Custom, Excise & Service Tax Tribunal
Vishal Video & Appliances Pvt Ltd vs Commissioner, Customs-New Delhi on 4 June, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH
CUSTOMS APPEAL NO. 50091 OF 2022
(Arising out of Order-in-Original No. 03-04/2021-22 dated 24.05.2021 passed by
Principal Commissioner of Customs, ACC (Imports), New Customs House, Near IGI
Airport, New Delhi)
Vishal Video & Appliances .....Appellant
Pvt. Ltd.
1/6, Gokhle Marg, Opp. Red Hill School
Lucknow - 226 001
VERSUS
Commissioner of Customs .....Respondent
ACC (Import), New Customs House,
New Delhi
AND
Customs Appeal No. 50286 of 2022
(Arising out of Order-in-Original No. 03-04/2021-22 dated 24.05.2021 passed by
Principal Commissioner of Customs, ACC (Imports), New Customs House, Near IGI
Airport, New Delhi)
Vishal Video & Appliances .....Appellant
Pvt. Ltd.
1/6, Gokhle Marg, Opp. Red Hill School
Lucknow - 226 001
VERSUS
Commissioner of Customs .....Respondent
ACC (Import), New Customs House,
New Delhi
WITH
Customs Appeal No. 50510 of 2021
(Arising out of Order-in-Appeal No. CC(A)/Customs/D-I/Import/NCH/808-838/2020-
21 dated 17.12.2020 passed by Commissioner of Customs (Appeals), New Customs
House, Near IGI Airport, New Delhi)
Vishal Video & Appliances .....Appellant
Pvt. Ltd.
1/6, Gokhle Marg, Opp. Red Hill School
Lucknow - 226 001
VERSUS
Commissioner of Customs .....Respondent
ACC (Import), New Customs House,
New Delhi
2
C/50091/2022
& 32 Others
AND
C/50511/2021 C/50512/2021 C/50513/2021 C/50514/2021
C/50515/2021 C/50516/2021 C/50517/2021 C/50518/2021
C/50519/2021 C/50520/2021 C/50521/2021 C/50522/2021
C/50523/2021 C/50524/2021 C/50525/2021 C/50526/2021
C/50527/2021 C/50528/2021 C/50529/2021 C/50530/2021
C/50531/2021 C/50532/2021 C/50533/2021 C/50534/2021
C/50535/2021 C/50536/2021 C/50537/2021 C/50538/2021
C/50539/2021 C/50540/2021
APPEARANCE:
Shri B.L. Narasimhan, Ms. Jyoti Pal and Ms. Anjali Gupta, Advocates for the
Appellant
Shri S.K. Rahman, Authorized Representative for the Department
CORAM: HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL)
Date of Hearing: 30.04.2024
Date of Decision: 04.06.2024
FINAL ORDER NO's. 55859-55891/2024
JUSTICE DILIP GUPTA:
Customs Appeal No. 50091 of 2022 and Customs Appeal
No. 50286 of 2022 have been filed by Vishal Video and Appliances
Pvt. Ltd.1 to assail the common order dated 24.05.2021 passed by the
Principal Commissioner of Customs, ACC (Import)2 that confirms the
demand of Rs. 2,36,92,607/- and Rs. 2,17,62,591/- raised in the two
show cause notices, both dated 26.09.2018, under section 28 of the
Customs Act, 19623 with interest under section 28AA of the Customs
Act.
2. Customs Appeal Nos. 50510 of 2021 to 50540 of 2021
have been filed by the appellant to assail the common order dated
1. the appellant
2. the Principal Commissioner
3. the Customs Act
3
C/50091/2022
& 32 Others
17.12.2020 passed by the Commissioner of Customs (Appeals) 4 that
rejects the 31 appeals filed by the appellant on 17.12.2019 under
section 128 of the Customs Act with an application under section 14
of the Limitation Act, 19635 for reassessment of the 31 Bills of Entry
filed by the appellant for import of mobile phones.
3. The appellant imported mobile phones during the period from
09.10.2014 to 17.07.2015 and paid Additional Duty of Customs at the
rate of 6% up to 28.02.2015 and thereafter, at the rate of 12.5%
under section 3(1) of the Customs Tariff Act 19756 on the 31 Bills of
Entry. However, in terms of the notification dated 17.03.2012, the
Additional Duty was leviable at 1% under the entry at serial 263A on
import of mobile phones provided condition no. 16 was satisfied.
Condition no. 16 provides that for an assessee to claim lesser 1%
Additional Duty, it should not have taken credit under rule 3 or rule
13 of the CENVAT Credit Rules 20047 in respect of the inputs or
capital goods used in the manufacturer of these goods.
4. The Supreme Court, in the context of import of Nylon Filament
Yarn of 210 deniers, examined a similar condition no. 20 in SRF Ltd.
vs. Commissioner of Customs, Chennai8. SRF had claimed nil rate
of Additional Duty by relying upon a notification dated 01.03.2002.
The Deputy Commissioner of Customs held that SRF would not be
entitled to exemption from payment of Additional Duty since it did not
fulfil condition no. 20 of the said notification, which is to the effect
that the importer should not have availed credit under rule 3 or rule
11 of the CENVAT Rules in respect of the capital goods used for the
4. the Commissioner (Appeals)
5. the Limitation Act
6. Tariff Act
7. CENVAT Rules
8. 2015 (318) ELT 607 (SC)
4
C/50091/2022
& 32 Others
manufacture of these goods. The admitted position was that such
CENVAT Credit was not availed by SRF. The Tribunal held that when
the credit under CENVAT Rules was not admissible, the question of
fulfilling the aforesaid condition did not arise and, therefore, as
condition no. 20 was not satisfied SRF could not claim nil rate of
Additional Duty. This reasoning of the Tribunal was found to be not
correct by the Supreme Court in view of the judgments of the
Supreme Court wherein it had been held that for the purpose of
attracting Additional Duty under section 3 of the Customs Tariff Act
on the import of a manufactured or produced article, the actual
manufacture or production of a like article in India was not necessary
and that for quantification of Additional Duty in such a case, it had to
be imagined that the article imported was manufactured or produced
in India and then to see what amount of excise duty was leviable
thereon. SRF was, therefore, held entitled to exemption from
payment of Additional Duty.
5. The appellant, on the same reasoning, claimed that it would
have to pay the reduced Additional Duty at the rate of 1% in terms of
condition no. 16 of the notification dated 17.03.2012, which is
identical to condition no. 20 of the notification dated 01.03.2002 that
was examined by the Supreme Court in SRF. It had, however, paid
Additional Duty at the rate of 6% upto 28.02.2015 and at the rate of
12.5% thereafter. It therefore, filed two applications on 25.09.2015
for refund of the excess Additional Duty that was paid by it. The first
application was filed for refund of Rs. 2,17,62,591/- for the period
from 01.10.2011 to 25.03.2015 and the second application was filed
5
C/50091/2022
& 32 Others
for refund of Rs. 2,36,92,607/- for the period from 27.03.2015 to
17.07.2015.
6. These two refund applications were rejected by two separate
orders, both dated 30.06.2016, on the ground that the appellant had
not provided reassessed Bills of Entry. Both the said orders were
assailed by the appellant before the Delhi High Court in Writ Petition
No. 7851 of 2016 and the Delhi High Court, by judgment dated
05.09.2016, allowed the refund claim. The respondents were directed
to pay the claimed amount together with interest due upto the date of
refund, which payment was required to be made within three weeks
from the date of the order. The relevant portion of the order passed
by the Delhi High Court is reproduced below:
"The writ petitioner seeks a direction that its refund
application be processed and the amounts claimed paid-
over. The issue involves payment and refund of
Countervailing Duty (CVD).
The petitioner/importer contends that all the documents
necessary for processing the refund claim were made
available to the respondents on time. However, the refund
application was rejected without reference to these
materials on the short ground that the department was
contemplating an appeal by way of special leave in regard
to an order in Micromax Informatics Ltd. v. Union of India
2016 (335) ELT 446 (Del). The other ground was that
review of the law declared by the Supreme Court in M/s.
SRF Industries Ltd. v. CC, Chennai 2015 (318) ELT 607
(SC) was sought. The Supreme Court in SRF (supra) had
clarified that to quantify CVD in the importer's case, the
presumption that such goods were manufactured in India
and excise duty leviable on it would have to be drawn and
then an ascertainment would be essential to determine
the extent of CVD to which the importer would be entitled.
It was on the basis of this principle that the refund claims
were to be processed.
6
C/50091/2022
& 32 Others
This Court notices from the record that the concerned
adjudication officer, who rejected the petitioner's claim for
refund has adopted the same approach that she did which
became the subject matter of scrutiny in several previous
orders commencing from Micromax (supra). We notice
that the Micromax (supra) was revisited in Yu
Televentures v. Union of India [W.P.(C) 6750/2016,
decided on 03.08.16]. In the present case as well, the
order rejecting the refund was made during the same
period and apparently by the same officer who rejected
the refund claim in Yu Televentures (supra).
It is contended lastly by the respondents that this
Court should not grant relief in this case since there
is no ascertainment as to whether the CVD was in
fact passed on and collected from the end user. The
petitioner, on the other hand, submits that all
relevant documents, including the Chartered
Accountant's certificate as required by the rules
were furnished. The relevant part of the CA's certificate
reads as follows:
"D. That for the purposes of examining the clause of
unjust enrichment to the importer in respect of
subject refund claim we have verified the importer's
Books of Accounts and other relevant documents and
record of the goods. Based on such verification we
have satisfied ourselves."
This was not a ground for rejection. We find no force in
the submission. It is accordingly rejected.
Since the facts are identical, we are of the opinion
that the operative portion of the order should be
identical to the one in Yu Televentures (supra). It is
hereby directed consequently that the petitioner's
refund claim is, therefore, allowed. The respondents
are directed to pay to the petitioner, the claimed
amount together with interest due thereof upto the
date of refund - which shall be done within three
weeks from today.
There shall be no order as to costs."
(emphasis supplied)
7
C/50091/2022
& 32 Others
7. Pursuant to the aforesaid directions of the Delhi High Court,
the Deputy Commissioner allowed the refund applications dated
27.09.2016. The relevant portion of the order dated 27.09.2016 in
respect of 14 Bills of Entry relating to refund claim of Rs.
2,36,92,607/- is reproduced below:
"Without prejudice to any of the above findings and
without admitting anything to the contrary, since, the
Hon'ble Delhi High Court vide judgment in W.P.(C) No.
