ivil Appeal No 1632 of 1988
From the Order dated 811988 of the Customs Excise and Gold Control Appellate Tribunal New Delhi in Appeal No SD SBT 71681 C Order No 1788 C AK Ganguli A Subba Rao and Mrs Sushma Suri for the Appellant
AN Haksar R Karanjawala Ms M Arora and Mrs M Karanjawala for the Respondent
The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
This appeal is under section 35Lb of the herein after called the Act  against the order dated 8th January 1988 passed by the Customs Excise  Gold Control Appel late Tribunal
The issue involved in this appeal was whether in the facts and the circumstances of the case the Tribunal was legally justified in restricting the demand of duty to six months prior to the date of issue of show cause notice particularly in a case where longer period was invoked on the ground of suppression of information in the declaration furnished by the respondent
The respondent manufactured patent and proprietary P  P medicines falling under TI 14E and also pharmacopoeial preparations falling under TI 68 of the Central Excise Tariff of an aggregate 714 value of Rs205933860 and cleared during the period of 141979 to 3131980 the same without payment of duty availing the benefit of exemption notification No 8080
Under the provisions of sub clause ii of clause 2 of notification No 8080 dated 19th June 1980 and sub clause iii of clause a of notification No 7178 dated 131978 the manufacturer would not be eligible for exemption under the two notifications in respect of clearance of patent or proprietary medicines from 1st April 1980 since the notifi cation would not apply to a manufacturer who manufactures excisable goods falling under more than one item of the 1st Schedule of the Act and the aggregate value of the clear ness of all such excisable goods by the manufacturer or on his behalf are cleared for home consumption from one or more factories during the preceding financial year had exceeded Rs20 lakhs
The factory had cleared during the period from 1st April 1980 to 29th October 1980 P  P medicines falling under TI 14E valued at Rs43205009
The central excise duty payable on the goods removed was Rs5530201
The respondent filed a declaration for exemption under notifica tion No 7178 dated 131978 and furnished particulars of only the value of P  P medicines manufactured and cleared by it during the preceding financial year ie 1979 80 and the respondent did not furnish the particulars of the value of the goods cleared under Tariff item 68 during the finan cial year 1979 80
It was noticed that the manufacturer did not file any declaration under Notification No 111 78 dated 95
1978 claiming exemption from the licensing con trol
However on 30th July 1980 the firm filed a classifica tion list in respect of P  P medicines claiming exemption under notification No 8080
A show cause notice was issued to the respondent who was asked to explain as to why excise duty in respect of Patent  Proprietary medicines manufactured and cleared by it should not be demanded under proviso a to Rule 101 of the Central Excise Rules and why penalty should not be imposed on it under rule 173Q of the Central Excise Rules 1944 for having cleared the goods without payment of duty in contravention of Rule 173Q a and d of the Central Excise Rules
After submission of the reply by the respondents the Collector of Central Excise held the respondents to be ineligible for the benefit of the two notifications and therefore duty was demanded from them in respect of the goods cleared by them for the period 141980 to 715 2910
The Collector Was of the view that in view of the respondents  failure to reveal the correct position they were liable
The Collector was of the view that the time limit under rule 10 section 11A would run for 5 years
The relevant portion of section 11A of the Act is as follows 11 A
Recovery of duties not levied or not paid or short levied or short paid or errone ously refunded 1 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 the 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 of fraud collusion or any wilful misstatement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty by such person or his agent the provisions of this sub section shall have effect as if for the words Central Excise Officer the words Collector of Central Excise and for the words six months the words five years were substituted
 The respondent filed an appeal before the Tribunal
The Tribunal considered the matter and noted that the appel lant s case was that the demand for duty for the period beyond six months was time barred and the respondent s case was that the demand for the period beyond 6 months from the receipt of show cause notice was time barred inasmuch as there was no suppression or misstatement of facts by the appellant with a view to evade payment of duty
In support of its claim the respondent produced classification list approved by the authorities during the period 1978 1979 and also produced extracts from the survey register showing that the officers had been visiting its factory from time to time and also taking note of the previous goods manufactured by the respondent
The plea of the revenue was that there was suppression andor mis declaration andor wrong information furnished in the declaration itself
The Tribunal noted the facts as follows 716 We observe it is not denied by the Revenue that the appellants had been submitting their classification lists from time to time showing the various products manufactured by them including those failing under 14E and 68 also these containing alcohol
