Case: Triveni Sheet Glass Works Limited Vs. Collector of Central Excise

1. This is a petition for special leave to appeal from the judgment and order of the High Court of Allahabad dated 16.8.1990 in Civil Miscellaneous Writ Petition No. 390 of 1982. We issued notice to the Respondents but, after hearing both counsels, we announced our decision dismissing the special leave petition. We, however, said that we would give our reasons for our conclusion later. We proceed to do so by this order. This Petitioner (hereinafter referred to as the Assessee) is a company manufacturing sheet glass in its factory at Iradatganj. The price lists filed by it under the Central Excises & Salt Act, 1944 (the Act) were accepted by the department all through from 1976 onwards. On 6.5.1981 the Superintendent (Preventive), Central Excise, Allahabad issued a show cause notice to the Assessee under Section 11A of the Act alleging that the clearances upto 30.6.1980 had suffered short levy of excise duty. We are not concerned here with the details of the basis for the issue of this show cause notice except to briefly mention that, according to the department, the Assessee had evaded duty during the above period by showing in his price lists the prices at which the goods had been sold by the Assessee to M/s. Hindustan Sheet Glass Works Ltd., which was a related person within the meaning of the Act. The Assessee submitted an explanation on consideration of which the Assistant Collector dropped the proceedings in pursuance of the notice dated 6.5.1981. This was on 17.6.1981. 2. On 22.5.1982 the Collector of Central Excise issued show cause notice to the Assessee under Section 35A of the Act proposing to revise and set aside the order of the Assistant Collector and proposing to confirm the demand of duty allegedly evaded by the Assessee, which, in the notice of the Supdt. (Preventive), Central Excise, dated 6.5.1981 had been set out at Rs. 4,01,36,595.15. On receipt of this notice the Assessee filed a writ petition in the Allahabad High Court. This writ petition has been dismissed and hence the present special leave petition. 3. The short point which has been agitated before us is as to whether the notice dated 22.5.1982 issued by the Collector of Central Excise is barred by time under the provisions of Section 35A(3)(b) of the Act. This clause and Sub-section (4), at the relevant date, read as under: (b) Where the Board or, as the case may be, the Collector of Central Excise 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. (4) No proceedings shall be commenced under this section in respect of any decision or order [whether such decision or order has been passed before or after the commencement of the Customs, Central Excises and Salt and Central Board of Revenue (Amendment) Act, 1978] after the expiration of a period of one year from the date of such decision or order. The High Court came to the conclusion that, having regard to the similarity of language between Section 11A and Section 35A(3)(b), the two periods of limitation applicable under Section 11A are equally applicable under Section 35A(3)(b) depending upon the nature of the allegations in the show cause notice. Having regard to the fact that prima facie the allegations in the show cause notices issued in the present case brought the case under the larger period of limitation set out in Section 11A, the High Court was of the opinion that the revision could have been made by the Commissioner within 5 years but for the provisions of Sub-section (4), which provided a shorter period of limitation in the interests of finality of the proceedings under the Act. Admittedly the notice in this case had been issued by the Collector within a period of one year from the date of order sought to be revised. It was, therefore, held that the proceedings initiated by the Collector were within time and the writ petition was dismissed. 4. We are of the opinion that the High Court was right in holding that the notices in this case were issued within the period of limitation. Section 35A(3)(b) enables the Collector to give a notice within the time limits prescribed under Section 11A. Section 11A provides two periods of limitation: one of a period of 6 months and the other of a period of 5 years. The submission on the part of the Assessee that this clause attracts only the shorter period of limitation prescribed in Section 11A and not the longer one is wholly untenable and the High Court was clearly right in rejecting the same. This is sufficient to dispose of the present case. 5. We shall, however, touch upon certain aspects mooted before us though it is unnecessary and we do not propose to express any opinion thereon. As pointed out by us, if Sub-section (4) had not been there, the logical interpretation of Sub-section (3)(b) would have been that the Collector could revise an order of a subordinate officer provided the show cause notice proposing such action is issued within a period of 6 months or 5 years of the order proposed to be revised, the later larger period being available in cases where the non-levy or short-levy of duty or the excess of refund is attributable to fraud, collusion or any wilful misstatement or misrepresentation of facts on the part of the Assessee. 6. What, then, is the role of Sub-section (4) which lays down another period of limitation, namely, that the notice proposing revision should be issued before the expiry of one year from the date of the decision or order sought to be revised? Does it extend the period of six months to one year and curtail the period of five years also to one year? Is this not repugnant to Sub-section (3)(b)? There are two ways of reconciling these two apparently inconsistent provisions. One is to confine Sub-section (3) to cases where the revision is on the ground that the duty had not been levied or had been short-levied or erroneously refunded and to apply Sub-section (4) only to orders in other types of cases such as, for example, an order of confiscation or of the levy of a penalty or, as held by the High Court, an order which does not have the direct and immediate effect of enhancing the duty or cutting down a refund. The second mode of reconciliation of the provisions of Sub-section (3) and (4) would be to construe Sub-section (4) as also covering the type of cases specified in Sub-section (3)(b) but as imposing a further limitation or relaxation of the period of limitation specified therein. On this interpretation two questions would arise: one is whether the period of six months available under Clause (b) would get extended to one year. This aspect is dealt with in some of the decisions referred to later but does not concern us. The other is whether, in cases where fraud etc. is alleged, the period of limitation would get cut down from five years to one year. It is not necessary for us to decide this question either since, even assuming that this interpretation is correct, the validity of the proceedings in this case, which have been initiated within the period of one year, cannot be successfully challenged. 