7851/2016 in the case of M/s Vishal Video and Appliances
Pvt. Ltd. Vs Union of India & Orshad directed to pay to the
appellant in W.P., the claimed amount together with
interest due thereof up to the date of refund within three
weeks from September 5, 2016 coupled with the fact that
no stay has been obtained, till date, against the above
said Judgment, I pass the following order, in compliance
with the directions of Hon'ble High Court:-
The refund claim has been pre-audited by the Assistant
Commissioner (Audit) vide C.No.VIII(I)20/R/1399/2015
dated 26.09.2016.
ORDER
Without prejudice, I sanction the refund claim for Rs. 2,36,92,607/- (Two Crore Thirty-Six Lacs Ninety-Two Thousand Six Hundred and Seven only) along with interest of Rs. 3,42,731/- (w.e.f 30-06-2016 to 26-09-2016 @ 6% per annum) to M/s Vishal Video & Appliances Pvt. Ltd., 1/6 Gokhle Marg, Opp. Red Hill School, Lucknow-226001, as per directions of Hon'ble High Court, payable through RTGS."
8. A similar order in respect of 17 Bills of Entry covering the refund of Rs. 2,17,62,591/- was passed by the Deputy Commissioner on the same date i.e. 27.09.2016.
9. The Department filed Special Leave Petition No. 2865 of 2017 before the Supreme Court on 03.01.2017 against the aforesaid judgment of the Delhi High Court. This Special Leave Petition was 8 C/50091/2022 & 32 Others decided by the Supreme Court on 18.09.2019 in bunch matters in ITC Ltd. vs. Commissioner of Central Excise, Kolkata-IV9. The issue involved in all the Civil Appeals was whether, in the absence of any challenge to the order of assessment in appeal, a refund application against the assessed duty could be entertained. The Bench of the Tribunal at Kolkata had opined that unless the order of assessment is appealed, no refund application against the assessed duty can be entertained. On the other hand, the Delhi High Court had opined that when there is no assessment order for being challenged in appeal because there is no contest or lis and hence no adversarial adjudication, a refund application can be maintained even if appeals are not filed against the assessed Bills of Entry. The Madras High Court had also similarly opined. The first question that arose for consideration before the Supreme Court was whether a self- assessment, when there is no speaking order, can be termed to be an order of self-assessment. It was urged on behalf of the assessees that there is no application of mind in such a situation and merely an endorsement is made by the authorities concerned on the Bills of Entry which endorsement cannot be said to be an order, much less a speaking order. This contention of the assessees was not accepted by the Supreme Court and it was held that the endorsement made on the Bills of Entry would be an order of assessment and that when there is no lis, a speaking order is not required to be passed in 'across the counter affair'. The Supreme Court then examined the provisions of sections 17 and 27 of the Customs Act, both prior to and after the amendments made by Finance Act 2011, and observed that there is
9. 2019 (368) ELT 216 (SC) 9 C/50091/2022 & 32 Others no difference even after the amendments as self-assessment is also an assessment. The observations of the Supreme Court are as follows:
"38. No doubt about it that the expression which was earlier used in Section 27(1)(i) that "in pursuance of an order of assessment" has been deleted from the amended provision of Section 27 due to introduction of provision as to self-assessment. However, as self- assessment is nonetheless an order of assessment, no difference is made by deletion of aforesaid expression as no separate reasoned assessment order is required to be passed in the case of self-assessment as observed by this Court in Escorts Ltd. v. Union of India & Ors. (2002-TIOL-2706-SC)"
10. It needs to be noted that in Escorts, the issue that had arisen for consideration before the Supreme Court was regarding the Bills of Entry classifying the imported goods under a particular tariff item and payment of duty thereon. The Supreme Court held that in such a case signing the Bills of Entry itself amounted to passing an order of assessment and, therefore, an application seeking refund on the ground that the imported goods fell under a different tariff item attracting lower rate of duty, should be filed within six months after the payment of duty. The Supreme Court, therefore, held that the signature made in the Bills of Entry was an order of assessment of the assessing officer.
11. The Supreme Court, thereafter, in ITC observed that the provisions relating to refund were more or less in the nature of execution proceedings and it would not be open to an authority, while processing a refund application, to make a fresh assessment on merits. The relevant portions of the judgment of the Supreme Court in ITC are reproduced below:
10
C/50091/2022 & 32 Others "44. The provisions under section 27 cannot be invoked in the absence of amendment or modification having been made in the bill of entry on the basis of which self-assessment has been made. In other words, the order of self-assessment is required to be followed unless modified before the claim for refund is entertained under Section 27.
The refund proceedings are in the nature of execution for refunding amount. It is not assessment or re-assessment proceedings at all. Apart from that, there are other conditions which are to be satisfied for claiming exemption, as provided in the exemption notification. Existence of those exigencies is also to be proved which cannot be adjudicated within the scope of provisions as to refund. While processing a refund application, re- assessment is not permitted nor conditions of exemption can be adjudicated. Re-assessment is permitted only under Section 17(3)(4) and (5) of the amended provisions. Similar was the position prior to the amendment. It will virtually amount to an order of assessment or re-assessment in case the Assistant Commissioner or Deputy Commissioner of Customs while dealing with refund application is permitted to adjudicate upon the entire issue which cannot be done in the ken of the refund provisions under Section 27.
*****
47. When we consider the overall effect of the provisions prior to amendment and post amendment under Finance Act, 2011, we are of the opinion that the claim for refund cannot be entertained unless the order of assessment or self assessment is modified in accordance with law by taking recourse to the appropriate proceedings and it would not be within the ken of section 27 to set aside the order of self assessment and reassess the duty for making refund; and in case any person is aggrieved by any order which would include self assessment, he has to get the order modified under section 128 or under other relevant provisions of the Act.
48. Resultantly, we find that the order(s) passed by the Customs, Excise and Service Tax Appellate Tribunal is to be upheld and that passed by the High Courts of Delhi and 11 C/50091/2022 & 32 Others Madras to the contrary, deserves to be and are hereby set aside. We order accordingly. We hold that the application for refund were not maintainable. The appeals are accordingly disposed of. Parties to bear their own coasts as incurred."
(emphasis supplied)
12. Two demand-cum-show cause notices dated 26.09.2018 had earlier been issued to the appellant by the Commissioner under section 28 of the Customs Act requiring the appellant to show cause why the erroneously sanctioned refund amount of Rs. 2,17,62,591/- covering 17 Bills of Entry and Rs. 2,36,92,607/- covering 14 Bills of Entry by the two orders dated 27.09.2016 should not be recovered from the appellant under section 28 of the Customs Act with applicable rate of interest under section 28AA of the Customs Act. It was alleged that the refund claim had been sanctioned on the basis of the judgment of the Delhi High Court, but the Department had preferred Special Leave Petition No. 6269 of 2017 before the Supreme Court which was pending, though no stay had been granted. It was further stated that the show cause notices were being issued in order to cover the period of limitation and the adjudication of the demand notices would be subjected to the outcome of the decision of the Supreme Court.
13. The appellant filed a reply to the two show cause notices and denied the allegations made therein.
14. After the decision of the Supreme Court in ITC on 18.09.2019, the Principal Commissioner adjudicated the two show cause notices by a common order dated 24.05.2021 and confirmed the demand proposed in the two show cause notices with interest. This common order dated 24.05.2021 has been assailed by the appellant in 12 C/50091/2022 & 32 Others Customs Appeal No. 50091 of 2022 and Customs Appeal No. 50286 of 2022.
15. The appellant had also, pursuant to the decision of the Supreme Court in ITC on 18.09.2019, filed 31 appeals before the Commissioner (Appeals) on 17.12.2019 against the 31 Bills of Entry under section 128 of the Customs Act together with an application for exclusion of time under section 14 of the Limitation Act. These 31 appeals were rejected by the Commissioner (Appeals) by a common order dated 24.05.2021. This order has been assailed by the appellant in Customs Appeal No. 50510 of 2021 to Customs Appeal No. 50540 of 2021.
16. It would, therefore, be appropriate to deal with these two set of appeals separately.
CUSTOMS APPEAL NO's. 50091 and 50286 OF 2022
17. As noticed above, pursuant to the directions issued by the Delhi High Court on 05.09.2016 in Writ Petition No. 7851 of 2016 filed by the appellant, the Deputy Commissioner allowed the refund claimed by the appellant. However, the department filed Special Leave Petition No. 2865 of 2017 before the Supreme Court against the aforesaid judgment of the Delhi High and this petition was decided along with other matters by the Supreme Court on 18.09.2019 in ITC. What is important to notice is that prior to the decision of the Supreme Court in ITC, two demand cum show cause notices, each dated 26.09.2018, were issued by the Commissioner under section 28 of the Customs Act requiring the appellant to show cause why the erroneously sanctioned refund amount covering 31 13 C/50091/2022 & 32 Others Bills of Entry should not be recovered from the appellant. These two show cause notices had been issued in order to cover the period of limitation and it was also stated that the adjudication of these two notices would be subject to the outcome of the decision of the Supreme Court. A copy of the show cause notice was sent to the Deputy/Assistant Commissioner of Customs (Adjudication) to keep it in call book as it was a protective demand and was not to be adjudicated till the outcome of the decision of the Supreme Court. The Supreme Court decided the appeal filed by the department on 18.09.2019. These two show cause notices were ultimately adjudicated by the Principal Commissioner by a common order dated 24.05.2021. It is this order that has been assailed in the two appeals filed by the appellant. The relevant portion of the common order dated 24.05.2021 passed by the Principal Commissioner is reproduced below:
"5.5.3 I find that going by the normal time taken in obtaining certified copy of the order for acting upon it, the said date as per sub section 9 of the Act fall in the month of March 2020, by all reasons from 20th March 2020 onwards. Further Section 130F of the Customs Act provides that where the judgment of the High Court is reversed or varied by the Supreme court in appeal, effect shall be given to the order passed on the appeal by the proper officer on the basis of a certified copy of the judgment. Further in the wake of pandemic situation arising out of spread of COVID 19, the President of India promulgated the Taxation and other laws (relaxation of certain provisions) Ordinance, 2020 dated 31.03.2020*****.
5.5.4 In accordance with the above Ordinance, the normal time limit for adjudication of the impugned show cause notices as per Section 28(9)(a) which was expiring in March 2020 got extended to 31 December 2020. Further proviso to Section 28(9)(a) 14 C/50091/2022 & 32 Others stipulates that where the proper officer fails to so determine within the specified period, an officer senior in rank to the proper officer may having regard to circumstances under which the proper officer was prevented from determining the amount of duty may extend the period specified in clause (a) to a further period of six months. In accordance with the above proviso, extension of time was sought from the competent authority specifying the circumstances therein including therein that the adjudicating authority suffered from COVID19 and that the noticee sought adjournment of hearing, the details of which are given at para 4 above. The competent authority having regard to the circumstances stated therein extended the time limit for adjudication of impugned notices for a further period of six months i.e. upto 30th June, 2021.
