Judgment:
1. In this proceeding, initiated pursuant to a notice to show cause issued in terms of Section 36(2) of the Central Excises and Salt. Act, 1944 (hereinafter, the Act for short) as it read at the relevant time, transferred to and heard by the Tribunal as if it were an appeal by virtue of the provisions of Section 35-P of the Act, a question of the bar of limitation for the issue of the notice itself had been raised by Shri Mitral, Advocate, for the respondent and heard by us as a.
preliminary issue on 30-8-1985 and again on 22-11-1985.
2. The facts relevant for the appreciation of the question as to whether the notice, ostensibly, under Section 36(2) of the Act, was barred by limitation, are-- a) the Appellate Collector decided an appeal by the respondent against an order of adjudication dated 15-12-1978 in favour of the respondent on 20-3-1980; b) the aforesaid notice to show cause was admittedly issued on 5-1-1981.
3. Section 36(2) of the Act at the relevant time and Section 11-A in so far as material, read as follows:-- 36.(2) The Central Government may, of its own motion or otherwise, call for and examine the record of any proceeding in which any decision or order has been passed under Section 35 or Section 35A of this Act for the purpose of satisfying itself as to the correctness, legality or propriety of such decision or order and may pass such order thereon as it thinks fit: Provided that no decision or order shall be varied so as to prejudicially affect any person unless such person is given a reasonable opportunity of making a representation and, if he so desires of being heard in the defence: Provided further that no proceedings shall be commenced under this sub-section in respect of any decision or order (whether such decision or order has been passed before or after the coming into force of this sub-section) after the expiration of a period of one year from the date of such decision or order: Provided also that where the Central Government is of opinion that any duty of excise has not been levied or has been short-levied or erroneously refunded, no order levying or enhancing the duty, or no order requiring payment of the duty so refunded, shall be made under this section unless the person affected by the proposed order is given notice to show cause against it within the time limit specified in Section 11A.11-A.(1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, a Central Excise Officer may, within six months from the relevant date serve notice on the person chargeable with the duty which has not been 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: Provided that where any duty of excise has not been levied or paid or has been short levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect, as if for the words 'six months' the words 'five years' were substituted.
(2) The Assistant Collector of Central Excise shall, after considering the representation, if any, made by the person on whom notice is served under Section (1), determine the amount of duty of excise due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined.
(a) in the case of excisable goods on which duty of excise has not been levied, or paid or has been short levied or short-paid-- (A) Where under the rules made under this Act a monthly return, showing particulars of the duty paid on the excisable goods removed during the month in which the said return relates, is to be filed by a manufacturer or producer or a licensee of a warehouse, as the case may be, the date on which such return is so filed; (B) Where no monthly return as aforesaid is filed the last date on which such return is to be filed under the said rules; (C) In any other case, the date on which the duty is to be paid under this Act or the rules made thereunder; (b) in a case where duty of excise is provisionally assessed under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof; (c) in the case of excisable goods on which duty of excise has been erroneously refunded, the date of such refund.
4. It is the contention of the respondent that it is the third proviso in the aforesaid provision that applied in the facts and circumstances of the case and, accordingly, the notice having been issued beyond a period of six months from the date of the order proposed to be revised, is barred in terms thereof. In the course of his submissions, he relied upon the rulings in-- 5. The appellant's representative merely submitted that it is the second pro viso in Section 36(2) that applies, in the facts and circumstances of the case, and, hence, the notice was not barred seeing that on the date of its issue, the period of one year (prescribed therein) from the date of the order proposed to be revised (20-3-80) had not yet expired. He had not, however, attempted to distinguish. the second from the third proviso in regard to their applicability or the decisions relied upon for the respondent. Asked if, in support of his submission, he would like to cite any case law and would like to have some time for that purpose, he submitted, curiously enough, that there is some case law but he does not propose to investigate, look it up and cite it before us in support of his submissions. In his view, he had already set out the correct purport of the provision and there was, obviously, no need to cite any case law.
6. This casual attitude of the appellant's representative had, undoubtedly, made our task more difficult than it would otherwise have been.
7. In [Corn Products Co. (India) Ltd. v. Union of India--decided on 21-2-1984], the Hon'ble High Court of Bombay had concluded after a comparison of Section 35A(3)(b) and the third proviso to Section 36(2) that they are in pari materia and the latter is restrictive of the revisional jurisdiction of the Central Government in matters which arise out of the orders under Sections 35 and 35A of the Act to the extent that the notice should be issued within a period of six months as specified in Section 11-A of the Act. There was, however, no discussion whatsoever of the areas of applicability of the two provisos in Section 36(2) of the Act. Nor does it appear that the decision of the Delhi High Court in 1981 ELT 421 [Associated Cement Companies Ltd. v. Union of India] adverted to below, was cited.
8. The ratio of the aforesaid decision, was applied by the tribunal, in [Military Dairy Farm v. Collector of Central Excise, Pune] in a construction of the provisions in Section 35A(3)(b) of the Act, rather than the provisos to Section 36(2) with which we are concerned in the instant case.
