Western Bengal Coal Fields Ltd. Vs. Collector of Central Excise - Court Judgment

Excerpt:
1. this is an appeal against the order of the collector (appeals) central excise, bombay.2. the brief facts of the case as set out in the order-in-original are as under: "m/s rawji amarsi (a partnership firm) were engaged in the manufacture and sale of phenolic moulding powders and synthetic resins under their brand name 'amarite' in their factory at majiwade, thane since 1962. under a lease agreement executed by m/s rawji amarsi with m/s western bengal coal fields ltd. (herein after referred as the party) the factory at majiwade along with the business of the firm was leased to the latter (the party) for a period of five years, effect from 1.6.74. m/s western bengal coal fields ltd. continued the manufacture and sale of phenolic moulding powders (herein after referred as the goods) under the same brand-name of 'amarite' at the same factory. pending issue of loan licence in their own favour for manufacture of synthetic resins and the goods at the factory of m/s rawji amarsi, 44865 kgs. of goods was manufactured at the factory during june, 1974 to july 1974 and was cleared separately in the name of m/s rawji amarsi during the period from august, 1974 to august, 1975. from 1.8.74 the party started" the manufacturing and clearing the same product with the same brand name 'amarite' on their own. the goods and the synthetic resins were classified under t.i. 15a(1) and the benefit of notification no. 198/76 dated 16.6.76 (herein after referred as the notification was available for these goods. the then jurisdictional assistant collector fixed the base quota in terms of the notification for the period from 1.8.74 onwards ignoring the clearances of the same product from the same factory by or on behalf of m/s rawji amarsi." the base clearances were fixed at 111789 kgs. it was pointed out by audit that the clearances of the specified goods from the factory took place when the factory was in existence prior to 1973 and the specified goods were being manufactured and cleared even for the year 1974 and 1975. the base clearance should have been fixed in terms of para 2(2)(c) of the notification, that is, by talking the average of the clearance made during the previous three years. accordingly, base clearances were refixed by the assistant collector at 227787 kgs and demands were raised for the duty short paid on the basis of the base clearances fixed earlier at 111789 kgs. the collector (appeals) upheld the order of the lower authority for the duty demanded and held the relevant criteria for the purpose of base clearances under notification no. 198/76 is the date of first clearance from the factory in terms of clause 2(2)(c) of the notification.2a. shri taleyar khan, the learned advocate for the appellant pleaded the issue basically related to the interpretation of notification no.198/76. he has pleaded that it is not denied that the factory of the appellant was first owned by m/s rawji amarsi upto 1974 when on 9.4.74 the previous owners leased the factory to the appellants under an agreement. after the lease, the previous owners ceased to have any connection with the manufacturing activity-and the appellants alone were concerned with the business and they had been given a central excise licence from 1.8.74 and they started paying duty on the goods manufactured from that date. the base clearance in terms of notification no. 198/76 were fixed under para 2(2)(b) of the notification as claimed by the appellants and the base clearances were fixed by the order dated 9.2.77 passed by the competent authority and the appellants claimed concessional assessment in respect of clearances in terms of notification 198/76 based on the base clearance fixed. he stated that the superintendent has subsequently addressed a letter that on account of audit objection, their base clearance should be fixed under para 2(2)(c), that is, taking into account the first clearances from the factory having been made before 1974 and the average of clearances for the year 1974, 1975 and 1976 was intimated to be the base clearance and a show cause notice was issued in this regard on 27.3.1979. he pleaded on being pointed out by the appellants that base clearances once fixed could not be changed by the assistant collector, a corrigendum to the show cause notice was issued on 27.3.79 and the appellant was asked to explain as to why the lease clearance should not be changed. his plea is that the assistant inspector had no power to review fixation of the base clearances fixed earlier. he further pleaded that unless base clearances could be be-fixed under the provisions of the law, the assistant collector had no authority to change the base clearances. he pleaded that if at all the assistant collector had any power of review in this regard, he had only a limited power which could be exercised in case there, was change in law or change in tariff entry or there was pronouncement of law by the supreme court or some fresh facts had come up. he stated that the department was in possession of all the facts regarding lease of the factory to the appellants from the previous owners and therefore the assistant collector had no power for fixing the base clearances. his plea is that unless base clearance could be legally refixed no demand would lie. he stated that as demand was raised after six months period, a part of the demand would be out of time even if these are held to be maintainable under the law.3. smt. chander, the learned jdr, pleaded that we have to go by plain reading of the notification and the notification should be read as such. she pleaded that the specified goods cleared were the same and of the same brand as manufactured by the previous owners who gave the appellants the factory on lease. she pleaded that the superintendent after the audit objection was raised, sent a letter to the appellants on intimating that the benefit under notification 198/76 could be availed of by them