5.5.5 Further at this stage, it is also relevant to quote that while taking suo-moto cognizance of the situation arising out of the challenges being faced on account of spread of COVID 19 pandemic, Hon'ble Supreme Court of India vide their Order dated 08.03.2021 has held that in computing the period of limitation for any suit, appeal, application or proceeding under the general law of limitation or under any special laws (both Central or State), the period from 15.03.2020 till 14.03.2021 stands excluded and further held that in cases where the limitation would have expired during the period between 15.03.2020 till 14.03.2021, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 15.03.2021. In continuation to the above order, while disposing off Miscellaneous Application No. 665/2021 in SMW (C) No. 3/2020, Hon'ble Apex Court vide order dated 27.04.2021 passed in exercise of powers under Article 142 read with Article 141 of the Constitution of India ordered that the periods(s) of limitation, as prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings, whether condonable or not, shall stand extended till further orders." The Court further held that this order shall be a binding order within the meaning of Article 141 on all Courts/Tribunals and Authorities.15
C/50091/2022 & 32 Others 5.5.6 From the above it becomes abundantly clear that the period from 15.03.2020 onwards will not be included in the stipulated time limit for the purpose of finalising the instant proceedings and hence the objection raised by the noticee is not acceptable on this account. The present adjudication proceedings are held within time.
5.6.1 ***** I find that the order of Hon'ble High Court which formed the basis of grant of refund has been overruled by the Hon'ble Supreme Court and hence this plea is not sustainable in the eyes of law. Any benefit that has accrued on the basis of the said order of Hon'ble High Court has to be deposited back/recovered*****.
5.7.2 The Court has clearly held that the claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceedings and it would not be within the ken of section 27 to set aside the order of self-assessment and reassess the duty for making refund the provisions under Section 27 of the Act. The Court held that the order passed by the High Court of Delhi to the contrary, deserves to be and are set aside. In the light of above, I hold that the amount of refund sanctioned to the noticee in the light of the order of Hon'ble High Court was erroneous and hence liable to be recovered from them along with interest from the date it was refunded. The judgments cited by the noticee against charging interest are related to such circumstances where demands were not confirmed which is not the case here."
(emphasis supplied)
18. It is seen that the contention of the appellant that the two orders dated 24.05.2021 should be set aside for the sole reason that the show cause notices were not adjudicated within six months from the date of issuance of notices was rejected for the reason that the time period stood extended in terms of the provisions of the Taxation 16 C/50091/2022 & 32 Others and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 202010 and also in view of the orders passed by the Supreme Court from time to time in "RE: Cognizance for Extension of Limitation". The Principal Commissioner also held that the amount of refund in terms of the order passed by the Delhi High Court was erroneously refunded to the appellant and, therefore, was directed to be recovered with interest.
19. Shri B.L. Narasimhan, learned counsel for the appellant assisted by Ms. Jyoti Pal and Ms. Anjali Gupta submitted that:
(i) The time limit for adjudication of the show cause notices had lapsed prior to the date of passing of impugned orders. Elaborating this submission, learned counsel pointed out that under section 28(9A) of the Customs Act, the time specified in sub-section (9) is to be calculated from the date when the reason ceases to exist but it was not passed within 6 months from the date when the reason for keeping the adjudication on hold ceased to exists on 18.09.2019, on which date ITC was decided by the Supreme Court. The show cause notices were, therefore, required to be adjudicated by 17.03.2020, irrespective of the date of receipt of certified copy of the judgment but they were adjudicated on 24.05.2021;
(ii) The order dated 08.03.2021 passed by the Supreme Court in suo-moto proceedings relating to Covid Pandemic would not be applicable in the present proceedings. A bare perusal of first order dated 23.03.2020 passed by the Supreme Court 10 the Relaxation Act 17 C/50091/2022 & 32 Others demonstrates that the said order was made applicable for institution of proceedings and not disposal thereof and in this connection reliance has been placed upon the judgment of the Supreme Court in S. Kasi vs. State11;
(iii) The provisions of the Relaxation Act would also not come to the aid to the department for extending the time period for adjudicating the show cause notices since the limitation expired prior to 20.03.2020;
(iv) The orders dated 28.09.2016 sanctioning refund were passed in compliance of the directions issued by the Delhi High Court, which orders attained finality as they have not been challenged by the department. The sanctioned refund, therefore, cannot fall in the category of 'erroneous refund' within the meaning of section 28 of the Customs Act;
(v) There was no 'erroneously granted refund' on the date of issuance of the show cause notice and hence the same could not have been issued. In this connection, reference has been made to the judgment of the Tripura High Court in Tripura Ispat (A unit of Lohia Group) vs. Union of India and others12 and the judgment of the Bombay High Court in M/s United Spirits Limited vs. State of Maharashtra13;
(vi) The refund was sanctioned to the appellant in view of the judgment of the Supreme Court in SRF and under the directions of the Delhi High Court by order dated 05.09.2016. On the day of issuance of the show cause
11. 2020 (6) TMI 727 - Supreme Court
12. 2021 (1) TMI 753 - Tripura High Court
13. 2022 (5) 73 - Bombay High Court 18 C/50091/2022 & 32 Others notice, Special Leave Petition against the order of the High Court was pending before the Supreme Court in batch matters tagged with ITC. and there was no stay order with respect to the order of the High Court order. Therefore, the refund granted to the appellant cannot be considered as 'erroneously granted' on the date of issuance of show cause notices. Therefore, the show cause notices could not have been issued in the present case; and
(vii) In any view of the matter, the appellant has filed an amendment application under section 149 of the Customs Act on 28.02.2024.
20. Shri S.K. Rahman, learned authorized representative appearing for the department however supported the order and made the following submissions:
(i) The refund was sanctioned subject to outcome of the Special Leave Petition before the Supreme Court.
The basis for sanction of refund stood removed when the judgment of the Delhi High Court was reversed by the Supreme Court in ITC on 18.09.2019. It would, therefore, clearly be a case of 'erroneous refund';
(ii) In terms of the provisions of the Relaxation Act and the interim orders passed by the Supreme Court in suo-moto proceedings relating to Covid Pandemic, the period during which the show cause notices were required to be adjudicated stood extended and the impugned order was passed within the stipulated time; and 19 C/50091/2022 & 32 Others
(iii) There was no requirement for the department to challenge the refund sanctioning orders and the amount erroneously refunded could have been claimed by the department from the appellant under section 28 of the Customs Act.
21. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered.
22. The first issue that arises for consideration is whether the requirement of section 28(9) of the Customs Act that the proper officer should determine the amount of duty under section 28(8) within six months from the date of issuance of the show cause notice is satisfied in the facts and circumstances of the case.
23. To appreciate this contention it would be appropriate to examine the relevant provisions of section 28 of the Customs Act.
24. Sub-section (1) of section 28 deals with recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded and the relevant portion is reproduced below:
"(1) where any duty has not been levied or not paid or has been short-levied or short-paid or erroneously refunded or any interest payable has not been paid, part-
paid or erroneously refunded, for any reason other than the reasons of collusion or any willful mis-statement or suppression of facts,-
(a) the proper officer shall, within two years from the relevant date, serve notice on the person chargeable with the duty or interest which has not been so levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice;"
20
C/50091/2022 & 32 Others
25. Sub-section (8) of section 28 of the Customs Act provides that:
"(8) The proper officer shall, after allowing the concerned person an opportunity of being heard and after considering the representation, if any, made by such person, determine the amount of duty or interest due from such person not being in excess of the amount specified in the notice."
26. Sub-section (9) of section 28 of the Customs Act provides that:
"(9) The proper officer shall determine the amount of duty or interest under sub-section (8), -
(a) within six months from the date of notice, in respect of cases filling under clause (a) of sub-
section (1);
(b) within one year from the date of notice, in respect of cases filling under sub-section (4). Provided that where the proper officer fails to so determine within the specified period, any officer senior in rank to the proper officer may, having regard to the circumstances under which the proper officer was prevented from determining the amount of duty or interest under subsection (8), extend the period specified in clause (a) to a further period of six months and the period specified in clause (b) to a further period of one year.
Provided further that where the proper officer fails to determine within such extended period, such proceeding shall be deemed to have concluded as if no notice had been issued."
27. Sub-section (9A) of section 28 of the Customs Act provides that:
"(9A) Notwithstanding anything contained in sub-section (9), where the proper officer is unable to determine the amount of duty or interest under sub-section (8) for the reason that-21
C/50091/2022 & 32 Others
(a) an appeal in a similar matter of the same person or any other person is pending before the Appellate Tribunal or the High Court or the Supreme Court; or
(b) an interim order of stay has been issued by the Appellate Tribunal or the High Court or the Supreme Court; or
(c) the Board has, in a similar matter, issued specific direction or order to keep such matter pending; or
(d) the Settlement Commission has admitted an application made by the person concerned, the proper officer shall inform the person concerned the reason for non-determination of the amount of duty or interest under sub-section (8) and in such case, the time specified in sub-section (9) shall apply not from the date of notice, but from the date when such reason ceases to exist."
28. It is seen that after the notice has been issued under sub- section (1) of section 28, the proper officer has to determine the amount of duty under sub-section (8), but this has to be done within six months from the date of notice as contemplated under sub-section (9) of section 28 of the Customs Act. Further, where the proper officer is unable to determine the amount of duty under sub-section (8) for the reason that an appeal in a similar matter of the same person is pending before the Supreme Court, the proper officer shall inform the person concerned the reason for non-determination of the amount of duty and in such case, the time specified in sub-section (9) shall apply not from the date of notice, but from the date when such reason ceases to exist.
29. In the present case, the notice under sub-section (1) of section 28 of the Customs Act was issued to the appellant on 26.09.2018, but it is only on 24.05.2021 that the Principal Commissioner determined the amount of duty under sub-section (8) 22 C/50091/2022 & 32 Others of section 28 of the Customs Act. According to the department, though the time limit of six months for such determination may have expired on 25.03.2019 but in view of the provisions of the Relaxation Act and the orders passed by the Supreme Court in suo-moto proceedings relating to Covid Pandemic, the period stood extended, and the Chief Commissioner in terms of the proviso to sub-section (9) of section 28 also gave extension upto 30.06.2021. Thus, according to the department, the Commissioner determined the amount of duty within the time stipulated. According to the appellant, the provisions of the Relaxation Act or the directions contained in the orders passed by the Supreme Court in suo-moto proceedings do not come to the aid of the department and so the order deserves to be set aside for this reason alone.
30. To examine this contention, it is necessary to consider the relevant dates, which are indicated in the following chart:
Date Particulars
26.09.2018 Show cause notices were issued to the appellant
seeking recovery of 'erroneously refunded' amount under section 28(1). However, adjudication of the show cause notices was kept in abeyance owing to pendency of the Civil Appeal filed by the department against the judgment of the Delhi High Court on the basis of which refund was granted to the appellant. This was in terms of section 28(9A).
