Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Sarabhai Chemicals on 2 July, 1986
Equivalent citations: 1986(26)ELT1057(TRI-DEL)
ORDER K.S. Venkataramni, Member (T)
1. These appeals are directed against the order dated 26.8.1985 read with the Addendum dated 30.9.85 passed by the Collector of Central Excise (Appeals) Bombay, preferred by the Collector of Central Excise, Baroda. The respondents in this case, M/s. Sarabhai Chemicals of Baroda manufacture Patent or Proprietary Medicines classifiable under Tariff Item 14E of the Central Excise Tariff. The issue involved is regarding their claim for assessment of duty at the concessional rate under Notification No. 116/69 dated 3.5.1969 on nine items of P or P Medicines manufactured by the respondents. In this case, the jurisdictional Assistant Collector of Central Excise passed an order on 12.1.83 holding that in respect of nine items of medicine manufactured by the respondents, the concessional rate of 2-1/2% under the notification was permissible and not 12-1/2%.
2. On 8.10.1984, the Collector of Central Excise, Baroda issued a direction to othe Assistant Collector under Section 35E(2) of the Central Excises & Salt Act to file an appeal under Section 35E(4) to the Collector (Appeals), Bombay in respect of two products covered by the Asstt. Collector's order namely, Resteclin IM Injection and Steclin IM Injection and an appeal was accordingly filed before the Collector (Appeals) on 18.10.84. Subsequently, the Collector of Central Excise, Baroda issued a further direction to the Assistant Collector directing him to file an appeal in respect of the remaining seven medicines also oand this appeal was accordingly filed on 9.1.85.
3. By his order-in-appeal passed by the Collector dated 26.8.85, be rejected the appeal filed on 18.10.84 as time barred and by an addendum dated 9.9.85 to the order-in-appeal, he also added the references to the appeal dated 9.1.85, In rejecting the appeal as time barred, the Collector relied upon the Larger Bench decision of this Tribunal in the case of Atma Steels (P) Ltd. and Ors. reported in 1984 (17) ELT 331. The Collector (Appeals) found that the order-in-original was passed by the Asstt. Collector on 12.1.83 whereas the Collector's authorisation under Section 35E(2) of the Central Excises & Salt Act was issued on 8.10.84 which was after a period of one year from the date of Assistant Collector's order which was sought ro be reviewed. He then referred to the decisioin of the Tribunal in Atma Steels case (para 101) wherein it was laid down that for issue of Show Cause Notice, either for short-levy or non-levy, recourse can be had to the provisions prevailing at the time of initiation of proceedings and the period of limitation for issue of Show Cause Notice would be the one as permissible under the existing provisions at the time of issue of a Show Cause Notice, in spite of the fact that the short-levy or non-levy refers to the period when different period of limitation was available. The Collector (Appeals) did not, therefore, go into the merits of the case, but rejected the appeal purely on the question of time bar.
