Customs, Excise and Gold Tribunal - Delhi
Macneill And Magor Ltd. vs Collector Of Customs on 29 September, 1986
Equivalent citations: 1986(10)ECC239, 1986ECR642(TRI.-DELHI), 1987(27)ELT129(TRI-DEL)
ORDER S. Duggal, Member (J)
1. This is a revision petition, which is directed against an order passed by the Collector of Customs, Calcutta, on 8-8-1977, in exercise of power under Section 130 of the Customs Act, 1962, as then existing, whereby he revised the orders of assessment, made on three Bills of Entry at the time of clearances, in respect to the goods imported by the appellants herein. The said revision petition has been registered as if it were an appeal filed before the Tribunal in view of the provisions of Section 131B(2) of the said Act. The review was undertaken on the charge of mis-declaration of the value of the goods as well as non-declaration of some quantity, resulting in short levy of Customs, and related duties.
2. The importer, in the first instance, was 'M/s Macneill & Barry Ltd.' but, by the time the review notice was issued, the name of the company had changed over to 'M/s Macneill & Magor Ltd.. The order was passed against this substituted Company, and the same is now the Appellant before us.
3. The appeal, which was originally a revision petition, sets out in detail the dates of import and clearances of the goods, which are the subject-matter of these proceedings; which dates have been shown to be falling between the period: May 1975 to July 1975, covering all the three consignments of 'Glacier thin walled bearings.' Besides repudiating the allegations on merits, there is also a challenge to the competence of the Collector of Customs to exercise powers under Section 130(2) of the Customs Act, on the plea that no decision or order, passed by the officers of Customs, can be revised under Section 130(2) of the Act by the concerned authority on its own motion, after expiry of two years from the date of such a decision or order. It is contended that in the instant case, the Collector,' in purported exercise of powers under the said Section, passed the order in review, revising the order or decision of the Customs officer assessing the duty on the imported consignments long after the expiry of two years from the date of such a decision or order. The order, having been passed after the statutory period of limitation set out for the purpose, is, thus, pleaded to be without jurisdiction and a nullity.
4. It is also contended that on the allegations, as set out in the review notice, it was a case of short-levy and, as such, a notice could appropriately be issued under Section 28 of the Customs Act, for which the time-limit was six months from the date of payment of duty; which period, as already stated, fell between May 1975 to July 1975 and, as such, the notice, issued on 24-1-1977, was barred under Section 130 read with Section 28 of the Act.
5. When this appeal was taken up for effective hearing on 15-1-1986, Shri R.N. Bajoria, Senior Advocate, while commencing his arguments, pressed this point of limitation as the very first point in his arguments, and prayed that this question of law be decided first, as a preliminary issue. The Bench accepted this plea by confining, in the first instance, only to this point of law, but adjourned the hearing to a later date for certain clarifications as to the exact date of clearances in respect to the three consignments in dispute in this case. Whereas the appellants furnished documentary evidence, to which we shall advert during the course of discussions, the Departmental Representative had not supplied any information in this regard, although it was at the instance of Shri P.K. Ajwani, SDR, that the adjournment was granted to enable him to seek information in this respect. Eventually, arguments were heard only on this point and we propose, in this order, to confine only to the said point of law, canvassed by the appellants and repelled by the respondent.
6. Shri Bajoria, the learned Counsel, stated that the plea of the appellants, submitted in reply to the show cause notice, and reiterated in the grounds of appeal, to the effect that the clearances in these cases were effected during May 1975 to July 1975, has not been controverted by record. On the other hand, the appellants have furnished evidence from the 'Job Register' of the appellants, supplied under cover of their letter dated 2-2-1986, indicating that octroi in respect to the said three consignments was paid by the appellants and the goods were, in fact, received at their godown on 28-5-1975, 19-6-1975 and 9-7-1975, respectively. Shri Bajoria submitted that the dates of clearances have to be taken to be the dates, prior to these three aforesaid dates of receipt of the goods in the appellants' godown and, consequently, it has to be taken as an uncontroverted fact that the relevant orders, as to the assessment of duty, were passed in this case during the months of May, June and July, 1975.
