Customs, Excise and Gold Tribunal - Delhi
National Radio And Electronics Co. Ltd. vs Collector Of C. Ex. on 21 April, 1992
Equivalent citations: 1992(62)ELT168(TRI-DEL)
ORDER Harish Chander, Vice President 1. M/s. The National Radio and Electronics Company Ltd., Bombay, have filed the above-captioned appeals being aggrieved from the order passed by Collector of Central Excise (Appeals), Bombay. The applicants have also filed the above-captioned Miscellaneous applications making a prayer for amendment of grounds of appeal. The Miscellaneous applications are supported with affidavits duly sworn before Notary Public. Since the issue involved is common in both the Miscellaneous applications and as such the same are being disposed of by this common order. 2. Shri Hidayatullah, the learned senior Advocate, has appeared on behalf of the applicants. He reiterated the contentions made in the application for amendment of the ground of appeal and also statement of facts. He drew the attention to Annexure-A which is to be added after paragraph 2 of the statement of facts and Annexure-B which relates to ground of appeal No. B, to be inserted after ground of appeal No. B. Shri Hidayatullah referred to exhibit-B attached with the appeal memo which is also the appeal memo filed before Collector (Appeals). He pleaded that on internal page 10 appears the ground of appeal No. 5 which appears on internal page 5 of appeal memo filed before Collector (Appeals) and the appellants have agitated that "the Assistant Collector failed to appreciate that an uninterrupted power supply system as such is immovable property and not goods at all and that, therefore, no excise duty could in law be imposed or charged on the same". He also drew the attention of the Bench to the order passed by Collector (Appeals) which is exhibit 'C of the appeal memo and the Collector (Appeals) has not given any finding. Shri Hidayatullah argued that inadvertently this ground of appeal could not be taken up due to oversight. He argued that in other appeals, for example, appeal Nos. 2328, 2329/88-A, this ground of appeal No. 5 relating to the immovable property was duly taken. He pleaded for grant of permission for raising the additional ground of appeal. In support of his argument, he cited a decision in the case of General Electro Mechanical Industries v. Collector of Central Excise, Pune, reported in 1987 (32) E.L.T. 785 (Tribunal) and laid special emphasis on para 6 of the judgment. Shri Hidayatullah further stated that his arguments for both the Miscellaneous applications are the same and prayed for permission to raise the additional ground of appeal. 3. Shri Prabhat Kumar, the learned JDR, has appeared on behalf of the respondent and opposed the grant of permission for raising the additional ground of appeal. He argued that the excisability is a matter of classification and if this ground of appeal is allowed the appellants will be reopening the classification issue and it is not a pure question of fact. He pleaded for the rejection of the applications for grant of permission for raising additional ground of appeal. In reply, Shri Hidayatullah referred to the tariff and argued that parts of components fell under Tariff No. 85.37. He pleaded that bought out items are erected at site and valuation and classification are of no consequence. He also referred to the price lists filed by the appellants. He pleaded for the allowing of the Miscellaneous applications. 4. We have heard both the sides and have gone through the facts and circumstances of the case. We have also perused the Annexures 'B' and 'C' attached with the appeal memo. Annexure 'B' is a form and part of the appeal memo which is filed before Collector (Appeals). The appellants have raised the same ground before the Collector (Appeals). We have also perused the decision of the Collector (Appeals) which is the impugned order before us. The Collector (Appeals) while disposing of the appeal has not given any finding in respect of this ground of appeal No. 5. Hon'ble Supreme Court in the case of The Commissioner of Income Tax v. Hardutroy Motilal Chamaria reported in AIR 1968 Supreme Court 153 had held as under :- "The Appellate Assistant Commissioner has no jurisdiction under Section 31(3) of the Act, to assess a source of income which has not been processed by the Income-tax Officer and which is not disclosed either in the returns filed by the assessee or in the assessment order, and therefore the Appellate Assistant Commissioner cannot travel beyond the subject matter of the assessment. In other words, the power of enhancement under Section 31(3) of the Act is restricted to the subject matter of assessment or the sources of income which have been considered expressly or by clear implication by the Income-tax Officer from the point of view of the taxability of the assessee." In the matter before us, the Collector (Appeals), has not come with any finding on this ground of appeal. 