4. Appearing for the appellant Collector, the learned Departmental Representative, Shri Sunder Rajan stated that the Collector (Appeals) had improperly disposed of the second appeal filed by the Collector of Central Excise, Baroda by an addendum to an order-in-appeal passed on 26.8.85 and that, therefore, there had been no proper disposal of the appeal filed on 9.1.85 and that this itself will be a defect in the impugned order of the Collector (Appeals). He further contended that the Collector (Appeals) has wrongly relied upon the Larger Bench decision in the case of Atma Steels and submitted that the present case will not be covered by that decision of the Tribunal. In this connection, he referred to para 2 of that decision which sets out the issues to be decided showing that the Tribunal had addressed itself to the interpretation of Rule 10 and 10A relaing to short-levy or non-levy and that there was no reference in that decision in regard to the time limit contained in the provisions relating to the filing of an appeal under the Central Excise Act. According to the learned Departmental Representative, the Collector (Appeals) had failed to correctly interpret the law and he contended that an appeal is a continuation of an original proceedings at the time the Asstt. Collector's order was passed, a period of two years was available under Section 35E(2) and it should continue to be available notwithstanding the amendment of that provision, in the absence of a clear indication to the contrary in the amended provisions. According to him, the right which had accrued to the Collector to direct the filing of an appeal within two years from the date of Assistant Collector's order could not be taken away in the absence of an express provision in the amending legislation. So long as a particular period of limitation was available to a party, it could not be asked to explain any delay during that period. He further argued that the question involved in the Atma Steels case was quite a different one and it does not have any analogy in the present case. The question before the Larger Bench in that case related only to the effect of amendments made to various rules relating to short-levy, non-levy or refund of duty and, therefore, it would be wrong to conclude that this isue which is involved in the case relating to the order passed under Section 35E(3) is also finally settled by the decision of the Tribunal in the case of Atma Steels. He further pointed out that that decision dealt with procedural law and not substantive law and largely relied on the judgment in the case of Rayala Corporation which dealt with a temporary statute. Moreover, it had relevance to the Central Excise Rules which are delegated legislation, whereas in the present case, interpretation of a section of the Central Excises Act is involved. He referred to Section $ of the General Clauses Act according to which, the legislature is presumed to be aware of the various laws enacted and also of the various interpretation of the law by the courts. He referred to the case law reported in 1958 AIR Bom. 279 - Abdul Aziz v. State of Bombay laying down by applying Section 6 of the General Clauses Act that a right to institute certain legal proceedings which had vested before the law in question was repealed would continue to exist after the date of repeal. Similarly, in AIR 1916 Madras 912, it has been observed that a statute of limitation ceases to be statute of mere procedure which shortens the period and is sought to be used to defeat causes of action which had accrued earlier than the length of time prescribed in the new law. Again, in AIR 1962 Rajasthan 43, it was laid down that a previously vested right must not be considered to have been destroyed by a repeal of the statute, subject to a specific provision to the contrary or by necessary implication. The Supreme Court in its decision in the case of State of Punjab v. Mohar Singh AIR 1955 SC 84 laid down that a criminal liability which arose under the previous ordinance was not extinguished by the replacement of the Ordinance by an Act. In all these cases, it is made clear that a vested right cannot be taken away by an amendment. He cited a further case law 1978 ELT 523 Shamul Dey and Ors. that any person aggrieved would include a Collector who could also be an aggrieved person entitled to file an appeal under the Act. The question is essentially to see whether the new Act manifersts an intention to destroy pre-existing rights. The General Clauses Act further refers not only to vested rights but also to previliges which shows that the state's rights are also protected. The decision of the Hon'ble Rajasthan High Court in the case of Govt. of Rajasthan v. Sangram Singh laying down, the concept of breathing time is also very important in this case. It was clear from the case law cited above, according to the learned Departmental Representative that any amendment which destroys a cause of action should not be given retrospective effect. The amendment brought about in 1984 Finance Act to Section 35-E which came into effect on 11.5.84 neither by implication nor otherwise could be given retrospective effect. In the circumstances, the learned Departmental Representative urged that the rejection of the appeals by the Collector (Appeals) as time barred based on the decision of the CEGAT in the Atma Steels case was bad in law.
5. Appearing for the respondents, the learned counsel Shri A.H. Desai. Senior Advocate along with Shri K.S. Nanavati and Shri G. Ganesh, Advocates submitted that the judgment in the case of Atma Steels-1984 (17) ELT 331 directly applies to and covers the issue arising in this case in favour of the Respondent company. The following issues decided in the Atma Steels case completely cover the issues arising in the present case:
i) There can be no claim of vested right by the State (Para 73 of the judgment).
ii) There can be no concept of vesting of any rights since the rights are merely inchoate until there is an adjudication in favour of the State (Para 76).
iii) A legislation which seeks to protect the previous law should normally incorporate a saving clause (Para 79).
iv) The Limitation Act itself makes a specified provision for this Section 30 (Para 78).
v) The law of limitation is procedural (Para 80).
vi) The law of limitation which applies is that prevailing on the date when the relief is claimed and not owhen the cause of action arises (Para 8O). In the absence of a saving clause, the law of limitation would apply with retrospective effect even in regard to amendments which are entitled to avail of the protection of Section 6 of the General Clauses Act (Para 84).
vii) No claim of breathing time can be raised by the State which has no vested right (Para 91).