7. He contended that the wording of Section 130(2), as existing prior to its amendment w.e.f. 1-7-1978, clearly provided that an order under this provision in exercise of suo-motu powers had to be passed within two years of the passing of the order sought to be revised, and that there was an embargo on the powers of the concerned authority, to pass an order after expiry of two years from such an order, on its own motion. He gave a comparative reading of Section 130 of the Act as it existed prior to. 1978, and subsequent thereto, and pointed out that a further distinction has been maintained as to the available limitation when a power is exercised suo-motu, as distinguished from the exercise of such a power on an application being made by the affected party. Shri Bajoria argued that this was by design and that where an application for revision is moved by a party; then the limitation set out is vis-a-vis the point of time of making of such an application, whereas in the case of suo-motu exercise, the emphasis was on the finalisation of the proceedings and passing of the final order. He relied in support of this contention on an earlier order passed by the Tribunal in the case of Anglo India Jute Mills Co. Ltd. v. Collector of Customs, Calcutta, vide Order No. 99/85-82 dated 13-7-1985 in Appeal No. CD(SB) (T) 97/76-B2, where the Tribunal has held, in very clear terms, that in case of sub-moto revision, the period of limitation prescribed under Section 130(2) of the Customs Act, as it stood prior to its amendment, was: "for passing of the order, and not for initiation of the proceedings." The learned Counsel submitted that the Tribunal having laid down the law expressly in this regard, the same view has to be adopted in the present case, and that the Order-in-Review dated 8-8-1977 was liable to be set aside on this short ground.
8. Shri Bajoria supported his argument in regard to the distinction between the date of passing of the order and the initiation of proceedings, incorporated in the Act prior-to its amendment, by referring to the amended provisions brought about by Act 25 of 1978, whereby the period of. limitation, which was earlier for completion of the proceedings and passing of the order, stood changed as the period of "commencement of the proceedings". He elaborated his point by reading from the Notes and Clauses in respect to the Customs & Central Excise (Amendment) Bill, vide Clause 14, explaining the purport and scope of the amendment, by stating that the said clause sought to substitute Section 130 of the Customs Act with a view to, inter alia, provide for the time limit for commencement of the proceedings, as in the Central Excises & Salt Act, and not for their finalisation. According to Shri Bajoria, this clearly implied that the earlier provision had reference only to the finalisation of the order and, apparently, because of some practical difficulties having arisen, the need for amendment was felt, and confine the time-limit only to initiation of the proceedings. He submitted that, as a corollary, the Act, as it stood prior to its amendment, has to be read to have laid down, in undisputable terms, that the final order in review should be passed before the expiry of two years from the date of the order sought to be revised and that, in this view of the matter, the order in this case having been passed' after a period of two years from the date of the respective assessment orders - last of which was, in any case, before 9-7-1975 -, was not sustainable.
9. Shri P.K. Ajwani, SDR, controverted the arguments by contending that the period of two years, as mentioned in Section 130(2) of the Act as it stood at the relevant time, was of a directory nature and could not be read as being mandatory. He drew a parallel by referring to the provisions of the Customs Act as well as the Central Excise Act, under which a statement of a case is required to be made by the Tribunal to a High Court within a given time, and cited a case decided by the Tribunal in respect to the provisions of Section 35G(1) of the Central Excises Act, reported in '1986 (23) ELT 4 59 (Tribunal)` in the case of Anna Match Works and Ors. v. Collector of Central Excise, Madras. According to the learned SDR, this was an analogous decision whereby the Tribunal has held that the period of time-limit of 120 days under Section 35G(1) of the said Act was directory and not mandatory inasmuch as that a reference, made by the Tribunal after 120 days of receipt of the application, when the Bench could not be constituted earlier for administrative reasons, could not be held to be invalid. He added that, in the same manner, once the proceedings have been initiated within two years, the mere fact that the order could not be passed within the said period, would not invalidate the order. Shri Ajwani further pointed out that, in this case, notice had been issued on 24-1-1977, i.e., well within two years, and that it was on account of appellants having sought adjournments from time to time that the hearing could be concluded on 6-8-1977, and thereafter, the order was passed on 8-8-1977, and that the appellants could not now take advantage of their own laches, and that principles of natural justice debar them from doing so.