25.03.2019 Time limit of six months for adjudication of the show cause notices expired in terms of section 28(9). 18.09.2019 The Supreme Court decided the appeal filed by the department in ITC. Thus, the reason to keep the notice in abeyance ceased under section 28(9A). 17.03.2020 Six months time, for adjudicating the show cause notice from 18.09.2019 expired on 17.03.2020. 29.09.2020 Relaxation Act was promulgated. Under section 6 of 23 C/50091/2022 & 32 Others the Relaxation Act, if the time limit falls between 20.03.2020 and 29.09.2020 for completion of any proceeding, it would stand extended to 30.09.2020. Subsequently, by Notification dated 30.09.2020, the time limit was extended upto 31.12.2020.
23.03.2020, The Supreme Court in suo-moto proceedings relating 08.03.2021, to Covid Pandemic ordered that the period from 27.04.2021 15.03.2020 till 02.10.2021 shall stand excluded in and computing the period prescribed under any law for 23.09.2021 instituting proceedings, outer limits (within which the Court or Tribunal can condone the delay), and termination of proceedings.
30.06.2021 The Commissioner sought extension for adjudication of show cause notices in terms of the proviso to section 28(9), and the time period was extended by the Chief Commissioner upto 30.06.2021.
24.05.2021 Impugned order was passed confirming recovery of the refund amount.
31. The adjudication of the two show cause notices dated 26.09.2018 had been kept in abeyance owing to pendency of the appeal filed by the department before the Supreme Court and this reason ceased to exist on 18.09.2019 when the Supreme Court decided the appeal filed by the department in ITC. The period of six months from 18.09.2019 would expire on 17.03.2020.
32. The Commissioner has, in the impugned order, placed reliance upon the provisions of section 6 of the Relaxation Act which is reproduced below:
"CHAPTER V RELAXATION OF TIME LIMIT UNDER CERTAIN INDIRECT TAX LAWS
6. Notwithstanding anything contained in the Central Excise Act, 1944, the Customs Act, 1962 (except sections 30, 30A, 41, 41A, 46 and 47), the Customs Tariff Act, 1975 or Chapter V of the Finance Act, 1994, as it stood 24 C/50091/2022 & 32 Others prior to its omission vide section 173 of the Central Goods and Services Tax Act, 2017 with effect from the 1st day of July, 2017, the time limit specified in, or prescribed or notified under, the said Acts which falls during the period from the 20th day of March, 2020 to the 29th day of September, 2020 or such other date after the 29th day of September, 2020 as the Central Government may, by notification, specify, for the completion or compliance of such action as--
(a) completion of any proceeding or issuance of any order, notice, intimation, notification or sanction or approval, by whatever name called, by any authority, commission, tribunal, by whatever name called; or
(b) filing of any appeal, reply or application or furnishing of any report, document, return or statement, by whatever name called, shall, notwithstanding that completion or compliance of such action has not been made within such time, stand extended to the 30th day of September, 2020 or such other date after 30th day of September, 2020 as the Central Government may, by notification, specify in this behalf"
(emphasis supplied)
33. A perusal of the aforesaid section 6 shows that only the time limit which falls during the period from 20.03.2020 to 20.09.2020 was extended upto 30.09.2020 and this period was subsequently extended upto 31.12.2020. In the present case, the time limit expired on 17.03.2020. Section 6 of the Relaxation Act would, therefore, not come to the aid of the department.
34. The Principal Commissioner held that the provisions of section 6 of the Relaxation Act would extend the time period in the present case because in normal circumstance at least three days time is required to obtain copy of the judgment of the Supreme Court and so the period would fall on or after 20.03.2020. 25
C/50091/2022 & 32 Others
35. It is not possible to accept this finding of the Principal Commissioner in view of the specific provisions of section 28(9A) of the Customs Act which provides that the time specified under sub- section (9) of six months shall not apply from the date of notice, but from the date when such reason ceases to exist. In the present case, the reason ceased to exist on 18.09.2019 when the Civil Appeal filed by the department against the judgment of the Delhi High Court was decided by the Supreme Court. Thus, the time period has to be counted from 18.09.2019 only.
36. The Principal Commissioner has also placed reliance upon the interim orders passed by the Supreme Court in suo-moto proceedings relating to Covid Pandemic to hold that the time period for adjudicating the show cause notices stood extended and the adjudication was within time.
37. In the first order in Suo Motu Writ Petition (Civil) No(s). 3 of 2020 dated 23.03.2020, the Supreme Court took suo-moto cognizance of the situation arising out of the challenge faced by the country on account of Covid-19 virus and issued certain directions, which directions are reproduced below:
"This Court has taken Suo Motu cognizance of the situation arising out of the challenge faced by the country on account of Covid-19 Virus and resultant difficulties that may be faced by litigants across the country in filing their petitions/applications/suits/ appeals/all other proceedings within the period of limitation prescribed under the general law of limitation or under Special Laws (both Central and/or State).
To obviate such difficulties and to ensure that lawyers/litigants do not have to come physically to file such proceedings in respective Courts/Tribunals across the country including this Court, it is hereby ordered that a period of limitation in all such proceedings, irrespective of 26 C/50091/2022 & 32 Others the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further order/s to be passed by this Court in present proceedings.
We are exercising this power under Article 142 read with Article 141 of the Constitution of India and declare that this order is a binding order within the meaning of Article 141 on all Courts/Tribunals and authorities."
38. This order is in the context of the difficulties faced by the litigants in filing petition/application/suits/appeals/all other proceedings and, therefore, would not come to the aid of the department.
39. However, the subsequent order dated 08.03.2021 passed by the Supreme Court does provide that the period from 15.03.2020 till 14.03.2021 shall stand excluded in computing the periods prescribed under the Arbitration Act, Commercial Courts Act, the Negotiable Instruments Act and any other laws, which prescribe periods of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings. The provisions of section 28 of the Customs Act are involved in the present case and sub-section (9) of section 28 provides that the proper officer shall determine the amount of duty within six months from the date of issuance of the show cause notice under section 28(1) of the Customs Act. It is this limitation provided for termination of the proceedings that has been extended by the Supreme Court in the aforesaid order dated 08.03.2021. The said order is reproduced below:
"1. Due to the onset of COVID-19 pandemic, this Court took suo motu cognizance of the situation arising from difficulties that might be faced by the litigants across the country in filing petitions/applications/suits/appeals/all 27 C/50091/2022 & 32 Others other proceedings within the period of limitation prescribed under the general law of limitation or under any special laws (both Central or State). By an order dated 23.03.2020 this Court extended the period of limitation prescribed under the general law or special laws whether compoundable or not with effect from 15.03.2020 till further orders. The order dated 23.03.2020 was extended from time to time. Though, we have not seen the end of the pandemic, there is considerable improvement. The lockdown has been lifted and the country is returning to normalcy. Almost all the Courts and Tribunals are functioning either physically or by virtual mode. We are of the opinion that the order dated 23.03.2020 has served its purpose and in view of the changing scenario relating to the pandemic, the extension of limitation should come to an end.
2. We have considered the suggestions of the learned Attorney General for India regarding the future course of action. We deem it appropriate to issue the following directions:-
1. In computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.03.2020 till 14.03.2021 shall stand excluded. Consequently, the balance period of limitation remaining as on
15.03.2020, if any, shall become available with effect from 15.03.2021.
2. In cases where the limitation would have expired during the period between 15.03.2020 till 14.03.2021, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 15.03.2021. In the event the actual balance period of limitation remaining, with effect from 15.03.2021, is greater than 90 days, that longer period shall apply.
3. The period from 15.03.2020 till 14.03.2021 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can 28 C/50091/2022 & 32 Others condone delay) and termination of proceedings.
*****
3. The Suo Motu Writ Petition is disposed of accordingly."
(emphasis supplied)
40. Though, the Supreme Court in the aforesaid order dated 08.03.2021 noticed that the order dated 23.03.2020 had served its purpose in view of the changing scenario relating to the pandemic and the extension of limitation should come to an end, but by the subsequent order dated 27.04.2021 the Supreme Court noticed that there was a second outburst of Covid-19 virus and, therefore, restored the order dated 20.03.2020, and in continuation of the order dated 08.03.2021 passed the following order dated 27.04.2021:
"Supreme Court Advocate on Record Association (SCAORA) has now through this Interlocutory Application highlighted the daily surge in COVID cases in Delhi and how difficult it has become for the Advocates-on-Record and the litigants to institute cases in Supreme Court and other courts in Delhi. Consequently, restoration of the order dated 23rd March, 2020 has been prayed for.
We have heard Mr. Shivaji M. Jadhav, President SCAORA in support of the prayer made in this application. Learned Attorney General and Learned Solicitor General have also given their valuable suggestions.
We also take judicial notice of the fact that the steep rise in COVID-19 Virus cases is not limited to Delhi alone but it has engulfed the entire nation. The extraordinary situation caused by the sudden and second outburst of COVID-19 Virus, thus, requires extraordinary measures to minimize the hardship of litigant-public in all the states. We, therefore, restore the order dated 23rd March, 2020 and in continuation of the order dated 8th March, 2021 direct that the period(s) of limitation, as prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings, whether condonable or not, shall stand extended till further orders.29
C/50091/2022 & 32 Others It is further clarified that the period from 14th March, 2021 till further orders shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings.
We have passed this order in exercise of our powers under Article 142 read with Article 141 of the Constitution of India. Hence it shall be a binding order within the meaning of Article 141 on all Courts/Tribunals and Authorities."
(emphasis supplied)
41. Subsequently, the Supreme Court passed another order dated 23.09.2021. By this order the Supreme Court ordered that the period from 15.03.2020 to 02.10.2021 shall stand excluded in computing the periods prescribed under the Arbitration Act, Commercial Courts Act, the Negotiable Instruments Act and any other laws, which prescribe periods of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings. In view of the aforesaid order of the Supreme Court the period from 15.03.2020 till 02.10.2021 shall stand excluded in computing the period prescribed under section 28(9) of the Customs Act. The order dated 23.09.2021 passed by the Supreme Court is reproduced below:
"6. The order dated 23.03.2020 was passed in view of the extraordinary health crisis. On 08.03.2021, the order dated 23.03.2020 was brought to an end, permitting the relaxation of period of limitation between 15.03.2020 and 14.03.2021. While doing so, it was made clear that the 30 C/50091/2022 & 32 Others period of limitation would start from 15.03.2021. As the said order dated 08.03.2021 was only a one-time measure, in view of the pandemic, we are not inclined to modify the conditions contained in the order dated 08.03.2021.
