| SooperKanoon Citation | sooperkanoon.com/30128 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi |
| Decided On | Feb-26-2003 |
| Judge | K Usha, N T C.N.B., P Chacko |
| Reported in | (2003)(87)ECC513 |
| Appellant | Shakti Beverages Ltd. |
| Respondent | Commissioner of Customs |
3. It is contended on behalf of the appellant that the Commissioner (Appeals) has committed grave error in treating the assessment as provisional and also permitting the department to finalise the same after a period of long delay. The appellant had paid duty on 26-2-87. A bond was executed by the appellant on 6-2-87. A reading of the bond will clearly show, as was observed in the reference order, that the assessment of the goods imported under the Project Import Regulation was provisional. The less charge demand which was in the nature of a show cause notice was correctly set aside by the Commissioner (Appeals) for the reason that such demand cannot be raised without finalizing the assessment. The Commissioner (Appeals) was within his powers to order that it was open to the department to finalize the assessment under the relevant provisions of Customs Act, 1962 and then take appropriate action.
4. It is contended on behalf of the appellant that in view of the long delay which has occurred after the provisional assessment, the department cannot be permitted to finalize the assessment and make a demand on that basis. In support of the above contention, the learned counsel for the appellant placed reliance on the decision of the Bombay High Court in Bhagwandas S. Tolani v. B.C. Aggarwal & Others -1983 (12) RUT. 44 (Bom.) which was followed by this Tribunal in Bhagsons Paint Indust. (India) v. Collector of Central Excise, New Delhi -1996 (88) RUT. 400 (Tribunal) and J.K. Rayons v. Collector of Central Excise, Allahabad -1994 (70) E.L.T. 132 (T). Reliance was also placed on the decision of the Supreme Court in State of Gujarat v. Patel Raghav Natha & Others - AIR 1969 S.C. 1297, S.P. Verma v. Union of India -1989 (42) E.L.T.5. The learned DR submitted that so long as no period of limitation is prescribed under the Statute for finalizing the provisional assessment, it is not open to the Tribunal which is a creature of the Statute to hold that the provisional assessment cannot be finalised in view of long passage of time. In support of the above contention, the learned DR placed reliance on two decisions of the Tribunal in Hindustan Lever Ltd. v. Collector of Central Excise, Bombay -1998 (103) E.L.T. 492 and Calcom Electronics Ltd. v. CC, Mumbai - 2000 (123) E.L.T. 1030.
Reliance was also placed on the decision of the Calcutta High Court in Angus Company Ltd. v. Collector of Customs, Calcutta -1988 (38) E.L.T.20. He placed further reliance on the decision of the Supreme Court in Miles India Ltd. v. Assistant Collector of Customs -1987 (30) E.L.T.641, Collector of Central Excise v. Doaba Co-operative Sugar Mills - 1988 (37) E.L.T. 478 and Union of India v. Kirloskar Penumatic Company -1996 (84) E.L.T. 401 (S.C.).
6. As mentioned earlier, the duty was paid provisionally on 6-2-87 a bond in respect of provisional assessment was executed by the appellant on 6-2-87. Whatever less charge demand was issued on 27-11-87 directing the appellant to show cause within 30 days from the date of receipt of the same. The appellant filed his written reply on 19-12-87. Thereafter the appellant received a letter dated 29-10-92 alleging that it had failed to reply the less charge demand dated 27-11-87. To the above letter the appellant replied on 19-11-92. Thereafter a personal hearing was held before the Assistant Commissioner of Customs on 4-2-97. Two years later a fresh notice for personal hearing on 5-5-99 was received.
The appellant attended the hearing. The Assistant Commissioner then passed order in original on 3-6-99 confirming the demand. Being aggrieved by the above order, an appeal was filed before the Commissioner (Appeals) who disposed of the same on 30-4-2001. It is the contention of the appellant that since the department took 12 years to pass the adjudication order, the Commissioner (Appeals) should have dropped the entire proceedings on the ground of delay. It is further submitted that this Tribunal should set aside the direction given by the Commissioner (Appeals) for finalizing the assessment only for the reason of long delay.