10. The Departmental Representative also sought to distinguish the judgment of CEGAT in case of Anglo-India Jute Mills Co. Ltd. (supra), by pointing out that the Bench in that case did not take note of provisions of Section 131 of the Act where no time-limit had been set under Subsections (1) and (3) for passing of an order. He also referred to certain case-law arising out of Sales-tax matters and also provisions of the Income-tax Act, and made particular reference to a case decided by the Supreme Court, reported in 'AIR 1970 S.C. 311', in the case of Sales Tax Officer, Special Circle, Ernakulam and Anr. v. Sudarsanam lyenger and Sons,, and that of Madras High Court, reported in '1980 (46) STC 151', in the case of 'The State of Tamil Nadu v. K.D. Mohamed Sulaiman & Co.'.
11. He also argued that Sub-section (1) of Section 130 has a reference to Section 28(1) of the Act which implies that, in certain cases, even extended period was also available.
12. Shri Bajoria, in a short rejoinder, pointed out that Section 28, where extended period could be applied, referred only to the original authority and not to the revisionary, or appellate, authority, who have to act on records, and where there was no justification in imputing concealment or suppression: a situation contemplated in Section 28(1), for invoking a larger period. He also contended that wherever there was any intention to exclude time taken in the proceedings, while computing the period of limitation, the legislature provided so in clear terms. He referred to the provisions of Explanation 1 to Section 153, and the Explanation to Section 263 of the Income-tax Act, 1961, in this regard. He also contended that the period prescribed in the old Section 130(2) of the Act was of mandatory nature and operated as a fetter on the jurisdiction of the concerned authority to revise the order after expiry of the stipulated period, for which argument, he placed reliance on a Supreme Court decision in Income-tax matter reported as '1964 (53) ITR 231 S.C.' S.S. Gadgil v. Lal and Co. He further contended that the argument of inconvenience was not available to the Department when a clear period of limitation has been laid down because every law of limitation causes some hardship, as held by the Supreme Court in another Income-tax matter reported in '1959 (36) ITR 569 S.C.' Commissioner of Income Tax, Bombay, v. Ranchhod Das Karsondas.
13. He also argued that the analogy of the decision of the Courts in reference-matters did not apply because, there, the underlying idea was that once a party had made application within the stipulated time, then a simply because there were some laches on the part of the Court, or order could not be passed for some administrative reasons within the given time, the party could not be made to suffer by striking down the order of reference and that, in this context, the time-limitation has to be treated as directory. He argued that such was not the case where a Departmental authority undertakes a suo-moto review, or revision, of a matter decided by a subordinate officer and that it was not open to the Department to plead incapacity to conclude proceedings within the time set by law, when such a time had been clearly laid, and that it was for the Department to have been vigilant and to have initiated proceedings within such time; that even after reasonable opportunity had been given to the party to effectively meet the charge, a final order could be passed within the time, as provided by law. He also repelled the argument that the provisions of Section 131 of the Act would ha 'e a bearing in this regard as, according to him, same Section 131 was making a distinction between suo-moto power and exercise of power on application being made inasmuch as Sub-section (2) restricts the right of the party for making such an application to six months from the date of communication to the applicant of the order against which the application was being made, which period could be extended on sufficient cause being shown; whereas Sub-section (4), in given cases, laid down a period of one year for the passing of an order.
