Customs, Excise and Gold Tribunal - Delhi
Collector Of Customs vs Ferro Alloys Corporation Ltd. on 22 October, 1991
Equivalent citations: 1992(39)ECC40, 1991ECR535(TRI.-DELHI), 1992(59)ELT633(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. In both these appeals, common question of law and facts arises and hence they are taken up together for disposal as per law.
2. The Revenue has filed this appeal No. 3920/88-C against the order of Collector (Appeals) who has rejected the application filed by the Additional Collector of Customs, Visakhapatnam under Section 129D of the Customs Act, 1962 against the final assessment order passed in respect of Bill of Entry No. 010/2/6.86 covering the import of 4,675 mt. tonnes of Low Ash Metallurgical Coke (LMM Coke) imported by M/s. Ferro Alloys Corp. Ltd. The goods were cleared on assessment on PD basis pending production of documents and chemical test result. The consignment was assessed and cleared free of duty extending the benefit of Notification No. 166/80-Cus., dated 19-84980 and the Bill of Entry was assessed finally on 10-11-1986 without charging to duty. The learned Additional Collector held that the consignment should not have been granted the benefit of notification in question as the goods in question did not satisfy the condition laid down in the said notification. Therefore, he directed the Assistant Collector (Appeals) Customs House, Visakhapatnam to appeal to Collector (Appeals) to seek review of his own decision given on the Bill of Entry on 10-11-1986 at the time of final assessment.
3. The Appeal No. 3921/88-C pertains to rejection of the application filed by the Additional Collector of Customs, Visakhapatnam under Section 129D of the Customs Act, 1962. In this case, the respondents had filed a bill of entry dated 13-11-1986 for clearing a consignment of 1,320 mt. tonnes of low ash metallurgical coke (LAM Coke). The goods were assessed provisionally free of duty under Customs Notification No. 166/80 and the samples were drawn for test. 50% of the cargo was released pending receipt of the test report. Thereafter, the goods were released in full on 24-11-1986 on the Bill of Entry being finally assessed free of duty under the said notification. The Additional Collector invoking Section 129D, directed the Assistant Collector (Appraising), Customs House, Visakhapatnam to apply to Collector (Appeals) to seek review of his own decision given on the Bill of Entry on 12-1-1987 at the time of final assessment.
4. The Collector (Appeals) on going through the said appeal filed by the Assistant Collector, Customs House, Visakhapatnam, held that the appeal before him was one of assessment and for recovery of short collection of duty arising out of order of assessment, and therefore, the recourse should have been taken only under Section 128(i) of the Customs Act, 1962 as specifically provided therein. Therefore, in that event of the matter, the learned Collector (Appeals) held that the provisions of Section 129D will not apply in such cases. As a result, he dismissed both the appeals of the respective importers by separate orders.
5. The Revenue has filed these two appeals and in both the appeals, a common ground has been taken by the Revenue. It is stated by them that the assessment was resorted to under Section 18(1) of the Customs Act, 1962 and later the assessment was finalised and the order was indicated in the bill of entry by the Asstt. Collector of Customs who is subordinate to Collector of Customs. This order of final assessment was under Section 18(2) of the Customs Act, 1962. They contended that though the order was not issued to the party, however, it was indicated in the bill of entry. The Revenue further contended that in terms of Section 129D(2) of the Customs Act, 1962, the Additional Collector of Customs reviewed the order made under Section 18(2) of the Act by his subordinate and found that it was necessary to go to appeal to the Collector (Appeals) and, thereafter, the appeals were filed. They contended that Section 28 and Section 129D are independent provisions. Just because time limit prescribed under Section 28(1) of the Customs Act had expired, this should not preclude the review power exercised by the Collector under Section 129D(2) of the Customs Act. They further contended that time limit under Section 28(1) of the Act should not be a bar to consider the appeal in terms of Sectionl29D(2) of the Act. It is further contended that Sectionl29D does not exclude specific orders passed under Section 28(2) of the Act. They further stated that time limit of one year prescribed under Section 129D(3) is possibly to include such cases where review by the Collector required finalising of an appeal against an order passed by his subordinates. In that view of the matter, they contended that the Collector (Appeals) was justified in rejecting their appeal.
6. The respondents in E. No. 3920/88-C, i.e. M/s. Ferro Alloys Corporation Ltd., have filed a Cross Appeal No. 452/88-C. They have also filed written submissions made in the cross appeal. It is contended by the importer that the provisions of Section 28(1) of the Act will prevail and that the review cannot circumvent the limitation laid down under Section 28(1) of the Act by invoking the period of one year provided under Section 129D of the Act. They contended that provisions under Section 129D can be invoked only when there is a decision or order issued in quasi-judicial capacity and such orders cannot be equated to written assessment to the type covered in the instant case. It is further stated that if the contention of the Revenue is accepted, then the sanctity of time limit laid down under Section 28(1) would be defeated. In their written statement, the respondent-importer has further contended that the similar contentions of the Revenue has not been accepted in several rulings of this Tribunal as under-
Re-rolling Mills v. Collector of Customs - 1989 (43) E.L.T. 115 Collector of Central Excise v. Universal - 1988 (37) E.L.T. 222 Textile Bearings v. Collector of Central Excise - 1990 (49) E.L.T. 280 S. Venkatesan v. Nihal Chand, Cal. - AIR 1962 Cal. 258 They further contended that Section 28 of the Customs Act is analogous to Section 11A of Central Excises and Salt Act, 1944 and Section 35E of the Central Excises and Salt Act is pari materia with Section 129D of the Customs Act. The Supreme Court has laid down that time limit for short levy or non-levy of duties shall be as per the time limit prescribed under Section 11A of Central Excises and Salt Act, 1944. They contended that a similar view has to be adopted in respect of Customs Act also. It is their contention that the powers granted for review under Section 129D(ii) of the Customs Act, even after expiry of the period of limitation, laid down under Section 128 of the Customs Act, are only in the following cases -
(1) cases relating to classification dispute simpliciter;
(2) cases relating to confiscation of goods, remand of redemption fine etc. (3) cases relating to imposition of penalty and other penal action;
(4) cases relating to violation of licensing provisions.
