Judgment:
1. In this matter a review show cause notice has been issued under Section 131(3) of the Customs Act, 1962 for review of Order-in-Appeal No. 35/81 (Cus) dated 24th April, 1981 passed, by the Appellate Collector of Customs, Bombay on the appeal of M/s. Jayalakshmi Cotton and Oil Products (P) Ltd., against Order-in- Original No. 22/81 dt.
21-3-1981, passed by the Assistant Collector of Central Excise, Kakinada. On the setting up of this Tribunal it is transferred here and is being treated as an appeal before us.
2. When the matter is called Shri S.B. Seshadri, Administrative Officer of the respondent Company has raised a preliminary objection that the review, show cause notice is hit by limitation. It is submitted; that the Order-in-Appeal was passed on 24th April, 1981, the review show cause notice has been issued by the Central Government under Section 131(3) on the 11th February, 1982 and was received by the respondent on 16th February, 1982. It is submitted that under 'Section 131(5) of the Customs Act, any action to be taken in this regard should be within the time limit specified under Section 28 of the Customs Act, 1962. Section 28 provides for a period of 6 months", therefore, review proceedings are hit by limitation.
3. It is also submitted on behalf of the respondents that the Order-in-Review states that pending decision by the Central Government, the operation of the Order-in-Appeal is stayed. it is stated that this Order is unilateral and invalid and requires to be set aside as respondents were not given an opportunity to explain their point of view as required under principles of natural justice.
4. For the appellant Shri K.C. Sachar, JDR has pointed out that the review show cause notice is issued not under Section 131 - (5) but under Section 131(3) which has no time limit. Section 131(3) of the Customs Act reads as under: "The Central Government may of its own motion annul or modify any Order passed under. Section 128 or Section 130" Shri Sachar has, in this connection pointed out that prior to its amendment the old Section 36(2) of the Central Excises & Salt Act, 1944 contained similar provision. However, in that provision it had been specifically provided that no proceedings shall be commenced under the relevant provision after the expiration of a period of one year from the date of such decision or Order. It is pointed out that Section 131(3) does not contain any such reservation, Shri Sachar has relied on the decision of the Allahabad High Court in the case of Trivani Sheet Glass Works Ltd. 1983 ELT 711, in order to make the point that in this case Section 131(5) is not attracted.
5. Shri Seshadri on the other hand has cited CEGAT decision in the case of Collector of Customs, Bombay v. Bharat Vijay Mills Ltd. Kalol and M/s. Modi Spinning and Weaving Mills Ltd., 1985 ECR 192 in his favour and states that this is the latest decision on the point at issue which takes into account the entire case law and should therefore hold the field.6. We have carefully considered the submissions made by both sides. Let us first consider what the review notice is about. The review notice asked the respondents to show cause as to Why the order annulling the Appellate Collectors order dated 24-4-1981 should not be annuled. The grounds for review are that on examination of the case records the Central Government is tentatively of the view that the Order of the Appellate Collector setting aside the Assistant Collector's Order-in-Original on a mere technical ground without going into the merits of the case was not correct, legal and proper, being based on incorrect appreciation of the facts and circumstances of the case as well as mis-interpretation of the provisions of law. There is a further elaboration of the justification of the proposal to review the Order of the Appellate Collector in the review notice and it Is stated that Central Government has carefully gone through the relevant statutory provisions governing the levy of export duty on deoiled rice bran and it was clear to the Central Government that the deoiled rice bran was chargeable to export duty during the intervening period from 22nd Jan, 1977 to 12th: May, 1977.