7. The learned Attorney General for India stated that paragraph No.4 of the order dated 08.03.2021 should be continued as there are certain containment zones in some States even today.
8. Therefore, we dispose of the M.A. No.665 of 2021 with the following directions:-
I. In computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.03.2020 till 02.10.2021 shall stand excluded. Consequently, the balance period of limitation remaining as on 15.03.2021, if any, shall become available with effect from 03.10.2021.
II. In cases where the limitation would have expired during the period between 15.03.2020 till 02.10.2021, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 03.10.2021. In the event the actual balance period of limitation remaining, with effect from 03.10.2021, is greater than 90 days, that longer period shall apply.
III. The period from 15.03.2020 till 02.10.2021 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings.
*****"
(emphasis supplied)
42. The show cause notices, therefore, in view of the orders dated 08.03.2021, 27.04.2021 and 23.09.2021 could have been adjudicated upto 02.10.2021 and in the present case they were adjudicated on 31 C/50091/2022 & 32 Others
24.05.2021. Thus, the show cause notices were adjudicated within time. It is also seen that the Chief Commissioner had also extended the time for adjudicating the show cause notices upto 30.06.2021 by exercising powers under the proviso to section 28(9) of the Customs Act.
43. The decision of the Supreme Court in S. Kasi would not help the appellant as it interprets the order dated 23.03.2020 passed by the Supreme Court and not the orders dated 08.03.2021, 27.04.2021 and 23.09.2021 of the Supreme Court.
44. It is, therefore, not possible to accept the contention of the learned counsel for the appellant that the show cause notices were not adjudicated within the time stipulated in section 28(9) of the Customs Act.
45. Learned counsel for the appellant also submitted that the show cause notices could not have been issued to the appellant as the present case cannot be termed as a case of 'erroneously granted refund'.
46. It is not possible to accept this contention of the learned counsel of the appellant.
47. The appellant had filed refund applications on the basis of the judgment of the Supreme Court in SRF. The two refund applications were rejected by orders dated 30.06.2016 passed by the Deputy Commissioner (Refund) specifically observing that the assessment can be modified only by filing an appeal before the Appellate Authority and unless and until the assessment order is modified by the competent authority, refund cannot be granted. The Deputy Commissioner also noticed that the appellant had not challenged the 32 C/50091/2022 & 32 Others assessment orders. The orders passed by the Deputy Commissioner were challenged by the appellant before the Delhi High Court in a Writ Petition which was allowed on 05.09.2016 and a direction was issued to the Deputy Commissioner (Refund) to pay the amount. It is as a consequence of the aforesaid directions of the Delhi High Court that the Deputy Commissioner sanctioned the refund amount by orders dated 27.09.2016. In the said orders, the Deputy Commissioner made it clear that the refund was being granted only because of the directions issued by the Delhi High Court. The Department filed a Special Leave Petition to challenge the order of the Delhi High Court. Thereafter, two show cause notices, each dated 26.09.2018, were issued to the appellant under section 28 of the Customs Act requiring the appellant to show cause why the erroneously sanctioned refund amount covering 31 Bills of Entry should not be recovered from the appellant. It was made clear in the show cause notice that the adjudication of these two show cause notices would be subject to the outcome of the decision of the Supreme Court. The Deputy Commissioner was also directed to keep the adjudication of these two show cause notices in the call book as it was a protective demand and the same was not to be adjudicated till the decision of the Supreme Court.
48. The issue as to whether it was a case of erroneous refund could be finally determined only after the decision of the Supreme Court. This is for the reason that the issue as to whether the appellant could straight away claim refund on the basis of the judgment of the Supreme Court in SRF, or it was incumbent upon the appellant to challenge the assessment by filing an appeal to the 33 C/50091/2022 & 32 Others Commissioner (Appeals) for claiming refund was to be decided by the Supreme Court in the appeal filed by the department. It cannot, therefore, be urged by the appellant that since it was not a case of erroneous refund on the date the show cause notices were issued, it was not permissible for the department to issue the show cause notices. The Supreme Court ultimately held that refund could be claimed only after the assessment orders are modified in appellate proceedings. The department had taken adequate care to keep the adjudication of these two cause notices in abeyance till the Supreme Court decided the appeal filed by the department.
49. Learned counsel for the appellant placed reliance upon the decision of the Tripura High Court in Tripura Ispat and to the decision of the Bombay High Court in United Spirits, which followed the judgment of the Tripura High Court, to contend that the appropriate remedy available to the department was to have filed an appeal against the order sanctioning refund and the remedy of issuing a notice under section 28 of the Customs Act was not available to the department.
50. This decision of the Tripura High Court would not help the appellant as would be clear from the factual position. The Writ Petitioner therein had applied for refund pursuant to the decision of a two Judge Bench decision of the Supreme Court in M/s. SRD Nutrients Private Limited vs. Commissioner of Central Excise, Guwahati14. The refund was granted to the appellant. The Supreme Court thereafter reversed the aforesaid decision in SRD Nutrients in
14. (2018) 1 SCC 105 34 C/50091/2022 & 32 Others M/s. Unicorn Industries vs. Union of India and others15. Based on this decision of the Supreme Court, the Assistant Commissioner issued show cause notices for recovery of the erroneously granted refund. It is in this context that the Tripura High Court observed that if the department was aggrieved by the refund order passed by the Assistant Commissioner, it was open to the department to file an appeal against such order.
51. In the present case, the refund was sanctioned because of the specific directions issued by the Delhi High Court in the Writ Petition filed by the appellant and the refund order specifically stated that it was because of the directions of the Delhi High Court that the refund was being sanctioned. The order of the Delhi High Court was assailed by the department before the Supreme Court. The show cause notice issued to the appellant under section 28(1) of the Customs Act clearly mentions that the adjudication would be dependent on the decision of the Supreme Court.
52. It also needs to be noticed that while both the importer and the Revenue can appeal to the Commissioner (Appeals) under section 128 of the Customs Act against an order of assessment or self- assessment of a Bill of Entry, the proper officer has another option of issuing a show cause notice under section 28 of the Customs Act to demand and recover duties erroneously refunded. This is clear from a plain reading of section 28 of the Customs Act and in Collector of Central Excise, Kanpur vs. Flock (India) Pvt. Ltd.16, the Supreme Court also held that an assessment can be modified either through an appeal or under section 28 of the Customs Act. This legal position was
15. (2020) 3 SCC 492
16. 2000 (120) E.L.T. 285 (S.C.) 35 C/50091/2022 & 32 Others reiterated by the Supreme Court in Priya Blue Industries Ltd. vs. Commissioner of Customs (Preventive)17 and the relevant observations of the Supreme Court are reproduced below:
6. We are unable to accept this submission. Just such a contention has been negatived by this Court in Flock (India)'s case (supra). Once an Order of Assessment is passed the duty would be payable as per that order.
Unless that order of assessment has been reviewed under Section 28 and/or modified in an Appeal that Order stands. So long as the Order of Assessment stands the duty would be payable as per that Order of Assessment. A refund claim is not an Appeal proceeding. The Officer considering a refund claim cannot sit in Appeal over an assessment made by a competent Officer. The Officer considering the refund claim cannot also review an assessment order."
(emphasis supplied)
53. The aforesaid legal position was also affirmed by the Supreme Court in ITC and the relevant paragraph 40 is reproduced below:
"40. In Priya Blue Industries Ltd. v. Commissioner of Customs (Preventive) - 2004 (172) E.L.T. 145 (S.C.) = (2005) 10 SCC 433, the Court considered unamended provision of Section 27 of the Customs Act and a similar submission was raised which was rejected by this Court observing that so long as the order of assessment stands, the duty would be payable as per that order of assessment. *****
41. It is apparent from provisions of refund that it is more or less in the nature of execution proceedings. It is not open to the authority which processes the refund to make a fresh assessment on merits and to correct assessment on the basis of mistake or otherwise."
17. 2004 (172) E.L.T. 145 (S.C.) 36 C/50091/2022 & 32 Others
54. It is for this reason that it was also held by this Division Bench of the Tribunal in M/s. Vivo Mobile India Pvt. Ltd. vs. Principal Commissioner of Customs18 that both ITC and Flock (India) make it explicit that the assessments can be modified either thorough an appeal to the Commissioner (Appeals) or under section 28 of the Customs Act. The relevant portion of the decision of the Tribunal in Vivo Mobile is reproduced below:
"42. Thus, the power under section 28 is the power to review the assessment by the proper officer himself and modify it. Such power is not inherently available to any judicial or quasi-judicial authority as once the authority passes any order, he becomes functus officio. But where such power is conferred on an authority by law, he can exercise it. All the four judgments of the Supreme Court in Flock India, ITC Ltd, Sayed Ali [2011 (265) ELT 17 (SC)] and Canon India make it more than explicit the nature of the power under section 28 and that an assessment can be modified by resorting to section 28 or on an appeal."
55. The appellant is, therefore, not justified in asserting that the notice under section 28 of the Customs Act could not have been issued to the appellant claiming 'erroneously granted refund' as the only remedy available to the department was to challenge the refund order by filing an appeal before the Commissioner (Appeals).
56. It is, therefore, not possible to accept the contention of the learned counsel for the appellant that order dated 24.05.2021 should be set aside for the sole reason that it was passed beyond the time period contemplated under section 28(9) of the Customs Act.
18. Customs Appeal No. 50782 of 2021 decided on 09.02.2024 (Del.) 37 C/50091/2022 & 32 Others CUSTOMS APPEAL NO's 50510 TO 50540 OF 2021
57. The appellant had filed 31 appeals before the Commissioner (Appeals) on 17.12.2019 under section 128 of the Customs Act for re- assessment of the 31 Bills of Entry filed for import of mobile phones during the period from 07.10.2014 to 17.07.2015. The appeals were required to be filed within 60 days from date of communication of the decision or order, and a delay of 30 days beyond this period could only be condoned. These appeals were accompanied by an application under section 14 of the Limitation Act, 196319 seeking exclusion of the time period from the date of out of charge of the respective Bills of Entry till the date of judgment of the Supreme Court in ITC on 18.09.2019. The Commissioner (Appeals) dismissed all the 31 appeals by a common order dated 17.12.2020 holding that the requirements of section 14 of the Limitation Act were not satisfied by the appellant and, therefore, the appeals filed for re-assessment of the Bills of Entry would have to be rejected as having been filed beyond the period contemplated under section 128 of the Customs Act. The relevant portion of the order passed by the Commissioner (Appeals) is reproduced below:
"5.5 The contention of the Appellant that they meet the requirement of said Section 14 is misplaced. The Section 14 of the Limitation Act, requires that -
(i) The plaintiff has been prosecuting with due diligence another civil proceedings;
(ii) The proceeding can be in the court of first instance or appeal or revision;
(iii) The proceeding relates to the same matter in issue and is prosecuted in goods faith in a court which,
19. the Limitation Act 38 C/50091/2022 & 32 Others from defect of jurisdiction or other cause of like nature, is unable to entertain it.