They further contended that the provisions as in Section 28(1) and Section 129D of the Customs Act are analogous to similar provisions which were under Section 39 and Section 190A of the Sea Customs Act, 1878. In this connection, the Calcutta High Court had clearly laid down the law as in the case of S. Venkatesan and Another v. Nihal Chand Agarwal and Ors. (AIR 1962 Calcutta 258) that the time limit prescribed for collection of short-levy or non-levy will be subjected to the limitation of 3 months period and that the authorities cannot resort to the provision of review under Section 129A which granted 2 years period for so doing.
7. We have heard Shri L.N. Murthy, learned DR for the appellants and Shri S.K. Bagaria and Shri J.P. Khaitan, learned advocates for the respondents. Shri L.N. Murthy, DR submitted that the power of review granted to the authorities under Section 129D is an independent provision and that provision is not restricted in any way by time limit laid down under Section 28 of the Customs Act. In this connection, he relied upon the ruling rendered by the South Regional Bench in the case of Collector of Central Excise, Bangalore v. Raman Board Limited - 1985 (22) E.L.T. 892. In this case, the Tribunal had examined the provisions of Sections 35, 35A, 35E vis-a-vis Section 11A of the Central Excises and Salt Act and had held that the provisions of Sections 11A and 35A were operating entirely in different fields with different objects and purposes and one cannot superimpose on the other. The Tribunal had also distinguished the ruling rendered by the Calcutta High Court in the case of S. Venkatesan and Another (supra). He also referred to the ruling of the Calcutta High Court in the case of I.T.C. Ltd. v. Union of India as reported in 1988 (34) E.L.T. 473 wherein the Calcutta High Court had examined the provisions of appeal under Section 35A and Section 35EE of the Central Excises and Salt Act alongwith the provisions of Section 11A and 11B of the said Act, The Court had held that Section 11A of the Act was provided as a substantive provision and complete code for realising excess duty in case of short levy or short payment and Section 11B of the said Act also provides the substantive and the machinery provision for refund of any excess duty paid which is also a complete code for the same. It further held that the provisions of Section 35E and Section 35EE neither override the provisions of Section 11 nor it could be said that Section 11A is a mere machinery provision which could not be invoked independently and/or the same could only be invoked in aid of the powers conferred in Section 35A and/or Section 35EE of the said Act. The Court had further held that if such an interpretation as sought to be given by the petitioners before them to Section 11A were to be accepted, then it could produce a wholly unreasonable result and would also defeat the obvious intention of the legislature.
8. Shri S.K. Bagaria, learned advocate arguing for the appellants, submitted that the limitation laid down under Section 28 of the Act is independent by itself and this provision of limitation cannot be circumvented by the Department by a roundabout way in invoking the larger period of limitation for reviewing the order as provided under Section 129D of the Customs Act. He further submitted that both the provisions of Section 28 and Section 129D of the Customs Act were independent by itself and in respect of short levy or non-levy the Revenue has to invoke only the provisions provided under Section 28 within the prescribed period thereunder and if the same is not done, then the claim would be time-barred. This time bar claim cannot be brought to life by a different provision which was only available with a different purpose as provided under Section 129D of the Act. He further contended that no show cause notice had been issued and any claim without issue of show cause notice and seeking an explanation would not be maintainable as had been held by the Supreme Court in the case of Kosan Metal Products Ltd. (supra). He submitted that the Tribunal did not follow the ruling of the South Regional Bench rendered in the case of Raman Boards in a subsequent matter arising in the case of Re-rolling Mills v. Collector of Central Excise as reported in [1989 (43) E.L.T. 115]. The Bench had examined the powers of Section 11A of the Central Excises and Salt Act, 1944 and held that the Department should have issued a demand under Section 11A and without so doing and resorting to a different route as provided under Section 35E of the Act, shall only nullify the effect of Section 11A of the Act and its time-Emit. He strongly relied on the ruling of S. Venkatesan case (supra) and held that it had a binding force in view of similar provisions of Customs Act. He further submitted that the Madras High Court in Pilman Agent case (supra) had categorically stated that issue of show cause notice is a must for recovery of non-levy of duty under Section 28 of the Act. He strongly relied on the ruling given by the Supreme Court in the case of Gokak Patel case (supra) and Kosan Metal case. The Supreme Court in the case of Gokak Patel case had held that service of show cause notice was a statutory provision for recovery of duty under Section 11A of the Act and if the show cause notice had not been issued, then the demand would not be enforceable as being contrary to the provisions of the Statute. He further stated that the Hon'ble Supreme Court in the case of Dr. Pratap Singh case (AIR 1985 SC 989) had defined the words 'so far as may be' occurring in Section 129D of the Act and submitted that the said interpretation should be applied for the provisions occurring in Excise Act vis-a-vis with the provisions of the Customs Act also. Shri Bagaria, learned advocate submitted that the interpretation given by the Revenue in this appeal, if accepted then all time-barred cases under Section 129 would be reviewed under Section 129D of the Act thereby defeating the legislative intention.