5. Hon'ble Andhra Pradesh High Court in the case of Commissioner of Income-tax v. Gangappa Cables Ltd., reported in 116 ITR 778 had held as under :- "The Appellate Tribunal disposing of an appeal under the I.T. Act has got the power to allow the assessee to put forward a new claim, notwithstanding the fact that such a claim was not raised by him before the I.T.O. or the A.A.C., provided there is sufficient material on record to allow such a claim. The assessee, for the first time, raised a plea in second appeal before the Appellate Tribunal that the expenditure incurred by the assessee before it went into commercial production was an admissible deduction for the purpose of Section 80J(I) of the I.T. Act. The revenue resisted the claim on the ground that the said claim having not been put forward by the assessee before the I.T.O. or the A.A.C., it could not be raised in second appeal. The Tribunal held that the directors' report accompanied by balance-sheet and profit and and loss account and other statements were filed by the assessee before the I.T.O. and practically all the details for allowing a claim under Section 80J(I) of the Act were on record and hence it was open to the Tribunal to allow such a claim. On a reference: Held, that the Tribunal was correct in allowing the claim of the assessee as there was material on record for allowing the same." 6. Hon'ble Patna High Court in the case of Hindustan Malleables and Forgings Ltd. v. Commissioner of Income-tax, reported in 191 ITR 110 had held as under :- "...it is not necessary to examine the cases in detail. In my view, the ambit of the jurisdiction of the Tribunal with regard to entertainment of a new ground raised for the first time before it has been well-defined by the Supreme Court in the case of C.I.T. v. Mahalakshmi Textile Mills Ltd. 1967 (66) ITR 710 in which it has been held that "There is nothing in the Income-tax Act which restricts the Tribunal to the determination of questions raised before the departmental authorities. All questions, whether of law or of facts, which relate to the assessment of the assessee, may be raised before the Tribunal"." 7. Hon'ble Supreme Court in the case of Smt. Ganga Bai v. Vijay Kumar and Ors., reported in AIR 1974 SC 1126 had held in para 22 as under :- "The power to allow an amendment is undoubtedly wide and may at any stage be appropriately exercised in the interest of justice, the law of limitation notwithstanding. But the exercise of such far-reaching discretionary powers is governed by judicial considerations and wider the discretion, greater ought to be the care and circumspection on the part of the Court." 8. In the matter before us the additional ground of appeal has been taken before us and the same can be disposed of without having recourse to any additional evidence. In view of the latest decision of the Patna High Court in the case of Hindustan Malleables and Forgings Ltd. v. Commissioner of Income-tax (supra) and Commissioner of Income-tax v. Gangappa Cables Ltd. (supra), we are of the view that the appellants were prevented by sufficient cause in not raising this ground of appeal earlier. We order that after statement of facts, as set out in Annexure 'A' to the Miscellaneous application should be added after paragraph 2 of the statement of facts at page 8 of the appeal and before paragraph 3. Paragraphs 2A, 2B, 2C, 2D, 2E and 2F should be added as mentioned in Annexure 'A'. After ground of appeal B of the grounds of appeal and before ground of appeal No. C, ground of appeal No. B1 should be inserted as shown in Annexure 'B'. 9. In the result, the Miscellaneous applications are allowed. S.L. Peeran, Member (J)
10. I have gone through the order prepared by learned Vice-President (as he then was) now President and I would like to add the following paragraphs.