14. He also made extensive reference to the provisions of Income-tax Act to highlight his point, such as Section 338 of Income-tax Act, 1922, corresponding to Section 263 of the new Act and, similarly, Section 34(1) and Section 34(3) of the old Act, corresponding to Section 153 of the new Act, and argued that the Courts have repeatedly held that whenever there is a provision for the passing of the final order within a given time, that provision has to be treated as admitting of no exception, and relied in this respect on the case decided by Delhi High Court re: 'Lakshmi Insurance Co. Ltd. v. Commissioner of Income-tax, New Delhi' '1969 (72) ITR 474
15. Shri Bajoria, therefore, concluded that, in view of the plain provisions of Section 130(2) of the Act, as then prevailing, there was no escape from the position that the period of two years mentioned therein has reference to the finalisation of the proceedings and there was a clear bar for the passing of an order after the expiry of the period of two years, as contained therein.
16. On a careful resume of the facts & arguments set out above, we are inclined to uphold the contention of the appellants that the provisions of Section 130(2), as then existing, created a clear bar on the power of the Collector to pass an order in review, or revision, after the expiry of two years from the date of the passing of the order, sought to be reviewed. The wording of the Sub Section under reference having been couched in an imperative negative, it does not admit of any doubt in this regard, as it lays down that: "No decision or order passed by an officer of Customs shall be revised under this Section ... ".
17. This provision has already been examined at length by this Tribunal, after detailed consideration of every aspect urged before them in the case of Anglo-Indian Jute Mills Co. Ltd. (supra), with which we propose to respectfully agree. The Bench there, in contra-distinction to the exercise of such a power by the competent authority on application being moved; upheld the contention of the appellants therein that in cases of suo-moto revision of an order of a lower authority, the time-limit laid down in the relevant provisions' has reference to: "the passing of an order, or finalisation of the proceedings". This distinction was observed to be based on logic and reasonableness inasmuch as a private citizen could not have the same resources, power and organisation as the Government has and, thus, thought to be deserving of a more lenient treatment than what would be metted out to Government who are armed with all the powers and have entire machinery at their disposal; particularly when the machinery is moved on their own, on the basis of records, and no further material is to be gathered.
18. It is also pertinent to note that the aforesaid judgment of the CEGAT had been given a number of months before the date when this matter was argued before us but, apparently, no appeal had been, or was proposed to be, filed against the view taken by the Tribunal in the aforesaid case inasmuch as the Departmental Representative did not make any such statement. We can, therefore, assume that this view has been allowed to become final, so far as the Tribunal is concerned. Unless some strong reasons were shown to impel us to take a contrary view; ordinarily, we are not expected to even re-examine the issue.
19. In this case, no fresh arguments were advanced. As against that, the appellants have reinforced their arguments by a number of judgments in Income-tax and Sales Tax matters, and by making a cross-reference to the relevant provisions of the Income-tax Act which have already been mentioned in detail, while reproducing the arguments advanced on behalf of the appellants. The only judgment cited by the Departmental Representative, besides the judgment of the Tribunal in respect to the time-limit set under Section 35G(1) of the Central Excise Act, was a judgment of the Supreme Court in respect to Kerala Sales Tax Act, reported in 'AIR 1970 S.C. 311'.
20. We would first take up the Supreme Court judgment, and we find that the Hon'ble Court has, in fact, taken note of the situation by observing that: "It is undoubtedly open to the legislature- or the rule-making authority to make its intention quite clear that on the expiry of a specified period no final order of assessment can be made...." It was held by their Lordships that, if that is the case, then the taxing authorities: "would certainly be debarred from completing the assessment beyond the period prescribed as were the case in Sub-section (3) of Section 34 of the Income-tax Act, 1922". It was because of the fact that in the case before the Hon'ble Supreme Court, such was not the case, in so far as the relevant terms of the Kerala Sales Tax Act did not contain any such positive prohibition, that it was held that when assessment proceedings have been undertaken in time, the assessment order was not open to challenge even if final order of assessment happened to have been passed subsequently. As already noted, it was in the context of provisions of the Act under reference that it was held that the "assessment" did not mean 'final order of assessment' but their Lordships unequivocally made it clear that this proposition shall hold good only when there was nothing in the context of a particular provision which compells such a meaning being attributed to it.