9. Shri Khaitan, learned advocate submitted that in his case show cause notice had been issued but, however, the said show cause notice was issued after a period of 6 months and it was not maintainable. He adopted the other arguments of Shri Bagaria, advocate appearing for M/s. Ferro Alloys.
10. Shri L.N. Murthy, DR in his reply submitted that the provisions of Section 129D of the Customs Act are quite clear and it did give power to the Collector to call for and examine the records of any proceedings in which an adjudicating authority subordinate to him had passed an order. Shri Murthy submitted that the finalisation of bill of entry is an order and that the Collector had the powers to examine its legality or propriety which he had done so in this case. He submitted that Section 129D did not provide for issue of show cause notice. Therefore, Section 28 being independent provision with mandatory proviso for issue of show cause notice would prevail over Section 129D of the Act. Hence, Section 129D cannot be considered as an independent of Section 28 of the Act but is subservient to it.
11. We have carefully considered the submissions made by both the sides and have perused the records and the citations referred to before us. The question that arises for our consideration is (i) as to whether the provisions of Section 28 of the Customs Act is independent of the provisions of Section 129D of the said Act (ii) the provisions of the Excise Act being pari materia with the Customs Act, would the rulings of the Supreme Court rendered in the cases of Gokak Patel and Kosan Metal Products apply to the provisions of the Customs Act in so far as the non-issue of the show cause notice for short levy is concerned?
12. In this case the importers had filed the bill of entry which was provisionally assessed and in the meanwhile, the samples had been sent for test. On the receipt of the test report, the Assistant Collector finalised the bill of entry and granted the benefit of the exemption under Notification No. 166/80, the PD bond was cancelled after the said finalisation. This completed the assessment which was provisional. The Revenue was not aggrieved with this order initially and did not prefer an appeal under the provisions of Section 128 of the Customs Act. The limitation provided under Section 128 of the Customs Act is 3 months and on sufficient cause being shown for non-filing and the Collector (Appeals) being satisfied could allow the extension of time for presenting the appeal by a further period of 3 months. The Collector of Customs did not invoke Section 128 of the Customs Act within the said period laid down under Section 128 of the Customs Act. The provision under Section 28 of the Customs Act provides for recovery of non-levy, short levy or erroneous refund. The provision of this section requires issuance of show cause notice within one year in respect of any individual, who has imported the goods for his personal use or by Government or by any research or charitable hospital and in any other case within 6 months from the relevant date of payment of duty. It further lays down that in case of non-levy, short levy or erroneous refund by reason of wilful suppression or suppression of facts by the importer or the exporters or the agent or employee of the importer or exporter, then the officer in such cases, being Collector of Customs, could within 5 years, proceed to recover the same by issue of show cause notice. In this particular case, the proper officer has not deemed it fit to proceed under Section 28 of the Customs Act, as the importer's case does not come within the provision of Section 28 of the Customs Act and also the period of limitation of 6 months in the present case had expired. There was no reason available in the present case to invoke the extended period of five years also. Therefore, the proper officer has deemed it proper to proceed under Section 129D of the Act. This Section 129D lays down the provisions as hereunder-
"Powers of a Board or Collector of Customs to pass certain orders. - (1) The Board may, of its own motion, call for and examine the record of any proceedings in which a Collector of Customs as an adjudicating authority has passed any decision or order under this Act for the purpose of satisfying itself, direct such Collector to apply to the Appellate Tribunal (or as the case may be, the Customs and Excise Revenues Appellate Tribunal established under Section 3 of the Customs and Excise Revenues Appellate Tribunal Act, 1986) for the determination of such points, arising out of the decision or order as may be specified by the Board in its order.
(2) The Collector of Customs may, of his own motion, call for and examine the record of any proceeding in which an adjudicating authority subordinate to him has passed any decision or order under this Act for the purpose of satisfying himself as to the legality or propriety of any such decision or order and may, by order, direct such authority to apply to the Collector (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Collector of Customs in his order.
(3) No order shall be made under sub-section (1) or sub-section (2) after the expiry of one year from the date of the decision or order of the adjudicating authority.
(4) Where in pursuance of an order under sub-section (1) or sub-section (2), the adjudicating authority or any officer of customs authorised in this behalf by the Collector of Customs, makes an application to the Appellate Tribunal (or as the case may be, the Customs and Excise Revenues Appellate Tribunal established under Section 3 of the Customs and Excise Revenues Appellate Tribunal Act, 1986) or the Collector (Appeals) within a period of three months from the date of communication of the order under sub-section (1) or sub-section (2) to the adjudicating authority such application shall be heard by the Appellate Tribunal (or as the case-may be the Customs and Excise Revenues Appellate Tribunal) or the Collector (Appeals) as the case may be, as if such application were an appeal made against the decision or order of the adjudicating authority and the provisions of this Act regarding appeals including the provisions of sub-section (4) of Section 129A (or as the case maybe the provisions of the Customs and Excise Revenues Appellate Tribunal Act, 1986) shall so far as may be, apply to such application."