7. Admittedly there is no period of limitation prescribed for finalizing the provisional assessment made under Section 18 of the Customs Act, 1962. Therefore, we have to examine whether on the basis of the ratio of the decisions relied on by the appellant the Commissioner (Appeals) or the Tribunal can direct to drop the proceedings on the ground of delay in finalzing the assessment.
According to the appellant, the decision of the Bombay High Court in Bhagwandas S. Tolani v. B.C. Aggarwal & Others is directly on the point in favour of the assessee. Short facts of the above case were as follows :- 8. A show cause notice was issued to a firm Eastern Machinery and Trading Co. on 2nd August, 1966 alleging violation of Foreign Exchange Regulation Act, 1973. The firm replied on 9-8-66. Directorate of Enforcement, New Delhi which issued the show cause notice granted a hearing to the firm which was represented by its partner and a senior counsel. No formal order was passed. Again a notice was received to the effect that the adjudication proceedings were fixed in respect of show cause notice of 1966 on 11-1-77. To this notice a reply was sent by the present petitioner who is now the sole proprietor on 6-1-77 referring to the earlier hearing and other details. He also mentioned the fact that after the earlier personal hearing Reserve Bank of India at Bombay had lifted the law imposed on certain earlier directions given by the Enforcement Directorate. Subsequently, the petitioner received a letter dated 7-1-77 directing him to send a copy of the adjudication order to the Additional Director to substantiate his contention that the case had been finalised by the department. The petitioner contended that adjudication proceedings cannot be held twice over. Even though copy of the adjudication order was not served on the firm it was after the first adjudication the directions were given to Reserve Bank of India for lifting the earlier ban. The learned Single Judge who heard the matter took the view that it was a stale matter which cannot be allowed to be reopened. In coming to the above conclusion, the learned Single Judge took into consideration the contention raised by the appellant that almost all the relevant records had been destroyed, the persons who were in charge were no longer in their employment and if matter is reopened it will cause serious detriment and prejudice to the petitioner. It was also observed that the department has failed to clarify the position as regards the directions given to Reserve Bank of India and an adverse reference was required to be drawn from such failure even otherwise.
9. We are afraid that the facts of the present case are entirely different. Firstly, this is a case of provisional assessment. There are no such circumstances available in this case which could give the appellant an impression that the provisional assessment has been finalised or dropped during the period as in the Bombay case where the Reserve Bank of India lifted the ban after the first adjudication.
Appellant has also no case that due to the delay it could not effectively defend the allegation. On the other hand, its definite case both in the memorandum of appeal before the Commissioner (Appeals) as well as before this Tribunal is that all the relevant details had been furnished by the appellant before the authorities. It is relevant to note that apart from the written reply dated 19-12-87 the appellant had submitted written submissions dated 4-2-97 and again on 11-2-97. When fresh personal hearing was granted on 5-5-99 it is admitted that the appellant had availed such opportunity. The appellant has no case and there is no averment in the memorandum of appeal that the delay in finalizing the "provisional assessment has caused any prejudice to the appellant. The only contention raised is that finalization of assessment cannot be permitted in view of the delay. We are, therefore, of the view that the ratio of the decision of the Bombay High Court cannot have any application to the facts of the present case,In Bhagsons Paint Indust. (India) v. Collector of Central Excise, New Delhi the Tribunal has followed the Bombay High Court decision. It was a case where show cause notice was issued on 5-9-81 to which the assessee replied on 12-9-81. Thereafter a personal hearing was given in March, 1990 after a request was made by the assessee in 1989. The assessee had alleged that because of the long delay in conducting the adjudication proceedings' they are not in a position to effectively take part in the proceedings. There was a fire in their factory in 1984 and the Revenue did not respond to the request made by the assessee for making available certain documents. We find that the facts of the present case are quite different from those available in the above decision. It is also noted that the above order is pending in appeal before the Supreme Court. The facts in J.K. Rayons v. Collector of Central Excise, Allahabad are also entirely different. There was a request for retest at the time of hearing which was not granted. So also cross examination of Chemical Examiner was not permitted. Without fresh hearing the order was passed after nine years. It was under these circumstances, the Tribunal took the view that the delayed adjudication was in violation of principles of natural justice.