7. On behalf of the Petitioner, it is submitted that leave should be granted in this SLP because the above question of limitation has been decided in favour of the Petitioner by the High Court of Delhi and Bombay in Associated Cement Company v. Union of India [: 1981 (8) ELT 421 ] : 1981 ECR 66D (Delhi), Com Products (India) Ltd. v. Union of India [1984 (16) ELT 77] and Mahindra Re-rolls v. Union of India [1988 (33) ELT 684 ] apart from several decisions of the Tribunal. Reference has been made to some decisions of the Tribunal, Special Leave Petitions from some of which have been granted or dismissed by this Court. The three High Court decisions cited were cases under Section 36(2) of the Act the provisions of which seem to correspond to Section 35A presently under consideration. It is not necessary for us to consider whether the provisions of Section 36(2) and Section 35A are in pari materia on this aspect or enter into a detailed discussion of the reasoning and conclusion in those cases. For, it seems to us that those cases are clearly distinguishable. There is nothing to suggest that any fraud, suppression or collusion had taken place in those cases and initiation of action beyond the period of six months was sought to be sustained. The attempt of the Revenue which was repelled in those cases was to get the period of six months which would have been available under the provision corresponding to Sub-Section 3(b) to a period of one year by resort to the provision corresponding to Sub-section (4). It is not necessary here to consider whether those cases were rightly decided or not. The present case does not raise that problem. This case, on the other hand, is one which on the facts, falls within the purview of the extended period of limitation available under Section 11A. In such a case whether action could be taken upto a period of 5 years by virtue Section 35A(3)(b) notwithstanding Sub-section (4) may be an arguable question but there can be no doubt at all that, in any view, even assuming that Section 35A(4) applies to such a case, such action could be initiated within a period of one year, as has been done in the present case. We are, therefore, of the opinion that the final conclusion of the Allahabad High Court in the judgment under appeal has to be upheld without going into all possible different interpretations of Section 35A. On those aspects of the matter, we express no opinion. We confine ourselves to the question whether, in a case like the present where fraud, collusion etc. are alleged, the initiation of proceedings within one year is valid and answer that question in the affirmative.

Decision:
0[ds]4. We are of the opinion that the High Court was right in holding that the notices in this case were issued within the period of limitation. Section 35A(3)(b) enables the Collector to give a notice within the time limits prescribed under Section 11A. Section 11A provides two periods of limitation: one of a period of 6 months and the other of a period of 5 years. The submission on the part of the Assessee that this clause attracts only the shorter period of limitation prescribed in Section 11A and not the longer one is wholly untenable and the High Court was clearly right in rejecting the same. This is sufficient to dispose of the present case.5. We shall, however, touch upon certain aspects mooted before us though it is unnecessary and we do not propose to express any opinion thereon. As pointed out by us, if Sub-section (4) had not been there, the logical interpretation of Sub-section (3)(b) would have been that the Collector could revise an order of a subordinate officer provided the show cause notice proposing such action is issued within a period of 6 months or 5 years of the order proposed to be revised, the later larger period being available in cases where the non-levy or short-levy of duty or the excess of refund is attributable to fraud, collusion or any wilful misstatement or misrepresentation of facts on the part of the Assessee.There are two ways of reconciling these two apparently inconsistent provisions. One is to confine Sub-section (3) to cases where the revision is on the ground that the duty had not been levied or had been short-levied or erroneously refunded and to apply Sub-section (4) only to orders in other types of cases such as, for example, an order of confiscation or of the levy of a penalty or, as held by the High Court, an order which does not have the direct and immediate effect of enhancing the duty or cutting down a refund. The second mode of reconciliation of the provisions of Sub-section (3) and (4) would be to construe Sub-section (4) as also covering the type of cases specified in Sub-section (3)(b) but as imposing a further limitation or relaxation of the period of limitation specified therein. On this interpretation two questions would arise: one is whether the period of six months available under Clause (b) would get extended to one year. This aspect is dealt with in some of the decisions referred to later but does not concern us. The other is whether, in cases where fraud etc. is alleged, the period of limitation would get cut down from five years to one year. It is not necessary for us to decide this question either since, even assuming that this interpretation is correct, the validity of the proceedings in this case, which have been initiated within the period of one year, cannot be successfully challenged.The three High Court decisions cited were cases under Section 36(2) of the Act the provisions of which seem to correspond to Section 35A presently under consideration. It is not necessary for us to consider whether the provisions of Section 36(2) and Section 35A are in pari materia on this aspect or enter into a detailed discussion of the reasoning and conclusion in those cases. For, it seems to us that those cases are clearly distinguishable. There is nothing to suggest that any fraud, suppression or collusion had taken place in those cases and initiation of action beyond the period of six months was sought to be sustained. The attempt of the Revenue which was repelled in those cases was to get the period of six months which would have been available under the provision corresponding to Sub-Section 3(b) to a period of one year by resort to the provision corresponding to Sub-section (4). It is not necessary here to consider whether those cases were rightly decided or not. The present case does not raise that problem. This case, on the other hand, is one which on the facts, falls within the purview of the extended period of limitation available under Section 11A. In such a case whether action could be taken upto a period of 5 years by virtue Section 35A(3)(b) notwithstanding Sub-section (4) may be an arguable question but there can be no doubt at all that, in any view, even assuming that Section 35A(4) applies to such a case, such action could be initiated within a period of one year, as has been done in the present case. We are, therefore, of the opinion that the final conclusion of the Allahabad High Court in the judgment under appeal has to be upheld without going into all possible different interpretations of Section 35A. On those aspects of the matter, we express no opinion. We confine ourselves to the question whether, in a case like the present where fraud, collusion etc. are alleged, the initiation of proceedings within one year is valid and answer that question in the affirmative.