13. The question now is as to whether after the order of finalisation of the bill of entry has become final under the Customs Act can the Collector of Customs within his powers on his own motion could call for, and examine the records of the proceedings of the Asstt. Collector to satisfy himself as to the legality or propriety of such finalisation. If so, could he direct such authority namely Assistant Collector either to Collector (Appeals) for determination of such points arising out of the decision or the said order of the Assistant Collector. The further question is as to whether Section 129D restricts the type of cases falling under Section 28 of the Customs Act as in the present case. It is now well settled that finalisation of bill of entry is an order and a decision passed by the authority lower to the Collector and therefore, the Collector is perfectly within his right to call for and examine the legality of such an order. But now which of the provisions the Collector should apply? Is it the proviso of appeal under Section 129D or Section 128 of the Act or invoke larger period of Section 28 by issuing show cause notice for short levy, for recovery of the duty. On examination of these provisions, it is seen that the aspect pertaining to non-levy, short levy and erroneous refund has been made an exclusive provision under Section 28 of the Act. All other aspects other than this, could be said to be covered by the provisions under Section 128 wherein the limitation is to an extent of a period of 3 months and the Collector (Appeals) having further period to allow another 3 months. Independently, the Collector can invoke Section 129D where a period of one year is available to the Collector to appeal to the Tribunal. Under Section 128 and 129D, the legislature has not restricted to any particular subject. It has given wide power to the Collector under Section 129D to call for and examine any decision or order passed by his subordinate adjudicating authority. But the provisions of Section 28 of the Act which restricts to only two matters pertaining to non-levy, short levy and erroneous refund. However, the Collector has even more powers under the proviso to Section 28 to extend the recovery for five years under the stated conditions. Therefore, it can be safely presumed that the legislature has made an independent provision for non-levy, short levy and for erroneous refund under Section 28 of the Act and the provisions granted under Section 28 should be independently restricted to this section alone. The limitation under Section 128 and Section 129D has to be held to be independent of Section 28 of the Act. The reason for so excluding provision of Section 28 from the ambit of Section 128 and 129D of the Act appears to be to satisfy the principles of natural justice by making mandatory provisions for issue of show cause notice and to allow the party to have a full hearing on the charges that would be made against them. This proceeding under Section 28 are of exclusive nature, inasmuch as, an independent proceedings are held by issue of show cause notice by the Department by which it sets out the reason for claiming nonlevy, short levy relying on its evidence or gives the reasons for rejecting the refund claims again relying on its evidence. If an extended period is invoked, then the entire evidence on which the Department relies is stated in unambiguous terms so as to make out a case for recovery beyond the period of 5 years. In case if this procedure is not followed, the proceedings get vitiated and the recovery would be bad in law. The assessee gets full opportunity to know the charges levelled by the Revenue as well as the evidence on which the charges are levelled. The assesses also can in turn, place their case with supporting evidence in defence. The cases arising other than in non-levy, short levy and erroneous refund under the Act may not have this feature of issue of show cause notice and disclosing the evidence to the assessee and giving opportunity to defend themselves by defence evidence. In respect of other orders under the Act, the Collector of Customs can call for records to examine its legality and recommend for filing an appeal before the Collector (Appeals) under Section 129D of the Act, for which there is a period of one year available to the Collector. Therefore, for cases arising under Section 28, the limitation available for both the parties to file an appeal under Section 128 of the Act is 6 months only. The Revenue cannot have better advantage over assessee in respect of limitation. Both should have equal treatment and hence Section 28 cannot be equated to the other provisions and it is to be considered as an independent of the other provisions of the Act.
14. The analogous provisions in the Central Excises and Salt Act, 1944, are Section 11A, 11B, Section 35, 35E, 35EE of the Act. Section 28 of the Customs Act is analogous to Section 11A of the Act as has been held in the case of International Computers Manufacturers Ltd. and Anr. v. Union of India [1981 (8) E.L.T. 632]. It has been held in this case by the Delhi High Court that if the show cause notice is not issued under Section 28 of the Customs Act, in absence of provisional assessment, within the stipulated time, then any demand raised would not be enforceable. The Supreme Court in the case of Gokak Patel Volkart Ltd. v. Collector of Central Excise, Belgaum [1987 (28) E.L.T. 53 (SC)] while examining the provi$ions of Section 11A of the Central Excises and Salt Act, observed in para 9 as follows-
"No notice seems to have been issued in this case in regard to the period in question. Instead thereof an outright demand had been served. The provisions of Section 11A(1) and (2) make it clear that the statutory scheme is that in the situations covered by the sub-section (1), a notice of show cause has to be issued and sub-section (2) requires that the cause shown by way of representation has to be considered by the prescribed authority and then only the amount has to be determined. The scheme is in consonance with the rules of natural justice. An opportunity to be heard is intended to be afforded to the person who is likely to be prejudiced when the order is made before making the order thereof. Notice is thus a condition precedent to a demand under sub-section (2). In the instant case, compliance with this statutory requirement has not been made and therefore, the demand is in contravention of the statutory provisions. Certain other authorities have been cited at the hearing by counsel for both sides. Reference to them, we consider, is not necessary."
