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Issues Involved:
1. Applicability of Rule 10 vs. Rule 10A for recovery of excise duty. 2. Validity of the demand notice issued under Rule 10A. 3. Time-limit for issuing a notice under Rule 10. Issue-wise Detailed Analysis: 1. Applicability of Rule 10 vs. Rule 10A for recovery of excise duty: The primary issue revolves around whether the recovery of excise duty should be governed by Rule 10 or Rule 10A of the Central Excise Rules, 1944. The appellants argued that the short-levy of excise duty due to an inadvertent error should fall under Rule 10, which deals with recovery of duties or charges short-levied or erroneously refunded. Rule 10A, on the other hand, provides residuary powers for recovery of sums due to the government where no specific provision exists in the rules. The court observed that assessments of finished products made from aluminium flat bar sections covered by Item 27(d) were completed, but there was an inadvertent or erroneous credit given under Rule 56A for the excise duty paid on the raw material. This resulted in an under-assessment and short-levy of excise duty. Therefore, the court concluded that Rule 10, which addresses short-levy due to error or inadvertence, was applicable, excluding Rule 10A. 2. Validity of the demand notice issued under Rule 10A: The appellants challenged the validity of the demand notice issued under Rule 10A on the grounds that Rule 10A should not apply when Rule 10 is specifically applicable. The court agreed with the appellants, stating that the assessments were erroneously under-assessed, resulting in a short-levy. Since Rule 10 specifically deals with such situations, it should be applied, and Rule 10A should be excluded. The court noted that the erroneous credit given under Rule 56A for the excise duty paid on the raw material led to an under-assessment of the finished products, thereby attracting the provisions of Rule 10. 3. Time-limit for issuing a notice under Rule 10: Rule 10 provides a time-limit of three months for issuing a notice for recovery of short-levied duties. The court acknowledged that the period of three months had long since expired, rendering the demand notice dated 28th August 1973 invalid under Rule 10. Consequently, the demand notice, though issued under Rule 10A, could not be treated as a notice under Rule 10 due to the lapse of the prescribed time-limit. Conclusion: The court set aside the impugned judgment and order, allowing the appeal in favor of the appellants. The demand notice issued under Rule 10A was deemed invalid as the provisions of Rule 10 were applicable but not adhered to within the specified time-limit. The court ordered that the appellants be entitled to withdraw the deposited amount claimed under the demand notice after ten weeks from the judgment date. The application for leave to appeal to the Supreme Court was rejected.
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