11. Substantial reliance was sought to be placed by the learned counsel on the decision of the Supreme Court State of Gujarat v. Patel Raghav Natha & Others - AIR 1969 S.C. 1297. It was submitted that the above decision is an authority to hold that the provisional assessment cannot be finalised after a reasonable period. We are unable to understand the above decision laying down such a rule under all circumstances. The Supreme Court was considering the effect of the provisions contained under Sections 65 and 211 of Bombay Land Revenue Code (5 of 1979).
Section 211 provided that "the State Government and any revenue officer, not inferior in rank to an Assistant or Deputy Collector or a Superintendent of Survey, in their respective departments, may call for and examine the record or any inquiry or the proceedings of any subordinate revenue officer, for the purpose of satisfying itself or himself, as the case may be, as to the legality or propriety of any decision or order passed, and as to the regularity of the proceedings of such officer." The question that came up for consideration was whether the Commissioner can revise an order made under Section 65 at any time in exercise of the power under Section 211. No period of limitation was prescribed under Section 211. Referring to the provisions contained under Section 65, the Supreme Court observed that power under Section 211 has to be exercised within a reasonable time.
In coming to the above conclusion the Apex Court referred to the provisions contained under Section 65 itself. It provided that if the Collector does not inform the applicant of his decision on the application within a period of three months, the permission applied for shall be deemed to have been granted. It was then observed as follows :- "This sections shows that a period of three months is considered ample for the Collector to make up his mind and beyond that the legislature thinks that the matter is so urgent that permission shall be deemed to have been granted. Reading Sections 211 and 65 together it seems to us that the Commissioner must exercise his revisional powers within a few months of the order of the Collector.
This is reasonable time because after the grant of the permission for building purposes the occupant is likely to spend money on starting building operations least within a few months from the date of the permission. In this case the Commissioner set aside the order of the Collector on October 12, 1961, i.e. more than a year after the order, and it seems to us that this order was passed too late." 12. From the above it is clear that the Supreme Court took into consideration the effect of the deeming provision in Section 65 and the adverse consequences which would fall on the applicant if a decision of the Commissioner is delayed as by that time the applicant would have started construction of the building taking advantage of the deeming provision under Section 65. We are of the view that this decision cannot be of any help to the appellant before us.
13. Reliance was placed by the appellant on the decision of the Supreme Court in CCE, Jaipur v. Raghuvar (India) ltd.:- "....... Courts may always held when any such exercise of power had the effect of disturbing rights of a citizen that it should be exercised within a reasonable period." "Any law or stipulation prescribing to do or not to do a thing after the expiry of period so stipulated has the consequence of creation and destruction of rights and therefore, must be specifically enacted and prescribed therefor. It is not for the Courts to import any specific period of limitation by implication, where there is really none." In the present case it cannot be contended that the rights of the appellant were disturbed after a long delay. The provisional assessment proceedings were pending to the knowledge of the assessee and he was given an effective opportunity to put forward his contentions against the proposal for finalizing the same.In Hindustan Lever Ltd. v. CCE, Bombay after referring to above mentioned decisions took the view that it is not in all cases where there is a delay, the Tribunal which is a creature of Statute can interfere if there is no specific period of limitation prescribed under the Statute. Tribunal has to examine whether on the ground of long delay there had been violation of principles of natural justice causing prejudice to the assessee. The Tribunal which is not clothed with the powers of a High Court exercising the jurisdiction under Section 226 of the Constitution, cannot prescribe a time limit for completion of the adjudication proceedings. After observing that the appellant was not able to place any material to show that the appellant was prevented on account of the delay for explaining his case properly before the adjudicating authority or that the appellant was in any way prejudiced on account of long delay, the Tribunal had declined to set aside the impugned order. A similar view was taken by the Tribunal in Calcom Electronics Ltd. v. CC, Mumbai. In this decision reference was also made to the two decisions of the Apex Court in Miles India Ltd. v.Assistant Collector of Customs and Collector of Central Excise v. Doaba Co-operative Sugar Mills where it has been held that the Appellate Tribunal is a creature of the Statute and any such authority acting under the Act are bound by the provisions of that Statute. As mentioned earlier, in the present case the appellant has no grievance that due to the delay it could not place all relevant materials before the authorities in support of its contentions. On the other hand, the specific averment made in paragraph 7 of the memorandum of appeal is that every information required from the appellant to enable the department to assess the Bill of Entry in question was available with the department well before the expiry of the bond and the bank guarantee. No where in the memorandum of appeal the appellant has contended that it was denied the opportunity to meet the allegations raised against it by reason of delay. The contention is that the department has no power or authority to finalize the provisional assessment which took place in February 1987 by passing an order on 3-6-99. We, therefore, find that there is no pleading or proof on prejudice caused to the appellant due to the delay which would amount to violation of principles of natural justice.