The officer who visited the factory as seen from the survey register at the factory also took note of the various products being manufactured by the appellants
It cannot be said that the appel lants had held back any information in regard to the range and the nature of the goods manufactured by them
The appellants have maintained that the value of the exempted goods under TI 68 and also value of medi cines containing alcohol according to their interpretation were not required to be in cluded for the purpose of reckoning of the total excisable goods cleared by them
There is nothing on record to show that the appel lants non bonafidely held back information about the total value of the goods cleared by them with a view to evade payment of duty
Their explanation that it was only on the basis of their interpretation that the value of the exempted goods were not required to be included that they did not include the value of the exempted goods which they manufactured at the relevant time and failing under TI 68 is acceptable in the facts of that case
The Departmental authorities were in full knowl edge of the facts about manufacture of all the goods manufactured by them when the declara tion was filed by the appellants
That they did not include the value of the product other than these falling under TI 14E manufactured by the appellants has to be taken to be within the knowledge of the authorities
They could have taken corrective action in time
We therefore find there was no warrant in invok ing longer time limit beyond six months avail able for raising the demand
So far as the demand for the period within six months reck oned from the date of receipt of the show cause notice is concerned we observe that the appellant s case is that value of the goods under 68 was not required to be included but the Revenue s plea is that only value of the specified goods under notification No 7178 and 8080 was not required to be excluded
 On the aforesaid view the Tribunal came to the conclu sion that the demand raised on this for a period beyond 6 months was not maintainable
717 Aggrieved thereby the revenue has come up in appeal to this Court
In our opinion the order of the Tribunal must be sustained
In order to make the demand for duty sustain able beyond a period of six months and up to a period of 5 years in view of the proviso to subsection 11A of the Act it has to be established that the duty of excise has not been levied or paid or short levied or short paid or erro neously refunded by reasons of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder with intent to evade payment of duty
Something positive other than mere inaction or failure on the part of the manufactur er or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise is re quired before it is saddled with any liability beyond the period of six months
Whether in a particular set of facts and circumstances there was any fraud or collusion or wilful misstatement or suppression or contravention of any provi sion of any Act is a question of fact depending upon the facts and circumstances of a particular case
The Tribunal came to the conclusion that the facts referred to hereinbe fore do not warrant any inference of fraud
The assessee declared the goods on the basis of their belief of the interpretation of the provisions of the law that the exempt ed goods were not required to be included and these did not include the value of the exempted goods which they manufac tured at the relevant time
The Tribunal found that the explanation was plausible and also noted that the Depart ment had full knowledge of the facts about manufacture of all the goods manufactured by the respondent when the decla ration was filed by the respondent
The respondent did not include the value of the product other than those falling under Tariff Item 14E manufactured by the respondent and this was in the knowledge according to the Tribunal of the authorities
These findings of the Tribunal have not been challenged before us or before the Tribunal itself as being based on no evidence
In that view of the matter and in view of the require ments of section 11A of the Act the claim had to be limited to a period of six months as the Tribunal did
We are therefore of the opinion that the Tribunal was fight in its conclusion
The appeal therefore fails and is accordingly dismissed
In the facts and the circumstances of the case the parties will pay and bear their own costs
NPV Appeal dis missed


Summary:
In 1978 the State Government undertook the construction of the Bhavnagar City Water Supply Scheme  and on 12th January 1979 two contracts in respect thereof were awarded to respondent No 1
On 29th March 1981 respondent No 1 filed a civil suit with regard to measurements recorded by the Deputy Engineer and alleged underpayments
On 14th June 1981 he gave notice to the State Government and the peti tioner Board requesting for reference of the disputes to an arbitrator as provided for under clause 30 of the Agreement and gave notice under section 8 of the calling upon the petitioner to concur in the appointment of one Shri GG Vaidhya
On 6th August 1981 respondent No 1 filed a civil miscellaneous application for appointment of the said Shri GG Vaidhya as the sole arbitrator after withdrawing the civil suit
The petitioner contended that the application was not maintainable
The Civil Judge howev er appointed the said Shri GG Vaidhya as sole arbitrator
The arbitrator gave an interim award holding that only two claims were not arbitrable and that the other claims were arbitrable