only on crossing the limit of 227787 kgs. she pointed out the base clearances had to be in terms of para 2(2xc) of the said notification and demand is restricted to six months from this date of the letter. she pleaded that the show cause notice was issued on 23.11.78 and this was in continuation of the intimation regarding base clearances sent under the letter of the superintendent dated 19.8.1978. she also pleaded that a_ corrigendum was issued later. she pleaded that the show cause notice issued on 27.3.1979 was a corrigendum to the show cause notice originally issued for the purpose of revising the base clearances did not tantamount to the issue of any fresh proceedings. it was in continuation of the same. she pleaded that the assistant collector had the power to review base clearances fixed earlier. she pleaded that the time for raising the demand should be reckoned from the issue of letter by the superintendent first written in this regard.4. in reply shri taleyar khan stated that para 2 of the said notification only was a machinery provision "and the scope of the notification is to be read with -reference to the first para of the notification. in this connection he drew attention of the bench to the opening para of the said notification which is reproduced for convenience of reference : "in exercise of the power conferred by sub-rule (1) of rule 8 of the central excise rules, 1944, the central government hereby exempts the excisable goods of the description specified in column (3) of the table hereto annexed (hereinafter referred to as the specified goods) and falling under such item number of the first schedule to the central excises and salt act, 1944 (1 of 1944), as are specified in the corresponding entry in column (2) of the said table and cleared from one or more factories in excess of the base clearances by or on behalf of a manufacturer, from so much of the duty of excise leviable thereon under the said item (read with any relevant notification issued under the sub-rule (1) of rule 8 and in force for the time being), as is in excess of seventy-five per cent of such duty, subject to the following' conditions, namely: (a) the clearances made during any financial year shall be separately calculated for all the goods specified in column (3) of the said table against each serial number specified in the corresponding entry in column (1) thereof on the basis of the accounts maintained under the central excise rules, 1944, in terms of the unit-for calculation specified in the corresponding entry in column (4) of the said table: (b) the clearances of any specified goods, exempted from the whole of the duty leviable theron in any financial year shall not be taken into account; but clearances of any specified goods under bond for exports or clearances of any specified goods entitled for exemption; when used in the production or manufacture of any other goods shall be taken into account; (i) any goods which were exempted from the whole of the duty leviable thereon in the base period but not so exempted in any financial year subsequent to the base period, shall not be entitled to any exemption from duty or be taken into account for calculating the excess clearances; (ii) any goods which were not exempted from the whole of the duty leviable thereon in the base period but are so exempted in any financial year subsequent to the base period, shall be taken into account for calculating the excess clearances; (c) if the central government is satisfied that there has been a substantial alteration in the pattern of clearances in any financial year subsequently to the base period in respect of any specified goods as compared to the pattern of clearances in respect of such goods in the base period and there has been no reasonable cause for such alteration, it may, after giving the manufacturer concerned a reasonable opportunity of making representation in the matter, by order, disallow the exemption. explanation 1. (a) in determining the excess clearances in a financial year over and above the base clearances, such excess shall, except as provided in clause (b), be calculated in terms of weight, number of volume where such weight, number or volume has been specified in column (4) of the said table against the serial number specified in the corresponding entry in column (1) thereof; (b) where value as specified in column (4) of the said table against the serial number specified in the corresponding entry in column (1) thereof is to be applied for determining the excess clearances in a financial year over and above the base clearances, such value shall be calculated:- (i) in a case where an article similar to the specified goods was produced in the base period, by adopting the value that prevailed in the base period in respect of such article and where in respect of such article the value has been varying in the base period, by adopting the average of the values; (ii) in any other case, by adopting the value that is applicable in respect of the article on the date of clearance. explanation 2. in this paragraph, unless the context otherwise requires, "value" means the value as determined under section 4 of the central excises and salt act, 1944 (1 of 1944) or, as the case may be, according to the tariff values fixed or altered under section 3 of the said act." he stressed that the benefit of the notification is made available in respect of a manufacturer and therefore the base clearance should be fixed with reference to the clearances made by a particular manufacturer.5. the first point to be disposed of in the proceedings before us is as to whether the benefit of notification is to be worked out based on the base clearances fixed with reference to the clearances made by a particular manufacturer as pleaded by shri taleyar khan, the learned advocate of the appellant or based on the first clearances of specified goods made from a factory. it is seen that the exemption in respect of specified goods set out in the table to the notification