It is true that the Tribunal has decided Atma Steels case on an interpretation of the Excise Rules and not of the Excise Act. But this has not the slightest hearing on the principle of the propositions laid down hereinabove.
Section 35-E(2) is not in the nature of a right of appeal at all. It is in fact only a power of superintendence conferred on the Board and the Collector. Such a power of superintendence cannot be equated with the right of an aggrieved party to go in appeal. It needs to be appreciated that the power under Section 35-E(2) is distinct and different from the power under Section 35-E(4). It is very important to note that the Note on clauses of the Finance Bill, 1984 describes Section 35-E(2) as a power only of revision. Further, what is in issue is not the right of the authority to apply and/or file an appeal, but the power of the Collector of Central Excise to apply his mind and issue a direction to the Excise authorities. This power, in any view of the matter, is not a vested right, as all that the Collector does is to apply his mind and order someone else to take appropriate proceedings. Thus, this is not a right of appeal at all. The Collector cannot claim any vested right of superintendence conferred on him. If a power of superintendence is conferred by the statute, such power can be taken away by the statute. The question would be, whether on the day on which the power is exercised, the Collector had that power or not. in the present cse, at the time when the Section 35-E(2) orders were issued, they were beyond the period of limitation of one year provided by that section. Consequently, the power under Section 35-E(2) could not be exercised.
6. In this connection, it is important to note that Section 35-E itself was not in existence at the point of time when the Show Cause Notice was issued (i.e. on 2.5.81) as to why the product should not be re-classified. The chronology of events would show that all the relevant events namely, the company's application for the benefit of the relevant notifications, the various classifictions and re-classifictions in favour of the company and the levy of a lesser charge of duty all transpired long period to the introduction of Section 35-E (i.e. 11.10.82). On the argument of the Department itself, therefore, there could be no proceedings under Section 35-E as the so called right of the Revenue vested, if at all, at a point of time when Section 35-E was not on the Statute book. It is submitted that the Department has no vested right arising under Section 35-E. If the Department wants to rely on Section 35-E, it can only rely on it as giving rise o a right at the time when the Section 35-E application is made. On this view, the Section 35-E(2) applications in the present case are clearly beyond limitation and are barred. But, if the Department wants to invoke the theory of vested right, the Section 35-E itself can have no application at. all. It is also submitted that it is only the right of appeal as such which is a vested right, and not the right of appeal within a certain time or under a certain procedure. Limitation is always a matter of procedure, and is in the present case, governed by the law in force at the time the proceedings in question under Section 35-E(2) are commenced. In the present case the period of appeal under Section 35-E(4) has not been reduced. In the instant case, the Collector had "breathing time" of about three months between the date the Bill was introduced by the Government and the Act came into force. The law therefore, should be treated as retrospective in operation. The counsel further argued that the authority cited by the learned Departmental Representative has no application to the present case and would have relevance only if it is shown that before amendment of Section 35-E(2) with effect from 1.4.84, the department had vested right to initiate the proceedings within the period of 2 years as laid down in Atma Steels case. The authorities cannot claim any vested right at all.
