Kashmilon Processing Industries vs Union Of India
2008 Latest Caselaw 1701 Del

*             THE HIGH COURT OF DELHI AT NEW DELHI

%                                 Judgment delivered on : 22.09.2008

+                             WP(C) No. 2258/1981

KASHMILON PROCESSING INDUSTRIES                           ..... Petitioner

                                   -versus-

UNION OF INDIA                                           ..... Respondent

Advocates who appeared in this case:

For the Petitioner : Ms Shikha Tyagi & Ms Vandana Sharma For the Respondent : Mr Mukesh Anand with Ms Zeba Tarannum Khan & Mr Shailesh Tiwary

CORAM :-

HON'BLE MR JUSTICE BADAR DURREZ AHMED HON'BLE MR JUSTICE RAJIV SHAKDHER

1. Whether the Reporters of local papers may be allowed to see the judgment ? Yes

2. To be referred to Reporters or not ? Yes

3. Whether the judgment should be reported in the Digest ? Yes

BADAR DURREZ AHMED, J (ORAL)

1. The short point raised in this writ petition is that the order

passed by the Central Government on 30.01.1981 under Section 36

of the Central Excise Act, 1944 was beyond time. The facts are that

the Appellate Collector of Central Excise had passed an order under

Section 35 of the said Act in favour of the petitioner on 28.3.1978.

The show cause notice under Section 36(2) of the said Act was

issued on 16.10.1978. Consequent to the said show cause notice, the

impugned order dated 30.01.1981 has been passed.

2. The provisions of Section 36 as it stood at the relevant point of

time read as under:-

"Sec.36: Revision by Central Government.- (1) the Central Government may on the application of any person aggrieved by any decision or order passed under this Act or the rules made thereunder by any Central Excise Officer or by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963, and from which no appeal lies, reverse or modify such decision or order.

(1A) Every application under sub-section (1) shall be accompanied by a fee of rupees one hundred and twenty-five.

(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 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 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."

3. A plain reading of the said provision makes it clear that by

virtue of Section 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 of Section 35(A) of the said 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.

The third proviso to this sub-Section, which is applicable in the

present case as the allegation is of short levy, stipulates that where

the Central Government is of the opinion that any duty of excise has,

inter alia, been short levied, no order levying or enhancing duty shall

be made under the said section "unless the person affected by the

proposed order is given notice to show cause against it within the

time limit specified under Section 11A". Section 11A as it stood at

the relevant point of time prescribed a period of six months from the

relevant date in case of duty short levied. It is common ground that

the proviso to Section 11A is not applicable in as much as there is no

allegation that the alleged short levy was on account of fraud,

collusion or any willful mis-statement or suppression of facts or

contravention of any of the provisions of the said Act or rules made

thereunder with intent to evade payment of duty. Consequently, the

extended period of limitation of five years available under the

proviso to Section 11A would not be relevant for the purposes of the

present case.

4. This being the position, the show cause notice under the third

proviso to Section 36(2) would have to be issued within six months

of the order under section 35 passed by the Appellate Collector. The

Appellate Collector had passed the order on 28.3.1978. It is relevant

to note that in the writ petition in ground (h) the petitioner has

specifically taken the plea that the show cause notice was time

barred. The plea taken was that:-

"The show cause notice, however, is dated 16.10.78, i.e, well

after the time limit of six months specified in Section 11A of the said

Act from the order in appeal dated 28.3.78. It is submitted that the

first respondent has no power at all to initiate the impugned review

proceedings under Section 36(2) of the said Act and the said show

cause notice dated 16.10.78 and the said order in review were

patently without jurisdiction, illegal, null and void."

5. In response to this plea, the respondents in their counter

affidavit have only taken the point that the said plea was an

afterthought and did not appear to have been agitated before the

reviewing authority at the time of personal hearing. However, even

if the submission made by the respondents is taken to be correct,

since the requirement of issuing the show cause notice within a

stipulated period of time is a mandatory requirement, whether the

petitioner took or did not take the plea that the show cause notice

was time barred would not be of much relevance. It is a

jurisdictional issue and can be taken at any point. It was for the

respondent to show that the show cause notice had been issued

within the stipulated period of six months. There is no denial of the

fact that the show cause notice was, indeed, issued after the period of

six months from the date of the order dated 28.3.1978.

6. In these circumstances, we are of the view that the show cause

notice dated 16.10.1978 was beyond the period prescribed under

Section 36(2). Consequently, the impugned order dated 30.01.1981

which is the culmination of the proceedings initiated on the basis of

the said show cause notice would also be without jurisdiction. The

impugned order is liable to be set aside. We may indicate that in this

conclusion of ours we are supported by a decision of this Court in

the case of Rollatainers Limited v. Union of India: 1998(98) ELT

311(Del.).

7. The writ petition is allowed. The impugned order dated

30.01.1981 is set aside. The bank guarantee furnished by the

petitioner to the department shall be returned to the petitioner within

two weeks of an application being made for the same. There shall

be no order as to costs.

BADAR DURREZ AHMED, J

RAJIV SHAKDHER, J

September 22, 2008 mb