is in respect of those goods which are cleared from one or more factories by or on behalf of a manufacturer subject to the other conditions in the notification. it is seen that the word by or on behalf of a manufacturer relate to the excess clearances made from one or more factories. this means that if a particular manufacturer clears the goods himself or clearances are made on his behalf from one or more factories all his clearances from said factory would be taken into reckoning for working out the excess. from this para we cannot, however, read that the base clearances should also be in respect of manufacturer. for the fixation of the base clearances a clear criterion has been laid out in explanation 2. in the explanation 2, the base clearance is required to be fixed with reference to a factory and the goods cleared therefrom during different periods.6. the learned advocate has pointed out while the opening para refers to the quantum of exemption given in respect of clearance made by a manufacturer, para 2 in the nature of machinery section lays down basis which would determine the excess clearance. the machinery section cannot be given the meaning other than what can be read in the wording of the said para. para 2 of the notification clearly sets out that for the purpose of working out the base clearance, clearances from the factory as such have to be taken into consideration. this would mean that notwithstanding the fact that clearances at different times have been made by different manufacturers so long as the specified goods have been cleared from the factory during the periods specified in para 2 of the notification, these clearances for the purpose of fixing base clearance will have to be taken into recknoning. we cannot read the words cleared by a manufacturer from the factory in para 2 just because in the opening para of the notification, the eligibility criteria for excess clearance has been mentioned in respect of these clearances which are made by or on behalf of a manufacturer from one or more factories. we find that there is no warrant to read notification as pleaded by shri taleyar khan, the learned advocate.7. the next question to be considered is whether once base clearances have been fixed by the assistant collector, the same can be revised by him. it is seen the intimation to the appellants was sent in regard to the change in the base clearances figures by the superintendent on 19.8.1978 asking them to pay full duty till limit of 227787 kgs was crossed. although it was indicated in this letter that the audit had pointed out that the base clearances were erroneously fixed earlier as the same should have been fixed under para 2(2)(c) of the notification.8. it is observed that changing the base period figures fixed has the effect of demanding more duty from the appellants. it is not denied that the demand could be raised in terms of rule 10 of the central excise law. all that is required is that a show cause should be issued under the relevant provisions of law for less charge demand. the limited power of review has been conceded by the appellants' advocate also. it is precisely for this purpose that provisions regarding the recovery of short levy had been made in the law. a wrong fixation of base clearances done which could be due to wrong interpretation of the provisions of the notification or due to arithmetics error cannot be allowed to remain unrectified in perpetuity.9. we hold, therefore, that the demand of duty was not without jurisdiction. the question, however, remains as to which communication could be considered as the show cause notice for the purpose of the demand against the appellants. it is observed that the superintendent had addressed a letter to the appellants on 19.8.1978 communicating the discrepancy pointed out by the audit and informed that the base clearance would be 2,27,737 kgs. the appellants sent a reply to the same vide letter dated 22.8.78 and submitted that they failed to understand as to how the arbitrary figures 2,27,737 kgs. has been arrived at. further communication was sent from the office of the superintendent vide letter dated 31.8.78 pointing out that the earlier figure was erroneously fixed and the appellants attention was drawn to the relevant para of the notification under which the revised figures of the base clearance had been arrived at. by this letter they were directed to pay the duty at the full rate till the limit of 2,27,787 kgs. was reached. the appellants sent a further communication on 4.9.78 contesting the re-fixation of the base clearance. it is seen that the communication of the superintendent to the appellants upto this point of time were for paying duty and these cannot be taken to be in the nature of a show cause notice. it was only vide communication of 23.11.78 that the appellants were given a regular show cause notice calling upon them to show cause as to why duty demand based on base clearance of 2,27,787 kgs. should not be demanded. rule 10(2) was also sought to be invoked. however, after a reply from the appellants this show cause notice was amplified calling upon the appellants to show cause as to why base clearance fixed should not be refixed. it is seen that the show cause notice for demand with reference to base clearance as 2,27,787 kgs. under the rules was issued on 23.11.78 and further amendment of the same calling upon the appellants as to why the base clearance fixed earlier should not be revised can be considered only in the nature of corrigendum to the said show cause notice. we, therefore, hold that the show cause notice issued on 23.11.78 is the relevant one for the purpose of time limit 'for raising the demand. inasmuch as the facts regarding the change in the ownership of the firm before the base clearance was fixed, were within the knowledge of the departmental authorities, the demand can be limited only to six month period to the issue of this is cause notice. the appeal is therefore, partially allowed in the above terms.