7. Now the issue before us whether the above Order can rightly be considered to be under Section 131(3) of the Customs Act, as it purports to be, as pleaded by the learned JDR, or it is actually only under 131(5). Shri Sachar has relied on the judgement of -the Allahabad High Court in; the case of Trivani Sheet Glass Works Ltd. v. Union of India and Ors. (supra) in urging that the review notice 'is in fact under Section 131(3) of the Customs Act and therefore not subject to any limitation. We find that the decision in Trivani Sheet Glass Works Ltd. case is based on interpretation of the then Section 36(") of the Central Excises and Salt Act, 1944. Prior to amendment made by Central Act No. 25 of 1978, which became operative with effect from 6th June, 1978, Section 36(2) of the Central Excises &Salt Act read as under : "The Central Government, may, of its own notion 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 resonable opportunity of making a representation and, if he so desires, of being heard in his 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 period of one year from the date of such decision or order." As a result of amendment made on 6th June, 1978 a third proviso was added to Section 36(2) of the Act which reads as under : "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 Order requiring payment of 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 time limit specified in Section 11-A." The time limit in Section 11-A(1) of the Act, as inserted by Act No.25 of 1978, has been specified in the following manner :- "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 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 fo 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 intend to evade payment of duty, by such person or his agent, the provision of this sub-section shall have effect as of for the words "six months" words "five years" were substituted.
Explanation - Where the service of the notice is stayed by an order or a court, the period of such stay shall be excluded in computing the aforesaid period of six months or five years, as the case may be," 8. the question before the Allahabad High Court was whether, While considering the legality and propriety of the Order of the Appellate Collector, which according to the impugned show cause notice was proposed to, be done, the Central Government was required to go into the question, whether there had been any short-levy or erroneous refund of duty and whether it would be required to make an order levying/enhancing duty or requiring payment of an amount erroneously refunded to the petitioner. The matter before the Allahabad High Court related to a refund claim by the petitioner but it was held that although the Central Government had issued a show cause notice to the petitioner under Section 36(2) of the Act in respect of the Appellate order, it had not passed any order staying the refund which had become due under that order. No such circumstance had been brought ot the notice of the Court which had the effect of inhibiting the proper officer from performing his obligation under Rule 11(3) to refund the amount due in accordance with Appellate orders within reasonable time.
The Allahabad High Court decided that the fact that the Central Government was examining the propriety of the Appellate order by itself would not provide a reason which was good enough to justify the proper officer is not performing his public duty under Rule 11(3). It was added that if and when the Appellate orders were modified or corrected, it would be open to the respondents to initiate proper proceedings in accordance with law for recovering the amount to the extent it has been wrongly refunded by it. As no proceedings for claiming back the amount refunded to the petitioner or for recovering the duty which had been found to be short-levied had been initiated, the. Allahabad High Court rejected the petitioners request for quashing the notice under the then Section 36 of the Central Excises and Salt 'Act, 1944 issued by the Central Government for examining the validity of the Appellate orderCollector of Customs, Bombay v. Bharat Vijoy Mills Ltd. and M/s. Modi Spinning and Weaving Mills (supra) this Tribunal, on the basis of the facts of the cases before it, held that there could be no doubt that the order which was sought to be revised in the case of Modi Spinning & Weaving Mills would be a case of shot levy because there was no dispute that there was an order of assessment under Section 17 of the Customs Act and that it would result in short duty being collected from the respondent. The Tribunal also decided that the third proviso to Section 36(2) of the Central Excises & Salt Act, 1944, as it then existed and Section 131(5) of the Customs Act, 1962 were in substance Part Materia. Relying on the decision of the Delhi High Court in the case of The Associated Cement Co. Ltd. v. Union of India 1981 ECR 66D as well as the decision of the Bombay High Court in the case, of Forn Products Co. (India) Ltd. and Ors. v. Union of India and Anr.
1984 (16) ELT 177, it was decided by this Tribunal that since the orders ought to be revised were clearly related to a case of short levy, therefore, the show cause notice issued was hit by limitation under Sub-section 5 of Section 131 of the Customs Act, 1962.
10. Now let us see what was the view taken in the Associated Cement Co.
and Corn Products Co. (India) Limited cases relied upon in the Order of the Tribunal. In the case of Associated Cement Co. Ltd. it was argued before the Delhi High Court that while the Appellate Orders were such that according to the tentative view formed by Central Government, they resulted in short levy of excise duty, the language of the impugned notices did not use these words which were found in the third proviso.