11. Shri Prabhat Kumar, learned D.R. has raised a very important question in this matter i.e. that the ground now sought to be introduced by the appellants, is a question of excisability and classification which has not been raised at the time of filing the classification list nor at the time of filing the price list. The appellants had admitted the goods to be excisable and had been clearing the same on payment of duty. In the various price lists filed by them, they had claimed deduction on account of the certain charges viz. Engineering and design charges, documentation and technical charges, installation and commissioning charges, packing and forwarding charges, brought out items like battery charges etc. However, the Asstt. Collector rejected the said claim for deduction relying on the Supreme Court decision in Union of India v. Bombay Tyres International Ltd. 1983 (14) E.L.T. 1896 (S.C.) . The Collector (Appeals) upheld this ruling of the Asstt. Collector on the price list filed by the appellants. Therefore, the learned DR had submitted that the appellants cannot be permitted to raise a ground which is totally new and which would change the cause of action completely in the face of approved classification list and the point not having been raised at the time of consideration of price list before the Assistant Collector. This is a well-founded argument of learned D.R. and the law pertaining to amendment of pleadings is very clear as has been held by the Supreme Court in the case of A.K. Gupta & Sons Ltd. v. Damodar Valley Corporation [AIR 1967 SC 96] in paras 7 to 10 which are reproduced below -
"It is not in dispute that at the date of the application for amendment, a suit for a money claim under the contract was barred. The general rule, no doubt, is that a party is not allowed by amendment to set up a new case or a new cause of action particularly when a suit on new case or cause of action is barred.
Weldon v. Neale 1987 (19) Q.B.D. 394 . But it is also well-recognised that where the amendment does not constitute the addition of a new cause of action or raise a different case, but amounts to no more than a different or additional approach to the same facts, the amendment will be allowed even after the expiry of the statutory period of limitation - see Charan Das v. Amir Khan 47 Ind App 255 : AIR 1921 PC 50 and L.J. Leach and Co. Ltd. v. Jardine Skinner and Co. (1957 SCR 438 : AIR 1957 S.C. 357) .
8. The principal reasons that have led to the rule last mentioned are first, that the object of Courts and rules of procedure is to decide the rights of the parties and not to punish them for their mistakes [ Cropper v. Smith (1884) 26 Ch D 700 (710-711) and secondly, that a party is strictly not entitled to rely on the statute of limitation when what is sought to be brought in by the amendment can be said in substance to be already in the pleading sought to be amended [ Krisandas Rupchand v. Rachappa Vithoba 1909 ILR 33 (Bom) 644 at p. 651 approved in Pirgonda Hongonda Patil v. Kalgonda Shidgonda 1957 SCR 595 (603) : AIR 1957 SC 363 at p. 366].
9. The expression 'cause of action' in the present context does not mean 'every fact which it is material to be proved to entitle the plaintiff to succeed' as was said in Cooke v. Gill (1873) 8 CP 107 (116) in a different context, for if it were so, no material fact could ever be amended or added [and, of course, no one would want to change (sic)] or add an immaterial allegation by amendment. That expression for the present purpose only means a new claim made on a new basis constituted by new facts. Such a view was taken in Robinson v. Unicos Property Corporation Ltd. 1962-2 All E.R. 24 , and it seems to us to be the only possible view to take. Any other view would make the rule futile. The words 'new case' have been understood to mean 'new set of ideas'.
Doman v. J.W. Ellis and Co. Ltd. 1962-1 All ER 303 . This also seems to us to be a reasonable view to take. No amendment will be allowed to introduce a new set of ideas to the prejudice of any right acquired by any party by lapse of time.