From the above reading, it becomes very clear that the issue of show cause notice under Section 11A is mandatory and it is a statutory provision under the requirement. Thus it can be clearly said that the provisions of Section 28 of the Customs Act and Section 11A of the Act are exclusive in nature on account of special feature of issuance of show cause notice. This feature cannot be circumvented. In a similar situation under Excise Act, where classification list had not been challenged by the Revenue by filing appeal under Section 35 of the Excise Act but preferred to have the matter reviewed under Section 35E of the Act, after the expiry of statutory period under Section 11A of the Act, the Tribunal has held that by following such a procedure, would make Section 11A nugatory. This view has been expressed in the case of Collector of Central Excise v. Universal Radiators Ltd. - 1988 (37) E.L.T. 222 in para 9, 10 which is noted below-
"The only way by which an erroneously refunded duty can be recovered is a notice under Section HA; an application and proceedings under Section 35E are not a step in that direction. If it were then the Department can by using this section recover erroneously refunded duty or short levied duty for which no notice was issued within the time specified under Section HA, the primary and fundamental section and the fountain-head of all the powers for recovery of any money erroneously refunded. Thus, by resort to Section 35E the department can recover erroneous refunds that have long become barred by limitation under Section 11A to say nothing of the fact that it is almost inconceivable that any notice issued by the Collector (Appeals) under Section 35E as he did in this case could ever reach the assessee in time. All of them would be out of time and illegal. To argue that because Section 35E allows this procedure of application and determination by the Collector (Appeals), the department can recover such duties, is to enlarge the powers of the department in a way that sets Section 11A at naught. It defeats the right process laid out in the Act.
The proper route of the right process laid out in the Act is only the one written in Section 11A. This section prominently gives leave to the Assistant Collector to issue notices if any money representing duty is found to have been lost by mistaken refund. There is no other course for the authorities to the recovery of such duty."
15. The same issue was again reiterated in the case of Re-rolling Mills v. Collector of Central Excise - 1989 (43) E.L.T. 115 (Tribunal) in para 5 to 8 which is reproduced below-
"It may be true that the appeal was filed to the Collector (Appeals) on 10-3-1983 but that will not save the demand from becoming time barred. To be in time, demand for the recovery of the money refunded on 12-10-1981 should have been made by the department within 6 months of the date of refund. There is no evidence that this was done. Instead an application was filed by the Assistant Collector in accordance with Section 35E(4) to the Collector (Appeals). This application is dated 5-3-1983. The Collector (Appeals) mentions party's application dated 10-3-1983 but this is not available. Then the Collector issued a notice dated 5-5-1983 (though he makes no mention of this in his order) calling upon M/s. Rerolling Mills to show cause why the refund order dated 12-10-1981 should not be set aside and necessary orders as deemed fit passed. Not only did this notice contain no demand, but it is about one year and seven months after the date of the Assistant Collector's order of refund. Nor does the notice allege any malpractice, fraudulence and suppression etc. The Collector (Appeals) thinks that because the review was done before expiry of two years under Section 35E it would enable recovery of the sum erroneously refunded. But he also says that appeal had been filed within 5 years from 12-10-1981 and therefore, it would not be time barred because of the proviso to Section 11A.
The five year time limit is not available for the purpose of turning an appeal or an application into a demand contemplated by Section 11A nor can it insulate the application/appeal from time bar. When any excise duty has been erroneously refunded. Section 11A requires that the Central Excise Officer should decide within six months from the relevant date, serve a notice on the person to whom the refund was erroneously made, requiring him to show cause why he should not pay the amount specified in the notice. In case of erroneous refund, the relevant date has been defined as the date of refund. The section has a time limit of five years if the erroneous refund was caused by fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act and rules made thereunder with intent to evade payment of duty. The Collector (Appeals) misunderstood the function of the time limit of Section 11A and thought it could be used in proceedings under Section 35E for counting the time limit within which the application should be filed. Filing of the appeal or the application within five years does not safeguard the demand from the time bar if a time bar has arisen and an order passed by the Appellate Collector under Section 35E cannot have the effect of nullifying Section 11A and its time limit.
The time limit of Section 11A governs the issue of the demand under that section and that section alone. It follows if no demand has been issued in accordance with Section 11A nothing can take its place. There is no evidence on record that demands were issued for the erroneously refunded money within the time limit prescribed by Section 11A. Therefore, the order of the Appellate Collector dated 22-9-1983 on the application of the Assistant Collector is invalid and cannot serve as a means for recovering the money.
The department should have issued a demand under Section 11A and if they thought wilful misstatement, suppression and fraud had caused the refund to be made erroneously on 12-10-1981, they should have issued a notice within the five year time limit permitted by Section 11A for such cases. If there was such suppression, there was time till October, 1986, for the departmental authorities to issue a notice using the five years limit of Section 11A and of course in so doing they should have charged the factory with fraud, suppression etc. They did not do so and evidently they did not have anything to support a charge of suppression and fraud. They chose to follow another route but that route cannot take them to the desired goal."
It can be noticed that the ruling given in Raman Board case was not considered by the Bench.