No reference to short levy or non-levy was made in the notice. All that was stated, was that the Central Government wished to review the legality, correctness or propriety of the Appellate Orders. It was in view of this language that it was argued that the impugned notices were under the second proviso of Section 36(2) and therefore not barred by limitation as they were issued within a period of one year from the date of Orders of the Appellate Collector. The Delhi High Court observed as under :- "While it is for the Central Government to choose its language in giving show cause notice under the first proviso to Section 36(2), the view of the Central Government has to be gathered not only from the language used in the show cause notice but also by reading the said language with. the orders passed under Section 35 or 35-A which are sought to be reviewed by the orders proposed in the show cause notices. Once the notices are read with the orders passed under Section 35 or 35-A, it would be clear whether the notices are issued under the second proviso or whether they are issued under the third proviso. The language of the impugned show cause notice in the present case purpots to be under the substantive part of Section 35(2). It cannot, however, attract the application of the limitation prescribed under the second proviso because if the notices are read as a whole and particularly if they are read with orders passed by the Appellate Collector, it becomes quite clear that the revision sought by these notices is of appellate orders of short-levy. It may be that alongwith short-levy the appellate order would also be incorrect or illegal in the opinion of the Central Government. This does not mean, however, that third proviso can be ignored and the notices can fall under the second proviso." 11. In the case of Corn Products Co. (supra) the Bombay High Court again decided as under : - It must be held that the third proviso has the effect of restricting the revisional jurisdiction of the Central Government in matters which arise out of the orders under Sections 35 and 35A relating to non-levy, short-levy or erroneous refund. This restriction is in the form of an express provision that the notice to show cause in respect of these matters must be given within the time-limit specified in Section 11A, that is, within the period of six months." 12. Now in the matter before us we find that the appellants had been issued two notices under Section 28 of the Customs Act, 1962 demanding duty on goods exported by them. The case was adjudicated by the Assistant Collector of Central Excise, Kakinada who held that the goods exported were liable to export duty and formed the amount demanded in the two notices. Against this decision of the Assistant Collector, demanding export duty, the exporters filed an appeal before the Appellate Collector of Customs, Bombay. The Appellate Collector set aside the Assistant Collector's order on the ground that the demand notices did not comply with the provisions of the Section 28 of the Customs Act, 1962. The Central Government, however, felt that the two demand notices in question were proper notices and it was wrong on the part of the Appellate Collector to set aside the Assistant Collector's orders merely on the ground that the notices were not proper.
Accordingly, the Central Government issued a show cause notice under Section 131(3) of the Customs Act, 1962 proposing to set aside the Order of the Assistant Collector, or to remand the case back to the Appellate Collector for a de novo decision or to pass such Orders as deemed fit. Furthermore, the Central Government, pending decision in the proceedings initiated, directed that the Order of the Appellate Collector be stayed. We thus observe that although the Order has been issued by the Central Government under Section 131(3) of the Customs Act, 1962. Actually there can hardly be any doubt that this is a matter pertaining to non-levy of duty, as the Assistant Collector's Order which it proposes to restore, makes a demand of duty not levied on goods exported. The Appellate Collector's Order also relates to non-levy and has the effect or ordering that no duty can be demanded from the appellants on the facts of the ease. The notice issued by the Central Government not only seeks to review the Appellate Order on the ground that the notices demanding duty of the appellants were proper notices but further goes on to stay the Order-in-Appeal which sets aside the Order of the Assistant Collector and the notices. It cannot, by any stretch of imagination, be argued therefore that the matter does not relate to non-levy of duty. Although, the notice have been issued by the Government under Section 131(3) of the Customs Act, 1962 it must be deemed to be actually issued under Section 131(5) of the Customs Act, 1962.
13. The Order-in-Appeal being passed on 24th April, 1981 and the show cause notice issued by the Central Government having been issued on 11th February, 1982 is clearly beyond the time limit provided under Section 131(5).
14. In taking this view, we also rely on the decision of the Bombay and Delhi High Courts and the Tribunal decision cited above.
15. Both sides had also extensively argued on merits. In the view, that we are taking, however, on the preliminary objection as regards limitation, it is unnecessary for us to go into the merits of the demand of duty as such.