$1 = first parameter from the command line
echo $123
is equal to
echo -n "$1"
echo -n "23"
and if the parameter $1 is empty then it is equal to
echo "23"
In other words you are EXECUTING the string.
Hints how to solve this problem:
You have probably hardcoded this. Modify the line to:
echo '$123' | cut -c 1-10
You should probably keep this '$123' in some variable - then usage will be different