16. The Hon'ble Calcutta High Court while examining the provisions of Section 11A and 11B, 35E and 35C of Central Excises and Salt Act held that the Section 11A and 11B are independent provisions and the effect of it cannot be taken away by resorting to the provisions of Section 35A/or 35E of the Central Excises and Salt Act. The relevant portion as appearing in para 29 at page 501 of the report in the case of I.T.C. Ltd. and Anr. v. Union of India and ors. - 1988 (34) E.L.T. 473 (Cal.) which is reproduced below -
"29. Finding on Point (c). - With regards to the next contention of Mr. Nariman about the scope and ambit to provision of Section 11A of the Central Excises and Salt Act, 1944 it appears to me that Section 11A of the said Act provides provision for recovery of duties not levied or not paid or short levied or short paid or erroneously refunded. It is evident that whenever the excise duty has not been levied or not paid or has been short levied or short paid, the power under Section 11A [could be invoked, but before an order is passed, a show cause notice has to be issued ... sic] could not be issued, in other words, it is the requirement of law that only after giving a notice and hearing, a party who has not paid proper excise duty, can be made liable to pay the said duty. In this context, reference be made to the provision of Section 11B of the said Act, which provides claim for refund of duty and on plain reading of Section 11B of the said Act, it appears that any person claiming refund of any duty of excise may make an application for refund of such duty before the expiry of six months. This power under Section 11B of the said Act is independent of the case when such refund is allowable as a result an order passed in appeal or revision under the Act. Mr Nariman referred to the proviso to sub-section (3) of Section 35A of the said Act wherein it was provided that where the Collector (Appeals) is of the opinion any duty of excise has not been levied or has been short levied or short paid, no order requiring the appellant to pay any duty not levied or not paid, short levied or short paid shall be passed unless the appellant is given a notice within the time limit specified in Section 11A to show cause against the proposed order. This proviso to sub-section (3) of Section 35A of the said Act clearly indicates that it is independent of the provision of Section 11A of the said Act and on plain reading of Section 11A and proviso to Section 35E(3) of the said Act, it is clear that the submission of Mr. Nariman that Section 11A is a mere machinery section and cannot be exercised independently but can only be exercised in connection with an appeal or revision as provided under Section 35A or Section 35EE of the said Act is without any substance. Section 35A or 35EE of the said Act merely adopted the period of limitation prescribed under Section 11A of the said Act for the purpose of initiating a proceeding for realisation of duties not levied or short paid in connection with an appeal or revision. Accordingly, in my view, on plain reading of the Section 11A of the said Act, no other interpretation could be given. In this connection reference may be made to the observation of Lord Esher M.R. in the case of R. v. City of London Court judge reported in 1842 (9 M & W) 378 at 398 may be quoted, wherein it was observed that "if the words of an Act are clear and if one interpretation leads to an absurdity and the other does not, the Court will conclude that the legislature did not intend to lead to an absurdity and will adopt to other interpretation". In my view, the interpretation sought to be given by Mr. Nariman in Section 11A is given that would produce a wholly unreasonable result and it is duty of the Court to construe a statute according to literal and grammatical meaning which it had expressed and that the words of enactment must prevail. Under the scheme of the said Act, Section 11A of the said Act was provided as a substantive provision and a complete code for realisation of excise duty in case of short levy or short payment and Section 11B of the said Act also provided the substantive and the machinery provision for refund of any excess excise duty paid which is also a complete code for the same.
Parliament introduced a simplified procedure for recovery of the excise duties not paid or short paid etc. and at the same time provided same procedure for the benefit of the assessee for getting refund of duty. The twin sections - Section 11A and 11B were introduced in the interest of the revenue as well as the assessee and that, that is the reason why the legislature had not laid down any condition precedent and/or restriction in the matter of exercise of its powers under 11A or 11B of the said Act. In my view also the decision referred to by Mr. Nariman decided by the Tribunal reported in 1987 (29) E.L.T. page 933, had not correctly decided the law on the subject and I hold that the said Tribunal had not correctly interpreted the provision of Section 11B of the said Act, inasmuch as such interpretation is on the face of it contrary to the plain meaning of the language used in the statute and that would be contrary for the purpose of which Section 11B was introduced and accordingly I am Unable to persuade myself to accept the proposition laid down by the said Tribunal that unless the price list is set aside on appeal, the question of refund will not arise. Such an interpretation given by the Tribunal on the face of it is erroneous in view of the fact that subsection (3) of Section 11B provides cases where refund should be made as consequence of an order passed in appeal or revision. If the interpretation given by the Tribunal is accepted that would result in a disastrous effect and that would make the provision of Section 11B(1) completely nugatory and unworkable. If such an interpretation given by the Tribunal is accepted, in that event also the provision of Section 11A should also be made completely nugatory and unworkable. In my view the Tribunal's decision is wholly erroneous and contrary to the scope and object of the Act and cannot be sustained on any rules of interpretation. The said Tribunal sought to narrow down and abridge the scope and ambit of Section 11B of the said Act to defeat a claim [for refund on a proposition which if accepted would produce a wholly ... sic] unreasonable results. The Court's and the Tribunal's duty is to apply rules of interpretation by which it should make sense of the enactment than by opening it to destructive analysis. The Tribunal's view in my opinion would lead to