The demand of excise duty for the period from 1-4-1979 to 26-6-1980 was barred by limitation under Section 11A of the Central Excise Act, 1944, as the show cause notice was issued on 26-11-1980, more than six months from the relevant date.

KANAKARAJ, J

The appellant is a small scale industry, manufacturing carbon sheets. They purchase "Copying Tissue paper", paying Central Excise duty at 30% under Item 17(2) of the Central Excise Tariff. They manufacture carbon sheets by coating the tissue paper with a thermosetting ink paste, non-drying oils, pigments and dyes, by means of a suitable coating roller and equalising rod and passing through chilled rolls. According to the appellant, the carbon paper thus manufactured by them cannot be brought within the definition of "paper" and will not fall under Tariff Item 17(2). But the Superintendent of Central Excise, Salem-7, issued a notice on 13-11-1979 calling upon the appellant to take out a licence in Form XIV for the clearance of carbon paper. W.P. 5812 of 1979 filed by the appellant, at that stage, was dismissed as premature on 18-9-1980. The 2nd respondent passed orders on 6-6-1981, holding that the carbon paper will fall under Tariff Item 17(2), and not under stationery articles, falling under residuary Item 68 of the Central Excise Tariff. The show cause notice preceding the said order had referred to clearance of goods without payment of duty to the tune of Rs. 2, 25, 538.70 and a demand was made under Rule 10 of the Central Excise Rules, 1944. In the final order of the 2nd respondent, dated 6-6-1981, this demand was confirmed.

2.The appellant, thereupon, filed W.P. 5419 of 1981 seeking to prohibit the 2nd respondent from demanding the said excise duty as per the order dated 6-6-1981. The one and only ground raised in support of the said Writ Petition was that the carbon paper will not fall under Tariff Item 17(2). In answer to the Writ Petition, the respondents rightly pleaded that after the year 1976, Tariff Item 17 had been made more comprehensive and the demand was in order. It was also brought to the notice of the court that the appellant took out licence under Tariff Item 17(2) on 26-6-1980 and started paying duty under protest. The demand of Rs. 2, 25, 538.70 was only in respect of the period from 1-4-1979 to 26-6-1980 when the appellant cleared the goods by wrongly availing of the exemption under Notification 89 of 1979.

3.The learned single Judge who heard the Writ Petition decided the only issue argued before him, namely, whether the carbon paper will properly fall under Tariff Item 17(2) and relying on various decisions on the point held in favour of the Revenue. Hence, this present Writ Appeal. In the grounds of appeal, apart from the merits of the case, a point relating to limitation under Sec. 11A of the Central Excise Act, 1944 is raised and it is urged that the demand is barred by limitation. It is also pointed out that Rule 10 of the Central Excise Rules was not in existence at the time of the show cause notice, dated 26-11-1980 and hence the entire proceedings are without jurisdiction.

4.InCollector of Central Excisev. Krishna Carbon Paper Co.,1988 AIR(SC) 2223, 1988 (S3) SCR 12, 1989 (1) SCC 150, 1988 (4) JT 762, 1988 (2) SCALE 880, 1989 (20) ECR 273, 1989 (72) STC 280, 1988 (2) Scale 880, 1988 (37) ELT 480, 1989 (19) ECC 32, 1989 UPTC 188, 1989 SCC(Tax) 42, the Supreme Court noticed the language of the entry during 1975, 1976 and 1982 and held that after the amendment in 1976, carbon paper was covered by item 17(2) of Central Excise Tariff. Conceding this position, learned counsel for the appellant urges only the point about the incorrect reference to Rule 10 of the Central Excise Rules and that even assuming Sec. 11A of the Act was alone meant to be applies, the claim is barred by limitation as provided in Sec. 11A itself. Though this point was not argued before, the learned single Judge, we are inclined to permit the appellant to argue the point because it goes to the root of the matter and if upheld the demand of the revenue will be time-barred and consequently without jurisdiction.

5.Sec. 11A of the Act was introduced by Act 25 of 1978 and came into force with effect from 17-11-1980