The High Court having dismissed the appeal a further appeal was filed in this Court
This appeal was however disposed of by con 319 sent on 30th November 1983 to the effect that a retired Secretary Public Department who was at that time sitting member of the petitioner Board be appointed as the sole arbitrator to decide all the disputes between the parties
On 8th July 1985 this sole arbitrator made a lump sum award
The Civil Judge directed that the decree be passed in terms of the award rejecting the objections of the peti tioner
The High Court by a common judgment dismissed the two appeals of the petitioner challenging the award
In the appeals to this Court by special leave it was contended 1 that the arbitrator had committed an error of law in not deciding or disclosing his mind about the arbi trability of the claim or counterclaims 2 in the award no basis or indication was given as to which claim was reject ed and further what amount was awarded as claim and what amount towards element of interest 3 there was an error apparent on the face of the award inasmuch as the basis on which interest had been awarded had not been disclosed and whether the interest has been awarded from the date of the institution of the proceedings 4 that the granting of interest pendente lite was contrary to the decision of this Court and 5 that the non speaking award had resulted in great prejudice to the petitioner inasmuch as against the claim of Rs1 lakh Rs57 lakhs had been awarded
Disposing of the appeals the Court HELD 1a There is a trend in modern times that reasons should be stated in the award though the question whether the reasons are necessary in ordinary arbitration awards is pending adjudication by the Constitution Bench of this Court
Even if it be held that it is obligatory for the arbitrator to state reasons it is not obligatory to give any detailed judgment
325E 1b An award Of an arbitrator should be read reasonably as a whole to find out the implication and the meaning thereof
Short intelligible indications of the grounds shall be discernible to find out the mind of the arbitrator for his action
325F lc The Court does not sit in appeal over the award and review the reasons
The Court can set aside the award only if it is apparent from the award that there is no evidence to support the conclusion or if the award is based upon any legal proposition which is erroneous
325G H 320 Indian Oil Corporation Ltd vs Indian Corbon Ltd   referred to
ld It is one thing to say that an award is unintelli gible and it is another thing to say that the award was bad because it was a nonspeaking award
326F In the instant case the arbitrator in pursuance to the order of this Court had to decide which of the disputes were arbitrable and which were not
Reading the award along with the preamble it appears clear that the arbitrator had decided the arbitrability and the amount which he has award ed was on the points which were arbitrable
In such circum stances it will not be in consonance with justice to refer the matter to the Constitution Bench or to await the dispos al of the point by the Constitution Bench
326B G 2
Reasonableness as such of an award unless per se preposterous or absurd is not a matter for the Court to consider
Appraisement of evidence by the arbitrator is ordinarily not a matter for the Court
It is difficult to give an exact definition of the word reasonable 
The word reasonable  has in law prima facie meaning of reasonable in regard to those circumstances of which the actor called upon to act reasonably knows or ought to know
The award in the instant case cannot be condemned as unreasonable
327C D Municipal Corporation of Delhi vs Ms Jagan Nath Ashok Kumar  Anr  referred to
The grant of interest pendente lite is however one infirmity in
the award which is apparent on the face of the award which in the interest of justice should be corrected
327E Executive Engineer Irrigation Balimela and Ors
vs Abhaduta Jena  Ors 1988 1 SCC 418 and State of Orissa  Ors
vs Construction India 1987 Supp
SCC 709 referred to
In the instant case April 2 1984 is the date of the reference to arbitration on August 22 1984 the arbitrator entered upon the reference
July 8 1985 is the date of the award and July 19 1985 the date of publication of the award
The latter date should be taken as the date of the award
Since the reference to arbitration was made after the commencement of the the arbitrator under section 31a of the said Act was entitled to award inter est from August 6 321 1981 till August 21 1984
He could not have awarded inter est for the period from August 22 1984 till the date of publication of the award viz July 19 1985
327G H 328A 4
So far as interest for the period from the date of the award July 19 1985 till the date of the decree is concerned interest should be allowed for this period on the principle that this Court can once proceeding under sections 15 to 17 are initiated grant interest pending the litigation before it ie from the date of the award to the date of the decree
It may be doubtful whether this can be done ln cases arising before the in view of the restricted scope of section 29 of the 
328D E 5
The interest awarded by the arbitrator for the period from August 22 1984 till the date of award is deleted and the interest on the principal sum is confined to 9 from August 6 1981 till August 21 1984
However exercising powers under section 3 of the and section 29 of the  the Court directed that the principal sum or unpaid part thereof should carry interest at the same rate from the date of the award July 19 1985 till the date of actual payment
329A B