destructive analysis. The provisions of Section 35A and Section 35EE neither override the provisions of Section 11A nor it could be said that Section 11A is a mere machinery provision which could be invoked independently and or the same could only be invoked in aid of the powers conferred in Section 35A and/or Section 35EE of the said Act. The later sections adopted by reference only the period of limitation and nothing else. When the language of Section 11A is clear and the powers conferred in other provisions could be invoked only within the period of limitation mentioned in Section 11A of the said Act, makes it clear that the provision of Section 11A is an independent code and/or provision for the purpose of recovery of the excise duty short paid and short levied. In my view, if the interpretation as sought to be given by Mr. Nariman is to be given in Section 11A of the said Act, it would produce a wholly unreasonable result and would also defeat obvious intention of the legislature and further the court has to do some violence to the words which in my view, is not permissible. In this connection I may quote the observation of Lord Scarman of the House of Lords, in the case of Duport Steels Ltd. v. Sirs and Others reported in (1980) 1 All ER page 529 at 551, 'But in the field of statute law the judge must be obedient to the will of the Parliament as expressed in its enactments. In this field Parliament makes and unmakes, the law, the judge's duty is to interpret and to apply the law, not to change it to meet the Judge's idea of what justice requires. Interpretation does of course imply in the interpreter a power of choice where differing constructions are possible. But our law requires the judge to choose the construction which in his judgment best meets the legislative purpose of the enactment. If the result be unjust but inevitable, the judge must say so and invite Parliament to reconsider its provision. But he must not deny the statute. Unpalatable statute law must not be disregarded or rejected, merely because it is unpalatable. Only if a just result can be achieved without violating the legislative purpose of the statute may the judge select the construction which best suits his idea of what justice requires. In my view, when the language of Sections 11A, 35A and 35EE of the said Act are clear and when they are independent provisions, the scope and ambit of Section 11A cannot be curtailed. In my view, Section 11A provides a complete code and is an independent provision and any other interpretation would in my view, narrow down, limit and/or abridge the scope and ambit of the provision of Section 11A of the said Act. If the provision of Section 11A has to be narrowed down defeating the obvious intention of the legislation, this would produce a wholly unreasonable result. In my view, the court will not interpret a statute which would give rise to a destructive analysis. This is not a case where the provision of Section 11A is capable of two alternative interpretation. Even interpreting a revenue statute, the Court should examine the substance and not merely the form of the language and should mould the taxing statute so far as possible to achieve the legislative intent and also to meet with the change of social needs. It is no longer the duty of the Court to interpret a statute strictly to help the evasion. Its duty is to construe in a manner which will suppress the evasion of tax or duty. In this particular case, the petitioner was admittedly enjoying a concession and/or exemption and the provision of notification giving concession and/or exemption should not be construed liberally in favour of the tax payer defeating the purpose of the legislation. While interpreting the provision of law, the Court will try to ascertain the mischief which the statute intended to remedy from the whole of the enactment and the existing state of law. The object of Section 11A was for recovery of duty short paid or short levied and in my view, the provision of Section 11A could not be interpreted in a manner which would defeat the very purpose and/or object for which the same is enacted. Accordingly, in my view, this contention of Mr. Nariman must be overruled. In my view, that within the scope and ambit of Section 11A of the said Act, the impugned show cause notice was issued rightly."
17. Again this Bench had a occasion to examine a similar case arising in the case of Akola Oil Industries Ltd. v. Collector of Central Excise - 1991 (53) E.L.T. 136 (Tribunal). In this case, this Bench examined the provisions of Section 11A of the Central Excises and Salt Act and the said findings in para 4 to 5 are given below -
"It is very clear that the Collector had acted beyond his competence and jurisdiction, the very views he attributed to the Assistant Collector. The Collector is undoubtedly correct when he says that the Asstt. Collector was, when he passed his order of 9-12-1986 not competent to do so and should have transferred the proceedings to the Collector for adjudication. But the question is whether the Collector in exercising his purported powers under the amended Section 11A of the Act was acting within the jurisdiction. The Assistant Collector's order dated 9-12-1986 was undoubtedly an illegal order. But right or wrong, it was an order passed by an order of Central Excise and it could have been nullified only in a manner sanctioned by law. At the relevant time, the Collector had no power to review or revise the Assistant Collector's order. He could only direct the Assistant Collector in terms of Section 35E of the Act, to apply to the Collector (Appeals) for determination of the points specified by the Collector. This was the course sanctioned by law and had not been followed. The amended Section 11A of the Act did not authorise the Collector to reopen suo motu or otherwise, orders or decisions made or taken by officers subordinate to him.
The learned DR could not understandably enough, reply satisfactorily to the questions put to him by the Bench on the jurisdiction of the Collector to reopen the proceedings dropped by the Assistant Collector and review the Assistant Collector's order."
18. The learned counsel for the respondents had relied on the ruling given by the Calcutta High Court in the case of S. Venkatesan v. Nihalchand (supra), the provisions of Customs Act, pertaining to short levy, non-levy as laid down under Section 39 of the Sea Customs Act. In a similar instance, the Court examined the provisions and gave their findings in para 10 to 22 of the Act. The relevant portion given in para 20 to 22 are given below.