In the present case, the appeal is for challenging the assessment of 31 bills of entry and seeking their reassessment based on the ruling of Hon'ble SC in the case of the case of M/s SRF Ltd. [2015 (318) E.L.T. 607 (S.C.)]. However, the Appellant had been pursuing with the Department and the High Court their request for refund of duty based on SRF case [2015 (318) E.L.T. 607 (S.C.)]. In their refund application which were rejected vide orders dated 30.06.2016 and which were matter of dispute before Hon'ble High Court in WP (C) No. 7851/2016 and before the Hon'ble Supreme Court in SLP (C) No. 6269 of 2017, the Appellant had not sought reassessment of bills of entry. Thus, the matter being pursued by the Appellant was of "refund of duty". This is entirely different from the issue now raised in appeal before me. Thus, the Appellant fails in the first requirement of Sec 14 of the limitation Act, 1963.
5.6. Even assuming (not admitting) that the matter being pursued till date of ITC judgment was same as the being pursued in the present appeal, it needs to be seen whether the matter was being prosecuted in good faith in wrong forum which from defect of jurisdiction or other cause of a like nature could not entertain it. Though refund application is entirely different from challenge to self assessment, for argument sake if we equate the refund application with challenge to self-assessment of impugned bills of entry, it needs to be noted that refund application was filed with correct authority and there was no defect in jurisdiction. Thus, section 14 does not remain applicable in the present case. The refund application were rejected by the competent authority on certain grounds which has been upheld by the Hon'ble Supreme Court in ITC case [2019 (368) E.L.T. 216 (S.C.)]. So the Appellant cannot take shelter under section 14 of the Limitation Act, 1963 to claim that they were pursuing matter before wrong forum. Thus, the Appellant fails in second requirement of section 14 of the Limitation Act, 1963.
39
C/50091/2022 & 32 Others 5.7 It also needs to be seen whether filing of refund application instead of challenge to self-assessment was in good faith and with due diligence or not. 5.7.1 ***** Since as per law laid down in Priya Blue (Supra) and Flock (India) Pvt. Ltd., they were not required to challenge the self assessment first before claiming refund, which they could not have done due to limitation, they took path of refund application where period was one year. Thus, the Appellant took/choose wrong path for his financial gains ignoring the law laid down by the Hon'ble Apex Court and choosing to rely upon case of Aman Medicals. ***** ***** 5.7.3 ***** In terms of said position of law, the Appellant could have claimed benefit of SRF Ltd. case only when his self-assessment (which were final in all aspects) were set aside according to law. Filing of refund application was not challenge to self-assessment. The Appellant very conveniently ignored this important law laid down by the Hon'ble Supreme Court and he cannot claim that they filed refund application in good faith. Thus the Appellant fails to meet requirement of Section 14 of the Limitation Act, 1963, in this regard also.
***** "5.10 Thus the Appellant is not eligible for benefit of section 14 of the Limitation Act, 1963 and the appeals for reassessment of bills of entry are time barred in terms of Section 128 of the Customs Act, 1962. Accordingly, I refrain from discussing merits of the issue and reject the appeals being time barred."
(emphasis supplied)
58. The appellant had claimed the benefit of section 14 of the Limitation Act, which deals with exclusion of time of proceeding bona fide in court without jurisdiction, and the said section is reproduced below:
40
C/50091/2022 & 32 Others "14. Exclusion of time of proceeding bona fide in court without jurisdiction. -
(1) In computing the period of limitation for any suit the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.
(2) In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it."
59. Learned counsel for the appellant submitted that the requirements of section 14 of the Limitation Act were satisfied by the appellant and, therefore, the appeals should have been treated to have been filed within time and should have been decided on merits.
60. The Commissioner (Appeals), as noticed above, held that the conditions stipulated in section 14 of the Limitation Act were not satisfied by the appellant for the reason that the matter that was earlier pursued by the appellant before the department related to refund of Additional Duty and not re-assessment of Bills of Entry, which relief had been claimed in the appeals filed before the Commissioner (Appeals), and even if it is assumed that the appellant was pursuing the same matter, the refund applications were filed before the correct authority and there was no defect in jurisdiction. The Commissioner (Appeals) also held that the appellant was required to challenge the self-assessment before claiming refund and so the 41 C/50091/2022 & 32 Others filing of the refund applications instead of challenging the assessment was not in good faith and was out of commercial consideration to reap the benefits arising out of the decision of the Supreme Court in SRF.
61. It is this order dated 17.12.2020 passed by the Commissioner (Appeals) that has been assailed in these appeals.
62. Learned counsel for the appellant made the following submissions:
(i) The appellant had filed the refund applications within a period of one year from the date of out of charge (i.e. within limitation) on a bona-fide belief that the refund is a proper remedy available to the appellant. The refund applications had been filed pursuant to the directions issued by the Delhi High Court on 05.09.2016 in the Writ Petition filed by the appellant. It is only when the Supreme Court decided ITC on 18.09.2019 that the position of law changed. Thus, the appellant had been prosecuting with due diligence another civil proceeding;
(ii) The refund applications were filed before the competent refund authorities;
(iii) The proceedings before the refund authorities as well as the Commissioner (Appeals) relate to same issue i.e. availment of refund of Additional Duty on the basis of the judgment of the Supreme Court in SRF. On the day when refund applications were filed under section 27, the settled position of law did not require any appeal to be filed under section 128 of the Customs Act to challenge the Bills of Entry; and
(iv) By virtue of application of section 14 of the Limitation Act, the period from 17.07.2015 till the ITC judgment was 42 C/50091/2022 & 32 Others delivered on 18.09.2019 has to be excluded for the purpose of computation of the period of limitation for filing an appeal under section 128 of the Customs Act.
63. Learned authorized representative appearing for the department, however, supported the impugned order passed by the Commissioner (Appeals) and made the following submissions:
(i) An appeal can be filled under section 128 of the Customs Act before the Commissioner (Appeals) for re-assessment of the Bills of Entry within 60 days from the date of communication of the assessment order and delay of 30 days beyond this period can only be condoned. In the instant case, the Bills of Entry were self-assessed by the importer and were filed from 07.10.2014 to 17.07.2015.
They were given out of charge from 09.10.2014 to 17.07.2015. The appeals were, however, filed on 17.12.2019 with a delay of 4 years and 5 months; and
(ii) The Commissioner (Appeals) correctly held that all the three conditions set out in section 14 of the Limitation Act were not satisfied by the appellant.
64. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered.
65. The appellant had imported mobile phones during the period from 09.10.2014 to 17.07.2015 and paid Additional Duty of customs @ 6% upto 28.02.2015 and thereafter @ 12.5% on the 31 Bills of Entry. In view of the judgment of Supreme Court in SRF, the appellant believed that it was liable to pay Additional Duty @ 1% 43 C/50091/2022 & 32 Others only. It, therefore, filed two applications on 25.09.2015 for refund of the excess Additional Duty that was paid. The first application was for refund for the period from 01.10.2011 to 25.03.2015 towards 14 Bills of Entry and the second application for refund for the period from 27.03.2015 to 17.07.2015 for the 17 Bills of Entry. These two refund applications were rejected by orders dated 30.06.2016, but these orders were challenged by the appellant before the Delhi High Court in a Writ Petition and by a judgment dated 05.09.2016 the refund was directed to be paid to the appellant. The Deputy Commissioner, in terms of the directions issued by the Delhi High Court, allowed the refund applications by order dated 27.09.2016. The department, however, challenged the judgment of the Delhi High Court before the Supreme Court and the Supreme Court allowed the appeal in ITC holding that the claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to appropriate proceedings. This judgment of the Supreme Court in ITC was delivered on 18.09.2019.
66. It is in view of the aforesaid judgment of the Supreme Court in ITC on 18.09.2019 that the appellant filed 31 appeals before the Commissioner (Appeals) on 17.12.2019 under section 128(1) of the Customs Act together with an application under section 14 of the Limitation Act for exclusion of time for re-assessment of the 31 Bills of Entry. The appellant has been denied the exclusion of time under of section 14 of the Limitation Act by the Commissioner (Appeals) for the reason that the requirements contained in section 14 of the Limitation Act were not satisfied by the appellant. 44
C/50091/2022 & 32 Others
67. The issue, therefore, that arises for consideration in these 31 appeals is whether the appellant is entitled to seek exclusion of time under section 14 of the Limitation Act.
68. It has first to be seen whether section 14 of the Limitation Act can be applied to proceedings under section 128 of the Customs Act.
69. This aspect was examined at length by the Supreme Court in M.P. Steel Corporation vs. Commissioner of Central Excise20. The Supreme Court held that though on a plain reading of the provisions of the Limitation Act it would be clear that suits, appeals and applications are only to be considered from the limitation point of view if they are filed in courts and not before quasi-judicial bodies, but after making reference to the decision of the Supreme Court in P. Sarathi vs. State Bank of India21, the Supreme Court observed that it would also be applicable to proceedings before Tribunals. The observations of the Supreme Court are as follows:
"31. This judgment is in line with a large number of authorities which have held that Section 14 should be liberally construed to advance the cause of justice - see : Shakti Tubes Ltd. v. State of Bihar, (2009) 1 SCC 786 and the judgments cited therein. Obviously, the context of Section 14 would require that the term "Court" be liberally construed to include within it quasi- judicial Tribunals as well. This is for the very good reason that the principle of Section 14 is that whenever a person bona fide prosecutes with due diligence another proceeding which proves to be abortive because it is without jurisdiction, or otherwise no decision could be rendered on merits, the time taken in such proceeding ought to be excluded as otherwise the person who has approached the Court in such proceeding would be penalized for no fault of his own. This judgment does not further the case of Shri Viswanathan in any way. The
20. 2015 (319) E.L.T. 373 (S.C.)
21. (2000) 5 SCC 355 45 C/50091/2022 & 32 Others question that has to be answered in this case is whether suits, appeals or applications referred to by the Limitation Act are to be filed in Courts. This has nothing to do with "civil proceedings" referred to in Section 14 which may be filed before other Courts or authorities which ultimately do not answer the case before them on merits but throw the case out on some technical ground. Obviously the word "Court" in Section 14 takes its colour from the preceding words "civil proceedings". Civil proceedings are of many kinds and need not be confined to suits, appeals or applications which are made only in Courts stricto sensu. This is made even more clear by the explicit language of Section 14 by which a civil proceeding can even be a revision which may be to a quasi-judicial Tribunal under a particular statute."