15. In Angus Company Ltd. v. Collector of Customs a learned Judge of the Calcutta High Court took the view that when the show cause notice was being issued within the time prescribed then the fact that the final order was passed only after ten years cannot be a reason to set aside the order as there is no limitation prescribed for conclusion of the proceedings under Section 116 of the Customs Act.
16. The limitation regarding the exercise of power by this Tribunal which is a creature of the Statute has been considered by the Apex Court in three decisions in clear terms. In Miles India Ltd., the Supreme Court held that the Customs authorities acting under the provisions of the Customs Act, 1962 were justified in disallowing the claim for refund as they were bound by the period of limitation under Section 27(1) of the Customs Act, 1962. The Tribunal's order was thus upheld. In Collector of Central Excise v. Doaba Co-operative Sugar Mills again it was held that the authorities functioning under the Act are bound by the provisions of the Act. In making claims for refund before departmental authorities an assessee is bound within the four corners of the Statute and the period of limitation prescribed in Central Excise Act and the rules framed thereunder must be adhered to.
In Union of India v. Kirloskar Penumatic Company Supreme Court reiterated the above view. In the above case an importer challenged before the Bombay High Court an order passed by an appellate authority under the Customs Act rejecting his claim for refund. While disposing of the writ petition the High Court directed that the Customs authorities shall not reject the refund application on the ground that it was time barred. The Apex Court took the view that even while acting under Article 226 of the Constitution the High Court cannot direct the Customs authorities to act contrary to the statutory provisions regarding the limitation. It was observed as follows :- "The power conferred by Article 226/227 is designed to effectuate the law, to enforce the Rule of law and to ensure that the several authorities and organs of the State act in accordance with law. It cannot be invoked for directing the authorities to act contrary to law. In particular, the Customs authorities, who are the creatures of the Customs Act, cannot be directed to ignore or act contrary to Section 27, whether before or after the amendment. May be the High Court or a Civil Court is not bound by the said provisions but the authorities under the Act are. Nor can there be any question of the High Court clothing the authorities with its power under Article 226 or the power of a civil court. No such delegation or conferment can be conceived.
17. Going by the ratio of the above three decisions of the Apex Court it is not open to the Commissioner (Appeals) or to this Tribunal to ignore the fact that there is no period of limitation prescribed under the Statute for finalizing the provisional assessment. The only question that can be considered is whether due to the delay in finalizing the provisional assessment whether the appellant has suffered any prejudice and whether there is violation of principles of natural justice. On the facts and pleadings in this case, as discussed earlier, we do not find any reason to hold that the appellant has suffered a prejudice and there is violation of principles of natural justice on account of the delay. We, therefore, hold that neither the Commissioner (Appeals) nor this Tribunal can annul the proceedings by which provisional assessment is being finalized for the reason of delay. The appeal, therefore, fails and it stands dismissed.