"It seems clear that when Customs duty after having been levied, has been erroneously refunded owing to one or other of the causes mentioned in Section 39, the person to whom such refund has been erroneously made shall repay the amount on a notice of demand being issued to him within three months from the date of refund. Similarly by Section 40, the Act provides that customs duty which was erroneously paid for similar causes will be refunded only if the claim for refund is made within three months from the date of such payment. The point to note is that the claim for levy of duty by the customs authorities or claim for refund against them has to be made within the prescribed period. These provisions are unambiguous. The courts have to construe them as they find them. The Customs right to levy duty unpaid or short paid or the citizens right to refund of duty erroneously paid or overpaid have been placed on the same footing. The question then arises whether by recourse to Section 190A, the time for levying of duty not paid or underpaid or erroneously refunded can be enlarged in favour of the Customs authorities. The direct effect of such enlargement of time will be to destroy completely the earlier provision contained in Section 39 limiting the time for the customs, to claim payment of duty not levied or short levied or erroneously refunded. If such was the result intended by the legislature, it would amount to taking away something with the left hand which was given with the right hand. There can be no extension of the customs right without corresponding extension of the citizen's obligations. Interest of revenue cannot be pleaded in extension of such right in favour of the Customs authorities. Equity has no place in the law of limitation and we are to construe these provisions strictly. It can never be right to think that the legislature intended to keep alive in favour of the Customs, in this indirect manner, a claim already extinguished by efflux of time. In our view, there is no real conflict between Section 39 and Section 190A, and even if there was one, it would be the business of the Courts to harmonise the two provisions so as to provide a workable and well-reasoned basis on which each might fulfil its purpose in aid of the object of the enactment. Section 190A which is a new provision introduced in 1955, embodies the experience of the working of the Act. Words of wide import appear to have been deliberately chosen so as to give the Chief Customs authority power to exercise effective control over all matters, administrative or other, with the very intelligible safeguard that no one can be adversely affected in consequence of the exercise of such power without the person concerned being first heard. The very amplitude of power given by the section would be a reason to guard against its abuse; and we consider an attempt to enlarge time for claim to payment of duty not levied or short levied or erroneously refunded by appealing to its provisions would be an instance of such abuse. The section cannot be read so as to destroy or defeat the earlier express provision contained in Section 39 of the Act.
The rule is well known that where a general intention is expressed and the Act expresses also a particular intention, incompatible with the general intention, the particular intention is to be considered in the nature of an exception. The Supreme Court endorsed this view in the case of State of Bombay v. United Motors (India) Ltd., (1953 SCA 408 : AIR 1953 SC 252). In our opinion, the specific provision relating to limitation contained in Section 39 cannot possibly be destroyed or overridden by the provision in Section 190A whereby the Chief Customs authority has been given power to revise orders previously made within a period of two years. There can in our view be no question that the period of limitation prescribed in S. 39 must prevail.
In our opinion, the present case is completely covered by Section 39 of the Sea Customs Act which is a specific provision. According to the notice issued by the Customs authorities, a part of the duty was erroneously refunded. Consequently, if action was to be taken, it was required to be taken under Section 39 within the period of three months prescribed in the section itself. The section speaks of relevant date. That expression is defined and it means in this instance the date of issue of refund. We have indicated that the date of issue of notice was long after the date of refund. We cannot accept the contention that since the notice speaks of action proposed to be taken in terms of Section 190A, the period of limitation prescribed in Section 39 of the Act is wiped out, to the detriment of the person called upon to show cause against the proposed recovery of the amount said to have been erroneously refunded. There can be no question that different periods of limitation have been prescribed for different purposes. In order to enable the Chief Customs Authority to exercise a general power of superintendence over decision and orders made by subordinate officers of the customs a longer period of limitation has been prescribed. This is quite understandable but surely the period of limitation in Section 190A cannot override the express provision in Section 39 which limits the issue of notice of demand for payment of duties not levied or short levied or erroneously refunded to a period of three months."
19. After careful examination of the provisions of the Act and the case law, it can be safely presumed that the provisions of Section 28 of the Customs Act are exclusive in nature. After finalisation of the assessment, the parties can file appeal under Section 128 of the Act or the Department can raise non-levy, short levy and erroneous refund by issue of show cause notice within 6 months and in the other circumstances explained in the provisions, the Collector can invoke the larger period of 5 years also.
20. In this case, the Department has not reopened the assessment under Section 28 nor filed an appeal after final assessment under Section 128 of the Customs Act, therefore, the Department cannot resort to Section 129D of the Act by preferring the review after the period of expiry as stipulated under Section 28 and 128 of the Customs Act. The provisions of Customs Act being analogous to the Central Excises and Salt Act and the law having been clearly stated by the highest court and the Tribunal as noted above, therefore, the same analogy would apply with the provisions of Customs Act also. In view of this, it has to be held that Section 28 of the Customs Act is independent of Section 129D of the Customs Act and the Revenue cannot take advantage of the limitation available under Section 129D of the Act on failure to comply with the provisions of Section 28 of the Act. The law laid down by the Supreme Court with regard to the issue of show cause notice under Section 11A of the Act as stated in Gokak Patel Volkart Ltd. (supra) and the ruling laid down in the case of Kosan Metal Products Ltd. would apply to the Customs Act also.
21. The view taken by the Collector (Appeals) in the impugned order is sustainable. These appeals are liable to be dismissed and we order accordingly.