(emphasis supplied)
70. The Supreme Court thereafter examined whether the principles contained in section 14 of the Limitation Act would also apply to an appeal filed under section 128 of the Customs Act and in this connection observed that the principles on which section 14 of the Limitation Act is based would apply to appeals filed under section 128 of the Customs Act. The relevant observations of the Supreme Court are as follows:
"We have already held that the Limitation Act including Section 14 would not apply to appeals filed before a quasi-judicial Tribunal such as the Collector (Appeals) mentioned in Section 128 of the Customs Act. However, this does not conclude the issue. There is authority for the proposition that even where Section 14 may not apply, the principles on which Section 14 is based, being principles which advance the cause of justice, would nevertheless apply. We must never forget, as stated in Bhudan Singh & Anr. v. Nabi Bux & Anr., (1970) 2 SCR 10, that justice and reason is at the heart of all legislation by Parliament."
(emphasis supplied) 46 C/50091/2022 & 32 Others
71. The Supreme Court also examined whether section 14 of the Limitation Act would stand excluded as section 128 of the Customs Act is a complete code which deals with limitation also. In this context the Supreme Court observed that the principles of section 14 of the Limitation Act would apply to an appeal filed under section 128 of the Customs Act and the observations are as follows:
"34. However, it remains to consider whether Shri Sanghi is right in stating that Section 128 is a complete code by itself which necessarily excludes the application of Section 14 of the Limitation Act. For this proposition he relied strongly on Parson Tools which has been discussed hereinabove. As has already been stated, Parson Tools was a judgment which turned on the three features mentioned in the said case. Unlike the U.P. Sales Tax Act, there is no provision in the Customs Act which enables a party to invoke suo motu the Appellate power and grant relief to a person who institutes an appeal out of time in an appropriate case. Also, Section 10 of the U.P. Sales Tax Act dealt with the filing of a revision petition after a first appeal had already been rejected, and not to a case of a first appeal as provided under Section 128 of the Customs Act. Another feature, which is of direct relevance in this case, is that for revision petitions filed under the U.P. Sales Tax Act a sufficiently long period of 18 months had been given beyond which it was the policy of the legislature not to extend limitation any further. This aspect of Parson Tools has been explained in Consolidated Engineering in some detail by both the main judgment as well as the concurring judgment. In the latter judgment, it has been pointed out that there is a vital distinction between extending time and condoning delay. Like Section 34 of the Arbitration Act, Section 128 of the Customs Act is a Section which lays down that delay cannot be condoned beyond a certain period. Like Section 34 of the Arbitration Act, Section 128 of the Customs Act does not lay down a long period. In these circumstances, to infer exclusion of Section 14 or the principles contained in Section 14 would be unduly harsh and would not advance the cause of 47 C/50091/2022 & 32 Others justice. It must not be forgotten as is pointed out in the concurring judgment in Consolidated Engineering that:
"Even when there is cause to apply Section 14, the limitation period continues to be three months and not more, but in computing the limitation period of three months for the application under Section 34(1) of the AC Act, the time during which the applicant was prosecuting such application before the wrong Court is excluded, provided the proceeding in the wrong Court was prosecuted bona fide, with due diligence. Western Builders [(2006) 6 SCC 239] therefore, lays down the correct legal position."
35. Merely because Parson Tools also dealt with a provision in a tax statute does not make the ratio of the said decision apply to a completely differently worded tax statute with a much shorter period of limitation - Section 128 of the Customs Act. Also, the principle of Section 14 would apply not merely in condoning delay within the outer period prescribed for condonation but would apply de hors such period for the reason pointed out in Consolidated Engineering above, being the difference between exclusion of a certain period altogether under Section 14 principles and condoning delay. As has been pointed out in the said judgment, when a certain period is excluded by applying the principles contained in Section 14, there is no delay to be attributed to the appellant and the limitation period provided by the concerned statute continues to be the stated period and not more than the stated period. We conclude, therefore, that the principle of Section 14 which is a principle based on advancing the cause of justice would certainly apply to exclude time taken in prosecuting proceedings which are bona fide and with due diligence pursued, which ultimately end without a decision on the merits of the case."
(emphasis supplied)
72. It would also be necessary to examine the factual position of the appeal before the Supreme Court in M.P. Steel to find out the reason why the application was filed by the appellant therein under 48 C/50091/2022 & 32 Others section 14 of the Limitation Act and why the said application was allowed by the Supreme Court.
73. The appellant therein had imported a vessel for the purpose of breaking it and filed a Bill of Entry on 07.02.1992 declaring the tonnage of the vessel as 7009 MT. On 19.02.1992, the appellant was informed by the Superintendent that the tonnage was actually 8570 MT and, therefore, customs duty was required to be paid on this tonnage. On 03.03.1992, the appellant cleared the vessel on payment of customs duty on the basis of 7009 MT and executed a bank guarantee for the differential customs duty on 1561 tons. On 25.03.1992, the Collector directed the Assistant Collector to encash the bank guarantee and on 02.04.1992, the Superintendent sent a letter to the appellant communicating the decision of the Collector. The bank guarantee was thereafter enchased on 03.04.1992. The appellant preferred an appeal before the Tribunal on 22.06.1992 against the letter dated 02.04.1992 sent by the Superintendent and the order dated 25.03.1992 passed by the Collector. The Tribunal, by order dated 23.06.1998, allowed the appeal and set aside the order dated 25.03.1992 passed by the Collector. This order of the Tribunal was assailed by the department before the Supreme Court. On 12.03.2003, the Supreme Court allowed the appeal filed by the department holding that:
"In our view, the reasoning of CEGAT cannot be sustained. The decision taken by the Collector was not taken in his capacity as Collector (Appeals). Also the order by which respondent is aggrieved is the order passed by the Superintendent. An appeal against that order has to be filed before the Commissioner (Appeals) under Section 128. By 49 C/50091/2022 & 32 Others virtue of Section 129A, CEGAT has no jurisdiction to entertain such an appeal.
It is clear that the impugned order is passed without any jurisdiction. Therefore, it cannot be sustained. We, thus, set aside the order. The appeal is accordingly allowed. There will be no order as to costs."
(emphasis supplied)
74. After the Supreme Court delivered the aforesaid judgment on 23.05.2003, the appellant filed an appeal before the Commissioner (Appeals) against the order passed by the Superintendent on 02.04.1992. On 04.08.2003, an application to condone of delay was filed stating therein that the time taken for pursuing the remedy before another platform should be excluded for the purpose of computing the period for filing the appeal. The Commissioner (Appeals), by order dated 27.10.2003, dismissed the appeal holding that the appeal had been filed beyond the period of 60 days plus another 30 days provided in section 128 of the Customs Act. The Tribunal also dismissed the appeal filed by the appellant stating that the Commissioner (Appeals) had no power to condone the delay beyond the period stipulated in section 128 of the Customs Act. It is this order of the Tribunal that was assailed by the appellant before the Supreme Court. The Supreme Court noticed that section 14 of the Limitation Act contained five conditions as was earlier noticed by the Supreme Court in Consolidated Engg. Enterprises vs. Principal Secy., Irrigation Deptt22, wherein it was held:
"21. Section 14 of the Limitation Act deals with exclusion of time of proceeding bona fide in a Court without jurisdiction. On analysis of the said section, it becomes evident that the following conditions must
22. (2008) 7 SCC 169 50 C/50091/2022 & 32 Others be satisfied before Section 14 can be pressed into service:
(1) Both the prior and subsequent proceedings are civil proceedings prosecuted by the same party;
(2) The prior proceeding had been prosecuted with due diligence and in good faith;
(3) The failure of the prior proceeding was due to defect of jurisdiction or other cause of like nature;
(4) The earlier proceeding and the latter proceeding must relate to the same matter in issue and;
(5) Both the proceedings are in a Court."
75. It is in this context that the Supreme Court observed:
"We might also point out that Conditions 1 to 4 mentioned in the Consolidated Engineering case have, in fact, been met by the appellant. It is clear that both the prior and subsequent proceedings are civil proceedings prosecuted by the same party. The prior proceeding had been prosecuted with due diligence and in good faith, as has been explained in Consolidated Engineering itself. These phrases only mean that the party who invokes Section 14 should not be guilty of negligence, lapse or inaction. Further, there should be no pretended mistake intentionally made with a view to delaying the proceedings or harassing the opposite party. On the facts of this case, as the earlier Supreme Court order dated 12-3-2003 itself points out, there was some confusion as to whether what was appealed against was the Superintendent's order or the Collector's order. The appellant bona fide believed that it was the Collector's order which was appealed against and hence an appeal to CEGAT would be maintainable. This contention, however, ran into rough weather in this Court. Further, the time taken between 3-4-1992 and 22-6-1992 to file an appeal cannot be said to be inordinately long. Thus, neither was there any negligence, lapse or inaction on facts nor did the appellant delay proceedings to harass the Department by 51 C/50091/2022 & 32 Others pretending that there was a mistake. Condition (3) was also directly met - this Court in the order dated 12-3-2003 set aside CEGAT's order on the ground that it was without jurisdiction. It is indisputable that the earlier proceeding and the later proceeding relate to the same matter in issue and thus Condition 4 is also met. Condition 5, however, has not been met as both the proceedings are before a quasi-judicial Tribunal and not in a Court. This, however, is not fatal to the present proceeding as what is being held by us in this judgment is that despite the fact that Section 14 of the Limitation Act may not apply, yet the principles of Section 14 will get attracted to the facts of the present case. It is in this way that we now proceed to consider the law on the subject."
(emphasis supplied)
76. The Supreme Court thereafter noticed that in P. Sarathi it was observed that abortive proceedings before the Appellate Authority would attract the provisions of section 14 of the Limitation Act and this judgment of the Supreme Court was in line with a large number of authorities which held that section 14 of the Limitation Act should be liberally construed to advance the cause of justice.