7. In his reply to the learned counsel, the learned Departmental Representative Shri Sunder Rajan reiterated that the decision in Atma Steels case does not conclude the issue arising in this case and as for the starting point of the proceedings with the issue of Show Cause Notice as contended by the respondent, this notice had to be issued only in compliance with an order of the Collector (Appeals) remanding the case to the Assistant Collector for decision afresh after issue of a Show Cause Notice although the Assistant Collector had already approved the classification list. The amendment to Section 35-E(2) did not indicate that it was retrospective and as regards the contention that the department has no vested right, he drew attention of the case of Union of India v. Shamul Dey & Others of the Calcutta High Court 1976 ELT 522 where the court had observed that words "any person" appearing in Section 128 of the Customs Act relating to appeals does not only connote the individual, but includes any jurisdic person or artificial person, and the Collector, being such a person, has the right of appeal. Further, the provisions in Section 35-E(2) is not a power of revision because no power is given to the Collector to review the order himself under that Section by passing an order in review. It is in effect an appeal only and the provisions are only to ensure that direction to file appeals are given OR due consideration and to discourage frivolous appeals being filed. Again, the breathing time concept as given by the counsel presumes that every Bill which is produced in the Parliament will be passed as an Act which may not always be the case, and, therefore, this argument is not valid. He pointed out that the Supreme Court decision in AIR 1957 SC 540 squarely covers the case and a perusal at Page 545 thereof would show that no distinction has been made between a private party and the State vide para 25. This decision clearly lays down that a vested right of appeal cannot be taken away by subsequent enactment except by an express provision. Further, even applying the Atma Steels case criterion, the right here is no longer inchoate as the matter has already been adjudicated upon. He emphasized that Section 6 of the General Clauses Act specifically provides that a repeal should not affect rights which had accrued before the date of repeal, and it was urged that no interpretation can be given which would render the provisions of Section 6 of the General Clauses Act nugatory.
8. We have given careful consideration to the submissions made by the learned Departmental Representative and the learned counsel for the respondents. It is observed that in this case, two appeals have been filed by the department before the Collector (Appeals), one on 13.10.84 and another on 9.1.85. He disposed of these appeals by first issuing an order dated 26.8.85 and then an addendum dated 9.9.85 which is admittedly a peculiar case because there is only one order of the Assistant Collector and one order with an Addendum of the Collector (Appeals), though there were two appeals to the Collector (Appeals) arising out of the single order of the Assistant Collector. The counsel, in this connection, had argued that there was nothing wrong in the disposal of the second appeal by an Addendum because they were heard together by the Collector (Appeals). However, a perusal of the order dated 26.8.85 of the Collector (Appeals) shows that it refers only to the first appeal dated 9.10.84 and throughout the order, reference is to "an appeal" or "the apeal", always in the singular. The final order is that "the appeal is rejected. being "time barred". The reference to the second appeal came only through an Addendum dated 9.9.85 and even this Addendum does not effect the necessary changes throughout the body of the Appellate order to make complete sense because the reference in the singular to "an appeal" or "the appeal" had not been amended, even in the operative sentence rejecting the appeal. In this connection, it is observed that Sub-sect ion (4) of Section 35-A of the Central Excises & Salt Act specifically requires the Collector (Appeals) to state the points for determination and decisions thereon and the reasons for the decision in respect of an appeal filed before him. Therefore, the disposal of an appeal by issue of an Addendum, as has been done in this case, is not in accordance with the provisions of Section 35-A of the Act. Further, there is no provision for rectification of mistakes in respect of orders in appeal passed by the Collector (Appeals), unlike in the case of orders of the Appellate Tribunal as provided in Sub-Section (2) of 35-C of the Act. Above all, the non-amendment of the operative sentence rejecting the appeal would mean that the decision of rejection, inspite of the Addendum, would be applicable only to "the appeal" referred to in the body of the order-in-appeal dated 26.8.85. Therefore, the disposal of the second appeal by way of an Addendum to the order-in-appeal dated 26.8.85 is bad in law.