Judgment:
1. This is an appeal against the order of the Collector (Appeals) Central Excise, Bombay.

2. The brief facts of the case as set out in the Order-in-Original are as under: "M/s Rawji Amarsi (a partnership firm) were engaged in the manufacture and sale of Phenolic Moulding Powders and Synthetic resins under their Brand name 'Amarite' in their factory at Majiwade, Thane since 1962. Under a lease agreement executed by M/s Rawji Amarsi with M/s Western Bengal Coal Fields Ltd. (herein after referred as the party) the factory at Majiwade along with the business of the firm was leased to the latter (the party) for a period of five years, effect from 1.6.74. M/s Western Bengal Coal Fields Ltd. continued the manufacture and sale of phenolic moulding powders (herein after referred as the goods) under the same brand-name of 'Amarite' at the same factory. Pending issue of Loan Licence in their own favour for manufacture of Synthetic Resins and the goods at the factory of M/s Rawji Amarsi, 44865 Kgs. of goods was manufactured at the factory during June, 1974 to July 1974 and was cleared separately in the name of M/s Rawji Amarsi during the period from August, 1974 to August, 1975. From 1.8.74 the party started" the manufacturing and clearing the same product with the same Brand name 'Amarite' on their own. The goods and the Synthetic Resins were classified under T.I. 15A(1) and the benefit of notification No. 198/76 dated 16.6.76 (herein after referred as the notification was available for these goods. The then jurisdictional Assistant Collector fixed the base quota in terms of the notification for the period from 1.8.74 onwards ignoring the clearances of the same product from the same factory by or on behalf of M/s Rawji Amarsi." The base clearances were fixed at 111789 kgs. It was pointed out by audit that the clearances of the specified goods from the factory took place when the factory was in existence prior to 1973 and the specified goods were being manufactured and cleared even for the year 1974 and 1975. The base clearance should have been fixed in terms of para 2(2)(c) of the notification, that is, by talking the average of the clearance made during the previous three years. Accordingly, base clearances were refixed by the Assistant Collector at 227787 kgs and demands were raised for the duty short paid on the basis of the base clearances fixed earlier at 111789 kgs. The Collector (Appeals) upheld the order of the lower authority for the duty demanded and held the relevant criteria for the purpose of base clearances under notification No. 198/76 is the date of first clearance from the factory in terms of Clause 2(2)(c) of the notification.