77. After applying the principles laid down in section 14 of the Limitation Act, the Supreme Court allowed the application and the observations contained in paragraph 52 of the judgment of the Supreme Court are reproduced below:
"52. ***** The abortive appeal had been filed against orders passed in March-April, 1992. The present appeal was filed under Section 128, which Section continues on the statute book till date. Before its amendment in 2001, it provided a maximum period of 180 days within which an appeal could be filed. Time began to run on 3-4-1992 under Section 128 pre- amendment when the appellant received the order of the Superintendent of Customs intimating it 52 C/50091/2022 & 32 Others about an order passed by the Collector of Customs on 25-3-1992. Under Section 128 as it then stood a person aggrieved by a decision or order passed by a Superintendent of Customs could appeal to the Collector (Appeals) within three months from the date of communication to him of such decision or order. On the principles contained in Section 14 of the Limitation Act the time taken in prosecuting an abortive proceeding would have to be excluded as the appellant was prosecuting bona fide with due diligence the appeal before CEGAT which was allowed in its favour by CEGAT on 23-6-1998. The Department preferred an appeal against the said order sometime in the year 2000 which appeal was decided in their favour by this Court only on 12-3- 2003 by which CEGAT's order was set aside on the ground that CEGAT had no jurisdiction to entertain such appeal. The time taken from 12-3-2003 to 23- 5-2003, on which date the present appeal was filed before the Commissioner (Appeals) would be within the period of 180 days provided by the pre-amended Section 128, when added to the time taken between 3-4-1992 and 22-6-1992. The amended Section 128 has now reduced this period, with effect from 2001, to 60 days plus 30 days, which is 90 days. The order that is challenged in the present case was passed before 2001. The right of appeal within a period of 180 days (which includes the discretionary period of 90 days) from the date of the said order was a right which vested in the appellant. A shadow was cast by the abortive appeal from 1992 right upto 2003. This shadow was lifted when it became clear that the proceeding filed in 1992 was a proceeding before the wrong forum. The vested right of appeal within the period of 180 days had not yet got over. Upon the lifting of the shadow, a certain residuary period within which a proper appeal could be filed still remained. That period would continue to be within the period of 180 days notwithstanding the amendment made in 2001 as otherwise the right to appeal itself would vanish given the shorter period of limitation provided by Section 128 after 2001."
(emphasis supplied) 53 C/50091/2022 & 32 Others
78. The aforesaid judgment of the Supreme Court in M.P. Steel holds that the time taken by the appellant in prosecuting an abortive proceeding would have to be excluded since the appellant was prosecuting bona fide and with diligence the appeal that it had filed before the Tribunal which appeal was ultimately allowed on 23.06.1998. The appellant had assailed the order dated 03.04.1992 passed by the Superintendent of Customs before the Tribunal on 22.06.1992. The appeal filed by the department for setting aside the order passed by the Tribunal was allowed by the Supreme Court on 12.03.2003. After the decision of the Supreme Court on 12.03.2003, the appellant filed an appeal before the Commissioner (Appeals) on 23.05.2003.
79. At the relevant time, an appeal could be filed before the Commissioner (Appeals) under section 128 of the Customs Act within 90 days but delay of 90 days beyond this period could be condoned. By applying the principles enshrined in section 14 of the Limitation Act, the Supreme Court held that the time period from 22.06.1992, on which date the appeal had been filed by the appellant before the Tribunal upto 12.03.2003 on which date the Supreme Court decided the matter would have to be excluded. It was, therefore, held by the Supreme Court that the period from 03.04.1992 upto 22.06.1992 and thereafter from 12.03.2003 to 23.05.2003 [on which date the appeal was filed before the Commissioner (Appeals)] would be within the total period of 180 days contemplated under section 128 of the Customs Act. The appeal was, therefore, found to have been filed within time by excluding the time period contemplated under section 14 of the Limitation Act.
54
C/50091/2022 & 32 Others
80. In the present case, the appellant had also bona fide pursued the remedy of filing refund applications before the Deputy Commissioner instead of filing an appeal before the Commissioner (Appeals) against the order of assessment. The Delhi High Court had also, at the instance of the appellant, directed that refund applications should be allowed and refund should be sanctioned. It is only when the Supreme Court reversed the decision of the Delhi High Court and observed that refund could only be granted pursuant to proceedings taken in appeal that the appellant filed the appeals before the Commissioner (Appeals). The Commissioner (Appeals) was not justified in holding that the appellant was not entitled to exclusion of the time period under section 14 of the Limitation Act as the requirements were not satisfied. The requirements, as noticed above, were satisfied by the appellant and this is what emerges from the decision of the Supreme Court in M.P. Steel. The appellant had re- sorted to abortive proceedings before the Deputy Commissioner as was ultimately held by the Supreme Court in ITC. The time taken in prosecuting such an abortive proceeding would have to be excluded under section 14 of the Limitation Act. It cannot be urged that there was any negligence on the part of the appellant in filing refund applications before the Deputy Commissioner. It cannot also be urged that the earlier proceedings and the present proceedings do not relate to the same matter. In fact both the proceedings basically relate to refund of the excess amount of Additional Duty that was paid by the appellant and it is for this purpose that the appellant had relied on the judgment of the Supreme Court in SRF. Merely because the appellant had filed applications for refund of this Additional Duty of customs 55 C/50091/2022 & 32 Others before the Deputy Commissioner and subsequently an appeal before the Commissioner (Appeals) for modifying the order of assessment would not mean that the two proceedings do not relate to the same matter. If it is held in the appeals that the appellant was not required to pay the Additional Duty of customs, it would result in granting relief of refund of the Additional Duty of customs. It also cannot be denied that both the proceedings were before a quasi-judicial authority. The Supreme Court held in M.P. Steel that this would not be fatal for the reason that though section 14 of the Limitation Act may not strictly apply, yet the principles of section 14 of the Limitation Act will get attracted and that section 14 of the Limitation Act should be liberally construed to advance the cause of justice.
81. The principles laid down by the Supreme Court in M.P. Steel would, therefore, apply in the present case for excluding the time period under section 14 of the Limitation Act from the date of filing of the refund applications on 25.09.2015 upto 18.09.2019, on which date the Supreme Court decided ITC.
82. The issue, however, that arises for consideration is whether the appeals can still be said to have been filed within the time period stipulated in section 128 of the Customs Act even if the aforesaid period from 25.09.2015 upto 18.09.2019 is excluded for the purpose of calculating the limitation period. In the instant case, the Bills of Entry were self-assessed by the appellant and were filed from 07.10.2014 to 17.07.2015. They were given out of charge from 07.09.2014 to 17.07.2015. Even if the last of this date i.e. 17.07.2015 is taken into consideration, the refund applications were filed only on 25.09.2015. The appellant could have filed an appeal 56 C/50091/2022 & 32 Others before the Commissioner (Appeals) within 60 days as provided under section 128(1) of the Customs Act. Thus, the appeal could have been filed within 60 days from 17.07.2015 i.e. upto 16.09.2015 and a delay of 30 days only after the expiry of the said period of 60 days could be condoned.
83. This is what was held by the Supreme Court in Singh Enterprises vs. CCE, Jamshedpur23. The Supreme Court examined the provisions of section 35 of the Central Excise Act, 1944, which are pari materia to the provisions of section 128 of the Customs Act and observed that the delay can be condoned in accordance with the language of the Statute which confers power on the Appellate Authority to entertain the appeal by condoning the delay only up to 30 days after expiry of 60 days, which is normal period for preferring the appeal. It is for this reason that the Supreme Court observed that the Commissioner and the High Court were justified in holding that there was no power to condone the delay after expiry of 30 days period and that the provisions of section 5 of the Limitation Act would not be applicable. Paragraphs 8, 9 and 10 of the judgment of the Supreme Court are reproduced below:
"8. The Commissioner of Central Excise (Appeals) as also the Tribunal being creatures of Statute are vested with jurisdiction to condone the delay beyond the permissible period provided under the Statute. The period upto which the prayer for condonation can be accepted is statutorily provided. It was submitted that the logic of Section 5 of the Indian Limitation Act, 1963 (in short the "Limitation Act") can be availed for condonation of delay. The first proviso to Section 35 makes the position clear that the appeal has to be preferred within three months from the date of communication to him of the decision or order. However, if the Commissioner is satisfied that the
23. 2008 (221) E.L.T. 163 (SC) 57 C/50091/2022 & 32 Others appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of 60 days, he can allow it to be presented within a further period of 30 days. In other words, this clearly shows that the appeal has to be filed within 60 days but in terms of the proviso further 30 days time can be granted by the appellate authority to entertain the appeal. The proviso to sub-section (1) of Section 35 makes the position crystal clear that the appellate authority has no power to allow the appeal to be presented beyond the period of 30 days. The language used makes the position clear that the legislature intended the appellate authority to entertain the appeal by condoning delay only upto 30 days after the expiry of 60 days which is the normal period for preferring appeal. Therefore, there is complete exclusion of Section 5 of the Limitation Act. The Commissioner and the High Court were therefore justified in holding that there was no power to condone the delay after the expiry of 30 days period.
9. Learned counsel for the appellant has emphasized on certain decisions, more particularly, I.T.C.'s case (supra) to contend that the High Court and this Court in appropriate cases condoned the delay on sufficient cause being shown.
10. Sufficient cause is an expression which is found in various statutes. It essentially means as adequate or enough. There cannot be any straitjacket formula for accepting or rejecting the explanation furnished for delay caused in taking steps. In the instant case, the explanation offered for the abnormal delay of nearly 20 months is that the appellant concern was practically closed after 1998 and it was only opened for some short period. From the application for condonation of delay, it appears that the appellant has categorically accepted that on receipt of order the same was immediately handed over to the consultant for filing an appeal. If that is so, the plea that because of lack of experience in business there was delay does not stand to be reason. I.T.C.'s case (supra) was rendered taking note of the peculiar background facts of the case. In that case there was no law declared by this Court that even though the Statute 58 C/50091/2022 & 32 Others prescribed a particular period of limitation, this Court can direct condonation. That would render a specific provision providing for limitation rather otiose. In any event, the causes shown for condonation have no acceptable value. In that view of the matter, the appeal deserves to be dismissed which we direct. There will be no order as to costs."
(emphasis supplied)
84. The aforesaid decision of the Supreme Court in Singh Enterprises emphasises that the language of the proviso to section 35(1) of the Central Excise Act, 1944 makes it clear that the Appellate Authority has no power to allow the appeal to be presented beyond the period of thirty days after the normal period of limitation of sixty days. In such circumstances, the Supreme Court held that there is complete exclusion of section 5 of the Limitation Act.
85. The decision in ITC was rendered by the Supreme Court on 18.09.2019 and thereafter the appeals were filed before the Commissioner (Appeals) on 17.12.2019 i.e. after a period of almost three months. The total time taken by the appellant from 18.07.2015 upto 25.09.2015 and then from 18.09.2019 to 17.12.2019 is much more than the maximum period of the 90 days contemplated under section 128 of the Customs Act. Thus, even though the benefit of section 14 of the Limitation Act for exclusion of time period from 25.09.2015 upto 18.09.2019 would be available to the appellant, but still the 31 appeals would have to be dismissed as having been filed beyond the time period contemplated under section 128(1) of the Customs Act.
86. The Commissioner (Appeals), therefore, committed no illegality in dismissing the appeals.
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C/50091/2022 & 32 Others Conclusion
87. Thus, for all the reasons stated above, Customs Appeal No. 50091 of 2022 and Customs Appeal No. 50286 of 2022 are liable to be dismissed and are dismissed. Customs Appeal No's. 50510 of 2021 to 50540 of 2021 are also liable to be dismissed and are dismissed.
(Order pronounced on 04.06.2024) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) Shreya