21. It can, thus, safely be said on the strength of the aforesaid authority that when the law itself lays down in categorical terms, as is. the case with Section 130(2) of the Customs Act, that no order or a decision of the lower authorities shall be revised after a stated period, then there was no escape from the inference that the final order had to be passed within that time.
22. For the same reason, the judgment of Madras High Court: "STC 1980 (46) P. 151", cited by the Departmental Representative, cannot be much of a guide because there is no indication as to the exact wording of relevant legislation, which was before the Hon'ble High Court.
23. We also find substance in the argument of the learned Counsel for the appellants that provisions, on reference applications in the Income-tax Act, or Customs, or Central Excises Act, could not be treated as parallel or analogous provisions inasmuch as in those cases, proceedings have to be taken up on an application being made and, thereafter, it entirely becomes for the Tribunal concerned to make reference within a given time, and it was in this context that the Courts have held that once the party has done whatever it had to do, or was within its powers, then merely because of some administrative delay, or other reasons for which the party was not responsible, the reference made after the expiry of the time-limit could not be vitiated as the party could not be made to suffer on account of lapses of the Court. It would, thus, be seen that the underlying object is protection of the right of the party to avail of the legal provisions and it cannot be argued that, correspondingly, the Government can also be allowed to ignore the period of limit set upon the exercise of its powers. In this view of the matter, the judgment of CEGAT in M/s Anglo-Indian Jute Malls Co. Ltd. (supra) can have no bearing on the issue before us.
24. The argument, that in< this case, the appellants had gone on taking time for filing reply and the delay occurred on that account, could not be entertained because, as pointed out by the learned Counsel of the appellants, quoting a Supreme Court judgment '1959 (56) ITR 569', that the argument of inconvenience was not available to the Government, and that while exercising suo-moto power; the authority ought to be aware of the limitation or fetter set on point of time on the exercise of this power, and it was for the concerned authority to exercise due diligence that an order is passed within the time set out by law. The Hon'ble Supreme Court observed in the above-quoted case that law of limitation invariably implies some hardship to one party or the other.
25. We also find, as pointed out by the learned Counsel of the appellants, that wherever law intends exclusion of time taken in some proceedings while computing the period of limitation; it does so provide in clear terms as, for instance, the Explanation 1 to Section 153 of the Income-tax Act, 1961, or the Explanation to Section 263 of the said Act lay down. There being no such provisions in the Customs Act, it could not be urged on behalf of the respondent that the time taken by -the appellants in filing reply, or putting in appearance, should be excluded while computing the period as laid down in Section 130 of the Customs Act.
26. That this period relates to the passing of the final order and not to mere initiation of proceedings, is made clear by subsequent amendment w.e.f. 1978, where exercise of revisionary powers, suo-moto or on an application being made, has been put at par so far as the time-limit is concerned and both relates to, now, initiation" or commencement of proceedings. This distinction was clearly pointed out in the Notes and Clauses to the proposed Bill which gives an unmistakable indication of the understanding which the law making authority had, and to remove this anomaly, the provisions were suitably amended.
27. We are, thus, satisfied that, at the relevant time, the law, as it stood, positively laid down that no order or decision of the lower authority could be revised after the expiry of period of two years from the passing of such an order, and it did not admit of any exceptions or saving-situations. We are, therefore, of our considered view that the order-in-review passed in this case on 8-8-1977, in respect to the assessments made on clearances effected by 9-7-1975, is liable to be struck down because of having been passed after the time allowed for the purpose. We, accordingly, uphold the preliminary objection, and do not find it necessary to further go into the merits.
28. The appeal is, thus, allowed on this preliminary point and the order dated 8-8-1977, as a result, set aside.