2a. Shri Taleyar Khan, the learned advocate for the appellant pleaded the issue basically related to the interpretation of notification No.198/76. He has pleaded that it is not denied that the factory of the appellant was first owned by M/s Rawji Amarsi upto 1974 when on 9.4.74 the previous owners leased the factory to the appellants under an agreement. After the lease, the previous owners ceased to have any connection with the manufacturing activity-and the appellants alone were concerned with the business and they had been given a Central Excise Licence from 1.8.74 and they started paying duty on the goods manufactured from that date. The base clearance in terms of Notification No. 198/76 were fixed under para 2(2)(b) of the notification as claimed by the appellants and the base clearances were fixed by the Order dated 9.2.77 passed by the competent authority and the appellants claimed concessional assessment in respect of clearances in terms of notification 198/76 based on the base clearance fixed. He stated that the Superintendent has subsequently addressed a letter that on account of audit objection, their base clearance should be fixed under para 2(2)(c), that is, taking into account the first clearances from the factory having been made before 1974 and the average of clearances for the year 1974, 1975 and 1976 was intimated to be the base clearance and a show cause notice was issued in this regard on 27.3.1979. He pleaded on being pointed out by the appellants that base clearances once fixed could not be changed by the Assistant Collector, a Corrigendum to the show cause notice was issued on 27.3.79 and the appellant was asked to explain as to why the lease clearance should not be changed. His plea is that the Assistant Inspector had no power to review fixation of the base clearances fixed earlier. He further pleaded that unless base clearances could be Be-fixed under the provisions of the law, the Assistant Collector had no authority to change the base clearances. He pleaded that if at all the Assistant Collector had any power of review in this regard, he had only a limited power which could be exercised in case there, was change in law or change in tariff entry or there was pronouncement of law by the Supreme Court or some fresh facts had come up. He stated that the Department was in possession of all the facts regarding lease of the factory to the appellants from the previous owners and therefore the Assistant Collector had no power for fixing the base clearances. His plea is that unless base clearance could be legally refixed no demand would lie. He stated that as demand was raised after six months period, a part of the demand would be out of time even if these are held to be maintainable under the law.

3. Smt. Chander, the learned JDR, pleaded that we have to go by plain reading of the notification and the notification should be read as such. She pleaded that the specified goods cleared were the same and of the same brand as manufactured by the previous owners who gave the appellants the factory on lease. She pleaded that the Superintendent after the audit objection was raised, sent a letter to the appellants on intimating that the benefit under notification 198/76 could be availed of by them only on crossing the limit of 227787 kgs. She pointed out the base clearances had to be in terms of para 2(2Xc) of the said notification and demand is restricted to six months from this date of the letter. She pleaded that the show cause notice was issued on 23.11.78 and this was in continuation of the intimation regarding base clearances sent under the letter of the Superintendent dated 19.8.1978. She also pleaded that a_ Corrigendum was issued later. She pleaded that the show cause notice issued on 27.3.1979 was a Corrigendum to the show cause notice originally issued for the purpose of revising the base clearances did not tantamount to the issue of any fresh proceedings. It was in continuation of the same. She pleaded that the Assistant Collector had the power to review base clearances fixed earlier. She pleaded that the time for raising the demand should be reckoned from the issue of letter by the Superintendent first written in this regard.

