H.R. Syiem, Member (T)

1. By a notice F.No. 198/10/23/ 78-CVX dated 15th November, 1978 issued under Section 36(2) of the Central Excises and Salt Act, 1944, the Government of India called upon M/s. Fedders Lloyd Corporation to show cause why the order of the Appellate 'Collector of Central Excise, New Delhi, No. 2427-2428 CE/77 dated 9-12-1977 should not be set aside and why the Government of India should not pass another order. The order of the Appellate Collector arose from Orders No. V(29A)2/65/74/10369 dated 11-7-1977 and No. V(29A)3/7/75/10632 dated 14-7-1977 passed by the Assistant Collector of Central Excise, New Delhi. The Assistant Collector confirmed demands of duty served on the appellants on the basis that the 3 - ton air-conditioners manufactured and cleared by the appellants were package type (water cooled) air-conditioners. One order was in respect of Rs. 92,535/- and the other for an amount of Rs. 19,84,600/-. These orders were set aside by the Appellate Collector.

2. The arguments before us by the two sides centred only on one point. The learned counsel for M/s. Fedders Lloyd Corporation, Mr. Soli J. Sorabjee maintained that the notice of the Government issued under Section 36(2) of the Central Excises and Salt Act, 1944 is dated 15th November, 1978, while the order of the Appellate Collector is dated 9-12-1977. This notice is time barred under proviso to Section 36 which reads thus :

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 11 A.

3. The learned counsel for the department, Mrs. Zutshi, however, said that the main question is what caused the Government to issue its notice under Section 36(2). She pointed to the fact that the Government says nothing about recovering any money by means of this notice. Provisos 2 and 3 of Section 36(2) are part of the same section and must not be understood to be incompatible; no interpretation must be given that would make one proviso or the other nugatory.

4. The Government came to no finding in respect of any duty or short levy which it seeks to recover from the assessee by means of this notice. She cited in support the decision of this Tribunal in 1986 (7) ECR 196 re.: Mizar Govinda Annappa Pai. In this order, the Tribunal showed that when the Central Government merely spoke of its tentative view that the order proposed to be revised was not proper, legal and correct, and if the notice did not quantify or demand payment of any duty not levied, short levied, or erroneously refunded, it would have to be held necessarily that proviso 3 to Section 36(2) was not attracted. In that case, the notice did not quantify or demand any money as short levied duty or erroneously refunded and, therefore, the notice was governed by proviso 2 which gave a time limit of one year from the date of the decision or order sought to be reviewed.

5. The Central Government, continued the learned counsel for the department, must come to a definite opinion about money having been lost through short levy of duty or wrong refund if proviso 3, that is to say, the shorter time limit of six months, is to operate. She read the notice dated 15th November, 1978 of the Government and said that she could not find anything in this notice that the Government had come to an opinion or conclusion of any money having been lost through short levy or erroneous refund. The Government said only that the order of the Appellate Collector was not proper, legal and correct on 3 or 4 grounds that it enumerated; towards the end of the notice it announced that it proposed to set aside the impugned order and to pass another order, and proceeded to call upon M/s.