9. (a) In 1981 ELT 421 [Associated Cement Co. Ltd. v. Union of India], a Division Bench of the Delhi High Court had, construing Section 36(2) of the Act, noticed the distinction between the second proviso and the third but held that the opinion of the Central Government to the effect that any duty of excise had not been levied or had been short levied or erroneously refunded although a prerequisite for the initiation of proceedings in terms of the third proviso, need not, ex facie, appear in the notice to show cause and the views of the Central Government could be gathered from the language of the notice read with the order proposed to be revised.
(b) The third proviso, significantly, is conditional upon an opinion of the Central Government of non-levy, short levy or erroneous refund. Indisputably, it is only when such an opinion is formed that the jurisdiction under the third proviso arises. The formation of an opinion in such a case is a condition precedent for the exercise of jurisdiction. In [Barium Chemicals Ltd. v. Co. Law Board and Ors.] it was laid down that the words "in the opinion of the Central Government" in Section 237(b) of the Companies Act, 1956 indicate that the opinion must be formed by the Central Government.
This was reiterated in [Rohtas Industries Ltd. v. S.D. Aggarwal]. [The question of the existence or otherwise of sufficient grounds for the formation of an opinion and judicial review thereof, also decided in the two aforesaid cases is an issue that does not arise in these proceedings.] So also, construing the expression "reason to believe" occurring in Section 147(a) of the Income Tax Act, 1961 the Hon'ble Supreme Court had laid it down that before jurisdiction could be assumed under the provision, the officer designated therein must have reason to believe that the income of the assesses had escaped assessment. If that condition is not fulfilled, the notice issued by the officer would be without jurisdiction.
(c) (i) Once this is so, the further question that arises is as to whether the formation of the requisite opinion should appear ex facie in the notice to show cause against the exercise of the jurisdiction that is invoked pursuant to such an opinion or its formation and existence can be inferred from a perusal of the notice along with the orders proposed to be revised.
(ii) It is a universal principle, however, that wherever jurisdiction is given by a statute subject to "certain specified terms contained therein, those terms should be complied with, in order to create and raise the jurisdiction and if they are not complied with, the jurisdiction does not arise" and where the want of jurisdiction appears on the face of the proceedings it cannot be waived [ (Kothamasu Kanakarathnamma v. State of Andhra Pradesh) relying on 6 Moo Ind. App 134 at 155 (Nusserwanjee Pestonjee v. Meer Moinuddin); (1901) 2 KB 833 (Alder-son v. Palliser) and (Badri Prasad v. Nagarmal)].
(iii) Unfortunately, the aforesaid decision of the Hon'ble Supreme Court does not appear to have been cited before the Delhi High Court in 1981 ELT 421.
(d) We had ourselves an occasion to interpret Section 36(2) of the Act as it existed at the relevant time in 1984 ECR 2142 Collector of (Central Excise, Chandigarh v. British India, Gurdaspur), wherein it was held that-- (a) In terms of Section 36(2), the Central Government could examine any proceeding in which a decision or order had been passed under Section 35 (by an Appellate Collector in an Appeal) or Section 35A (by the Board or the Collector, in revision), as they read previously, with a view to satisfy itself as to the correctness, legality or propriety thereof and pass any order thereon confirming, altering or annulling it.
(b) The second proviso restricts the period within which such a proceeding in revision could be commenced to a period one year from the date of the order proposed to be revised.
(c) The third, specifically, provides for the issue of a notice to show cause as a prelude to any such proceeding for revision, within a period identical to the period of limitation provided in Section 11A of the Act, if the Central Government is of the opinion that any duty of excise has not been levied or has been short levied or erroneously refunded.
(d) It will be observed that two different periods of limitation for two different actions--one for commencement of revision proceedings ordinarily in a case of mere illegality, incorrectness or impropriety in the order proposed to be revised and the other for the issue of a notice to show cause as a prelude to the initiation of the revision itself in a case of short levy or erroneous refund are provided with different terminus a quo. While the limitation prescribed in the second proviso commences to run from the date of the order proposed to be revised, the limitation in Section 11A, made applicable by reference in the third proviso, for the issue of a notice to show cause, starts from the 'relevant date' as defined therein which, in no case, is the date of the order proposed to be revised.
(e) It cannot, therefore, be that the two provisos apply to the same set of facts, so that it could be contended that in every case of an illegal, incorrect or improper order under Section 35 or 35A, there is also inherent a question of short levy or erroneous refund, in other words, the third proviso is comprehended in the second. Such a construction not merely flies in the face of the legislative intent and renders one of the provisos nugatory but also ignores the essential distinction between the two. While in every case of short levy or erroneous refund, the order proposed to be revised may be illegal, incorrect or improper, every illegal or incorrect order does not, necessarily, involve a short levy or erroneous refund.
(f) On the facts, alleged in the notice to show cause in terms of Section 36 (2) in this case, no such opinion had been expressed so that it could be inferred that it was formed.
10. A persual of the notice to show cause in the instant case reveals that, far from expressing any such opinion, it speaks merely of the tentative view of of the Central Government that the order proposed to be revised "was not proper, legal and correct". Nor did the notice quantify or demand payment of any duty not levied, short levied or erroneously refunded. In the premises, we have necessarily, to hold that the third proviso to Section 36(2) is not, in the facts and circumstances of the case and on the face of the notice to show cause, attracted. The notice in this case falls within the second proviso to Section 36(2) and is accordingly not without jurisdiction or barred by the limitation prescribed therein.