4. In reply Shri Taleyar Khan stated that para 2 of the said notification only was a machinery provision "and the scope of the notification is to be read with -reference to the first para of the notification. In this connection he drew attention of the Bench to the opening para of the said notification which is reproduced for convenience of reference : "In exercise of the power conferred by Sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts the excisable goods of the description specified in column (3) of the Table hereto annexed (hereinafter referred to as the specified goods) and falling under such Item Number of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), as are specified in the corresponding entry in column (2) of the said Table and cleared from one or more factories in excess of the base clearances by or on behalf of a manufacturer, from so much of the duty of excise leviable thereon under the said item (read with any relevant notification issued under the Sub-rule (1) of rule 8 and in force for the time being), as is in excess of seventy-five per cent of such duty, subject to the following' conditions, namely: (a) the clearances made during any financial year shall be separately calculated for all the goods specified in column (3) of the said Table against each serial number specified in the corresponding entry in column (1) thereof on the basis of the accounts maintained under the Central Excise Rules, 1944, in terms of the unit-for calculation specified in the corresponding entry in column (4) of the said Table: (b) the clearances of any specified goods, exempted from the whole of the duty leviable theron in any financial year shall not be taken into account; but clearances of any specified goods under bond for exports or clearances of any specified goods entitled for exemption; when used in the production or manufacture of any other goods shall be taken into account; (i) any goods which were exempted from the whole of the duty leviable thereon in the base period but not so exempted in any financial year subsequent to the base period, shall not be entitled to any exemption from duty or be taken into account for calculating the excess clearances; (ii) any goods which were not exempted from the whole of the duty leviable thereon in the base period but are so exempted in any financial year subsequent to the base period, shall be taken into account for calculating the excess clearances; (c) if the Central Government is satisfied that there has been a substantial alteration in the pattern of clearances in any financial year subsequently to the base period in respect of any specified goods as compared to the pattern of clearances in respect of such goods in the base period and there has been no reasonable cause for such alteration, it may, after giving the manufacturer concerned a reasonable opportunity of making representation in the matter, by order, disallow the exemption. Explanation 1.

(a) In determining the excess clearances in a financial year over and above the base clearances, such excess shall, except as provided in clause (b), be calculated in terms of weight, number of volume where such weight, number or volume has been specified in column (4) of the said Table against the serial number specified in the corresponding entry in column (1) thereof; (b) where value as specified in column (4) of the said Table against the serial number specified in the corresponding entry in column (1) thereof is to be applied for determining the excess clearances in a financial year over and above the base clearances, such value shall be calculated:- (i) in a case where an article similar to the specified goods was produced in the base period, by adopting the value that prevailed in the base period in respect of such article and where in respect of such article the value has been varying in the base period, by adopting the average of the values; (ii) in any other case, by adopting the value that is applicable in respect of the article on the date of clearance.

Explanation 2. In this paragraph, unless the context otherwise requires, "value" means the value as determined under Section 4 of the Central Excises and Salt Act, 1944 (1 of 1944) or, as the case may be, according to the tariff values fixed or altered under Section 3 of the said Act." He stressed that the benefit of the notification is made available in respect of a manufacturer and therefore the base clearance should be fixed with reference to the clearances made by a particular manufacturer.

5. The first point to be disposed of in the proceedings before us is as to whether the benefit of notification is to be worked out based on the base clearances fixed with reference to the clearances made by a particular manufacturer as pleaded by Shri Taleyar Khan, the learned advocate of the appellant or based on the first clearances of specified goods made from a factory. It is seen that the exemption in respect of specified goods set out in the Table to the Notification is in respect of those goods which are cleared from one or more factories by or on behalf of a manufacturer subject to the other conditions in the notification. It is seen that the word by or on behalf of a manufacturer relate to the excess clearances made from one or more factories. This means that if a particular manufacturer clears the goods himself or clearances are made on his behalf from one or more factories all his clearances from said factory would be taken into reckoning for working out the excess. From this para we cannot, however, read that the base clearances should also be in respect of manufacturer. For the fixation of the base clearances a clear criterion has been laid out in Explanation 2. In the Explanation 2, the base clearance is required to be fixed with reference to a factory and the goods cleared therefrom during different periods.

