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Supreme Court Of India
GEEP FLASHLIGHT INDUSTRIES LIMITED
Versus
Union of India
CUSTOMS ACT, 1962 - SECTION 131(3), 131(5) - REVISION OF ORDER - LIMITATION - POWER OF CENTRAL GOVERNMENT TO ANNUL OR MODIFY ORDER - SCOPE.
Fact of the Case:
The appellant, a manufacturer of dry battery cells, received a consignment of manganese dioxide. The Assistant Collector levied duty on the consignment under Tariff Item 28. The appellant appealed, and the Appellate Collector confirmed the order. The Revisional Authority held that the goods should be assessed under Tariff Item 26 and ordered a refund of duty. The appellant requested a refund and sent reminders to the Customs Authorities. The appellant gave a notice under Section 80 of the Civil Procedure Code for institution of a suit for recovery of refund. The appellant received a notice under Section 131(3) of the Customs Act, 1962, for revision of the order of refund. The appellant challenged the notice, arguing that the power of suo motu revision under Section 131(3) is subject to the limitation period prescribed in Section 131(5).
Finding of the Court:
The Delhi High Court held that the appellant should raise all objections to the notice before the Central Government, which should give a hearing to the appellant and consider all objections. The High Court directed the Government to take a decision within three months, unless the appellant caused delay. The Supreme Court held that the provisions in Section 28 of the Act, which speak of non-levy, short-levy, and erroneous refund, require a notice to be given within six months from the relevant date. However, in the case of erroneous refund, the limitation would be six months from the date of actual refund. The Court held that the notice dated 10/02/1975 was not hit by the limitation provision since refund had not been made.
Issues: 1. Whether the power of suo motu revision under Section 131(3) of the Customs Act, 1962, is subject to the limitation period prescribed in Section 131(5). 2. Whether the notice under Section 131(3) was barred by limitation.
Ratio Decidendi: 1. The Court held that the provisions contained in Section 131(3) of the Act are independent of the provisions contained in Section 131(5) of the Act. Section 131(3) empowers the Central Government to annul or modify any order passed under Section 128 or Section 130, while Section 131(5) provides a limitation period for cases of non-levy or short-levy of duty. 2. The Court held that the notice under Section 131(3) was not barred by limitation since refund had not been made. The relevant date for limitation in the case of erroneous refund is the date of actual refund, and since no refund had been made, the limitation period had not commenced.
Final Decision: The Supreme Court dismissed the appeal and directed the Central Government to hear the appeal on merits and decide the matter expeditiously. The Court specified a period of two months from the date of the order for the Central Government to make payment if it held that the order of refund was valid.
Judgment
RAY, J.
( 1 ) THIS appeal is by special leave from the judgment dated 10/09/1975 of the Delhi High Court.
( 2 ) THE appellant is a manufacture of dry battery cells. In October 1969 the appellant received a consignment of ten metric tones of manganese dioxide. The Assistance Collector levied duty on the consignment under Tariff Item 28. The appellant preferred an appeal. The Appellate Collector confirmed the order of the Assistant Collector. The appellant thereafter made an application to the Revisional Authority. The Revisional Authority held that the goods should be assessed under Tariff Item 26 and ordered refund of duty.
( 3 ) THE appellant asked for refund and sent reminders to Customs Authorities for refund.
( 4 ) ON 3/10/1974 the appellant gave a notice under Section 80 of the Civil Procedure Code for institution of a suit for recovery of refund.
( 5 ) ON 10/02/1975 a notice under Section 131 (3) of the Custom Act 1962 referred to as the Act was given to the appellant for revision of the order of refund.
( 6 ) THE appellant impeached the aforesaid notice dated 10/02/1975. The notice inter alia stated that "since the goods were processed ore, not meant for extraction of metallic manganese they ceased to qualify as an ore within the normally accepted sense of the term as in Item 26 Indian Customs Tariff. The notice thereafter said "it, therefore, appears to the Government that the appellate order does not appear to be sustainable. Therefore, in exercise of the powers under Section 131 (3) of the Customs Act, 1962 the Government of India proposes to annul the order in Appeal No. 590-593/1972 passed by the Appellate Collector of Custom, Calcutta. "
( 7 ) THE appellant made an application under Article 226 and moved the Delhi High Court. The appellant in the application asked for a writ in the nature, of prohibition restraining the "opposite party" thereto from taking any proceeding pursuant to the impugned notice. The appellant also asked for a writ of certiorari to quash the notice. The appellant also asked for a writ of mandamus not to withhold the excess duty paid by the petitioner and ordered to be refunded.
( 8 ) THE contention of the appellant was that the power of suo motu revision under Section 131 (3) of the Act in so far as it relates to a case of non-levy or short levy of duty must be exercised within the period of limitation prescribed in Section 131 (5) of the Act. In short, the appellants contention is that the power of suo motu revision contained in Section 131 (3) of the Act is subject to the provisions contained in Section 131 (5) of the Act.
( 9 ) THE provisions contained in Section 131 (3) of the Act are as follows :"the Central Government may of its own motion annul or modify any order passed under Sec. 128 or Section 130. "
( 10 ) THE provisions contained in Section 131 (5) of the Act are as follows:-"where the Central Government is of opinion that any duty or customs has not been levied or has been short-levied, no order levying or enhancing the duty 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 28. "
( 11 ) SECTION 28 of the Act provides for notice for payment of duties not levied, short-levied or erroneously refunded. Under Section 28 when any duty has not been levied or has been short-leived or erroneously refunded, the proper officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has been short-levied 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.
( 12 ) COUNSEL for the appellant extracted the provision contained in Sections 28 and 131 (3) and 131 (5) of the Act in support of the contention that any notice for suo motu revision by the Central Government in so far as it relates to a case of non-levy or short levy of duty must be given
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