10. Now how does the present case stand of these principles. Does the amendment introduce a new cause of action or a new case. We do not think it does. The suit was on the contract. It sought the interpretation of a clause in the contract only for a decision of the rights of the parties under it and for no other purpose. It was the contract which formed the cause of action on which the suit was based. The amendment seeks to introduce a claim based on the same cause of action that is, the same contract. It introduces no new case of facts. Indeed the facts on which the money claim sought to be added is based are not in dispute. Even the amount of the claim now sought to be made by amendment was mentioned in the plaint in stating the valuation of the suit for the purpose of jurisdiction. The respondent had notice of it. It is quite clear that the interpretation of the clause was sought only for quantifying the money claim. In the written statement the respondent specifically expressed its willingness to pay the appellant's legitimate dues which could only mean such amount as might be due according to the rates applicable on a proper interpretation of the clause. The respondent was fully aware that the ultimate object of the appellant in filing the suit was to obtain the payment of that amount. It was equally aware that the amount had not been specifically claimed in the suit because the respondent had led the appellant to believe that it would pay whatever the court legitimately found to be due. It in fact said so in the written statement. If there was any case where the respondent was not entitled to the benefit of the law of limitation, the present is that one. The respondent could not legitimately claim that the amendment will prejudicially affect his right under that law for really he had no such right. It is a case in which the claim for money was in substance in the plaint from the beginning though it had not formally been made".
This was the view which had also been expressed earlier by the Supreme Court in the case of L.J. Leach and Co. Ltd. and Anr. v. Jardine Skinner & Co. (AIR 1957 SC 357) has held in para 16 as under -
"It is no doubt true that Courts would, as a rule, decline to allow amendments, if a fresh suit on the amended claim would be barred by limitation on the date of the application. But that is a factor to be taken into account in exercise of the discretion as to whether amendment should be ordered, and does not affect the power of the Court to order it, if that is required in the interests of justice. In Charan Das v. Amirkhan 47 Ind App 255 : AIR 1921 PC 5 (A) the Privy Council observed:
"That there was full power to make the amendment cannot be disputed, and though such a power should not as a rule be exercised where the effect is to take away from a defendant a legal right which has accrued to him by lapse of time, yet there are cases where such considerations are outweighed by the special circumstances of the case".
Vide also Kisan Das v. Rachappa ILR 33 Bom. 611 (B) ."
12. The Tribunal also took a similar view in the case of Merinoply & Chemicals Ltd. v. Collector [1988 (35) E.L.T. 654] in para 2 which is as under -
"The appellants have now pleaded that the sanding machine imported by them came without the two standard belt drive motors of 22 kw each and that is why their import price was low. Since the fresh plea is a plea of fact which was never taken at the earlier stage and hence not subjected to verification by the authorities, the same cannot be allowed to be taken before the Tribunal at the belated stage."
13. In the case of Chandras' Chemical Industries (Pvt.) Ltd. v. Collector of C. Ex. [1992 (57) E.L.T. 110] the learned Member (Technical) had held in para 9 as follows -
"We have examined the provisions of Rule 173B in para 6. We notice that there is no provision in the law by which a classification list, which is once approved can be reopened except by way of appeal under Section 35 by the assessee or under Section 35E by the departmental authorities. The other provisions by which the approval of the classification list can be called into question indirectly are those relating to recoveries and refunds, but in such cases the starting point of the action would have to be within the time limits prescribed therein under Sections 11A and 11B respectively by invoking those provisions and indicating in the demand notice/refund claim how the circumstances stipulated therein exist. It is an admitted fact that in the present appeal, action has not been initiated under any of these provisions."
14. The position of law is very clear that the appellants not having challenged the approval of classification list till date, cannot be permitted to raise this issue in an appeal pertaining to an issue raised in appeal before Collector (Appeals) pertaining to approval of price list. In case the appellants' plea is allowed, then the Revenue would be put to serious hardship in as much as, the appellants' plea is likely to be considered at a different stage without the basic facts having been taken into consideration.
15. However, in this particular case, a peculiar circumstance has arisen in as much as that the appellants' plea pertaining to this excisability was considered by the learned Collector (Appeals) in other connected appeals and their contention was allowed. As the President has noted that it is only in this particular appeal, they had not taken such a plea before us in appeal Memo although they raised it before the Collector (Appeals). In view of this peculiar circumstance, I agree with the reasoning given by the learned President to allow the appellants to raise this ground. However, I make it clear that the Revenue may take such defences as are available in law to contest this ground at the tune of hearing of the main appeal.