6. The learned advocate has pointed out while the opening para refers to the quantum of exemption given in respect of clearance made by a manufacturer, para 2 in the nature of machinery section lays down basis which would determine the excess clearance. The machinery section cannot be given the meaning other than what can be read in the wording of the said para. Para 2 of the notification clearly sets out that for the purpose of working out the base clearance, clearances from the factory as such have to be taken into consideration. This would mean that notwithstanding the fact that clearances at different times have been made by different manufacturers so long as the specified goods have been cleared from the factory during the periods specified in para 2 of the notification, these clearances for the purpose of fixing base clearance will have to be taken into recknoning. We cannot read the words cleared by a manufacturer from the factory in para 2 just because in the opening para of the notification, the eligibility criteria for excess clearance has been mentioned in respect of these clearances which are made by or on behalf of a manufacturer from one or more factories. We find that there is no warrant to read notification as pleaded by Shri Taleyar Khan, the learned advocate.

7. The next question to be considered is whether once base clearances have been fixed by the Assistant Collector, the same can be revised by him. It is seen the intimation to the appellants was sent in regard to the change in the base clearances figures by the Superintendent on 19.8.1978 asking them to pay full duty till limit of 227787 kgs was crossed. Although it was indicated in this letter that the audit had pointed out that the base clearances were erroneously fixed earlier as the same should have been fixed under para 2(2)(c) of the notification.

8. It is observed that changing the base period figures fixed has the effect of demanding more duty from the appellants. It is not denied that the demand could be raised in terms of Rule 10 of the Central Excise Law. All that is required is that a show cause should be issued under the relevant provisions of law for less charge demand. The limited power of review has been conceded by the appellants' advocate also. It is precisely for this purpose that provisions regarding the recovery of short levy had been made in the law. A wrong fixation of base clearances done which could be due to wrong interpretation of the provisions of the notification or due to arithmetics error cannot be allowed to remain unrectified in perpetuity.

9. We hold, therefore, that the demand of duty was not without jurisdiction. The question, however, remains as to which communication could be considered as the show cause notice for the purpose of the demand against the appellants. It is observed that the Superintendent had addressed a letter to the appellants on 19.8.1978 communicating the discrepancy pointed out by the Audit and informed that the base clearance would be 2,27,737 kgs. The appellants sent a reply to the same vide letter dated 22.8.78 and submitted that they failed to understand as to how the arbitrary figures 2,27,737 kgs. has been arrived at. Further communication was sent from the office of the Superintendent vide letter dated 31.8.78 pointing out that the earlier figure was erroneously fixed and the appellants attention was drawn to the relevant para of the notification under which the revised figures of the base clearance had been arrived at. By this letter they were directed to pay the duty at the full rate till the limit of 2,27,787 kgs. was reached. The appellants sent a further communication on 4.9.78 contesting the re-fixation of the base clearance. It is seen that the communication of the Superintendent to the appellants upto this point of time were for paying duty and these cannot be taken to be in the nature of a show cause notice. It was only vide communication of 23.11.78 that the appellants were given a regular show cause notice calling upon them to show cause as to why duty demand based on base clearance of 2,27,787 kgs. should not be demanded. Rule 10(2) was also sought to be invoked. However, after a reply from the appellants this show cause notice was amplified calling upon the appellants to show cause as to why base clearance fixed should not be refixed. It is seen that the show cause notice for demand with reference to base clearance as 2,27,787 kgs. under the Rules was issued on 23.11.78 and further amendment of the same calling upon the appellants as to why the base clearance fixed earlier should not be revised can be considered only in the nature of corrigendum to the said show cause notice. We, therefore, hold that the show cause notice issued on 23.11.78 is the relevant one for the purpose of time limit 'for raising the demand. Inasmuch as the facts regarding the change in the ownership of the firm before the base clearance was fixed, were within the knowledge of the departmental authorities, the demand can be limited only to six month period to the issue of this is cause notice. The appeal is therefore, partially allowed in the above terms.