9. The respondents in this case have heavily relied upon the Larger Bench decision of the Tribunal in Atma Steels which, according to them, squarely covers their case, whereas the lerned Departmental Representative has argued that the question involved in that case was quite a different one arid it did not have any relevance to the present case. We have carefully perused the, judgment of the Tribunal in the Atma Steels case and we are of the view that the question before the Larger Bench in that case was a different one relating mainly to the effect of the amendments made to various Rules relating to short-levy or non-levy of duty and it does not touch upon the provisions relating to appeals as. such. It is further observed" that this Tribunal while dealing with the case of Nagarjuna Steels Ltd. v. Collelctor of Central Excise, Hyderabad 1985 (21) ELT 854, relating to a refund claim where the question of limitation was involved, had considered the Atma Steels judgment and had distinguished it by observing that from para 31 of the said judgment, it is seen that the Tribunal had held that the Bench would confine its deliberations to points 1(a), 1(b), 2(a) and 2(b) only on the issues set before it and that hence that decision specifically dealt with a case of demand by the department and the decision was confined only to the question whether the demand would be governed by the Rules as they stood at the time of raising the demand, though the demand related to an anterior period when the Rules stood differently. Accordingly, in the Nagarjuna Steels case, the Tribunal followed the Bombay High Court judgment 1984 (18) ELT 207 - Universal Drinks (P) Ltd. v. Union of India, wherein the Court had upheld the claim of the assessee that once the duty is paid, a right to claim refund thereof in proper circumstances was a vested right in the assessee and the Court had held that such a right was not defeated by the substitution of old Rule 11 by new Rule 11 in which the period of limitation was different and shorter than the one prescribed under the old Rule. Similarly, in this case also, the ratio of the Atma Steels case will not apply for the same reasons as held by this Tribunal in the Nagarjuna Steels decision referred to supra, because this is a case where the provisions relating to filing of application under 35-E are to be construed and this aspect was clearly not covered by the Atma Steels decision. On the other hand, the Supreme Court decision in AIR 1957 SC 540 has clearly laid down that right of appeal is a vested right and that this right can be taken away only by a subsequent enactment if it so provides expressly or by necessary intentment and not otherwise. In the same judgment, the well known principle has also been referred to the effect that statutes are not to be held to act retrospectively unless a clear intention to that effect is manifested. In this case, the appeals have been rejected as time barred by the Collector (Appeals) on the ground that the order in original of the Assistant Collector which is sought to be reviewed was dated 12.1.83 whereas the Collector's authorisation under 35-E(2) had been issued on 8.10.84 and 9.1.85 and being over one year, was time barred under Section 35-E(3). However, a perusal of the provisions of the amended Finance Bill, 1984 shows that there was no express provision making the reduction in the period for seeking a revision under Section 35-E(3) from 2 years to 1 year to expressly have a retrospective effect. The amended provisions came into effect from 11.5.84 and in this case, since the order which is sought to be reviewed was passed on 12.1.83 being prior to 11.5.84 cannot be held to be hit by time bar in the absence of an express provision in the amending enactment giving the amendment retrospective effect. It is further seen that if one were to apply the amended provisions to the present case, then since the Assistant Collector's order is dated 12.1.83, the one year period would expire on 11.1.84 i.e. it would become time barred even before the amendment took effect i.e. from 11.5.84, which, admittedly, could hot have been the intention. In the light of the Supreme Court decision in 1957 SC 540 cited above, which decision was also not before the Tribunal while considering the At ma Steels case, and having regard to the concept of breathing time laid down in the Rajasthan High Court judgment AIR 1962 Raj. 43) stating, when there is no expressed breathing time provided in a new legislation, the remedy must continue to be governed by the old law of limitation, we are unable to accept the argument of the counsel in this regard that the time between the introduction of the Bill and its passing by the Parliament should be considered sufficient breathing time, for the reason that it cannot be taken for granted that the Parliament will always pass a Bill that is introduced. In these circumstances, we are satisfied that the present case is not one which is to be decided with reference to the decision of this Tribunal in Atma Steels case relied upon by the Collector (Appeals) and by the respondents. We, therefore, hold that the order of the Collector (Appeals) rejecting the appeals as time barred is bad in law for the reason firstly, that the disposal of the subsequent appeal by an Addendum to the order-in-appeal dated 26.8.84 is inherently defective and is not a disposal of the appeal in accordance with the provisions of Section 35-A, and secondly, because the reliance placed by the Collector (Appeals) on the Atma Steels decision of this Tribunal for rejecting the appeal is not legally sound. In the result, the applications of the department succeed, and the case is remanded to the Collector (Appeals) for a decision on merits, by giving fresh opportunity of hearing to both the parties.