 18, 1973, the appellant came to the conclusion that the respondent had evaded payment of duty on 1272 bags weighing 48,304 Kgs. of VFC Farmash tobacco and issued a demand under Rule 160 in the sum of Rs. 1,66,165.76 under adjudication order No. 173/74 dated April 9, 1974. In addition thereto the appellant imposed a penalty of Rs. 100/- for contravention of Rules 151 and 32 (1) of the Rules. Thereupon the respondent filed a writ petition No. 2600 of 1974 under Article 226 of the Constitution challenging the aforesaid order of the appellant. This writ petition was heard and disposed of by a learned single Judge of the High Court who took the view that the appellants action was time barred inasmuch as it was initiated after the expiry of the period of six months from the accrual of the cause of action. According to the learned Judge under Section 40(2) of the Central Excises and Salts Act, 1944 (the Act hereinafter) no suit, prosecution or other legal proceeding could be instituted for anything done or ordered to be done under the law after the expiration of six months from the accrual of the cause of action. Since a period of more than six months had indisputably expired from the dates on which the excess tobacco was transported under the six transport permits in question, the action was clearly time barred. In this view of the matter the writ petition was allowed and the demand made under the impugned adjudication order both in respect of duty and penalty was quashed. The present appellant questioned the correctness of this view in appeal, Writ Appeal No. 358 of 1976, but in vain. The Division Bench found the view taken by the learned single Judge in accord with its view in Writ Petition No. 2516 of 1974 decided on April 1, 1976. It, therefore, dismissed the appeal but since it had granted a certificate to appeal in the case relied on, it also granted a similar certificate which has given rise to this appeal.

2-3. Sub-section (2) of Section 40 of the Act as it stood at the relevant point of time before its amendment by Amendment Act 22 of 1973 read as under:

"No suit, prosecution or other legal proceeding shall be instituted for anything done or ordered to be done under the Act after the expiration of six months from the accrual of the cause of action or from the date of the act or order complained