-1- IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION CENTRAL EXCISE APPEAL (LODGING) NO. 114 OF 2008 WITH NOTICE OF MOTION NO. 2028 OF 2008 The Commissioner of Central Excise ) Pune-II, Pune, Ice House, 41/A ) Opp. Sasoon Road, Pune 411 001 ).. APPELLANT Versus M/s Shruti Colorants Ltd. ) Plot No D-23, MIDC ) Lote Parshuram, Tal : Khed ) Dist.: Ratnagiri. ).. RESPONDENT ALONG WITH CENTRAL EXCISE APPEAL (LODGING) NO. 139 OF 2008 WITH NOTICE OF MOTION NO. 1980 OF 2008 The Commissioner of Central Excise ) Pune-II, Commissionarate, Ice House, 41/A ) Third Floor, Opp. Sasoon Road, ) Wadia College, Pune 411 001 ).. APPELLANT Versus M/s Engineering Technologies (P) Ltd. ) 101/A-1, Akiwate Industrial Estate ) Jaysingpur, District Kolhapur 416 144 ).. RESPONDENT -2- AND CENTRAL EXCISE APPEAL (LODGING) NO. 352 OF 2006 WITH NOTICE OF MOTION NO. 4110 OF 2006 The Commissioner of Central Excise ) Pune-II, Commissionerate, Ice House, B Wing ) Wadia College, Sasoon Road, Pune 411 001 ).. APPELLANT Versus M/s Perfect Pressing and others ) P.O. Hajarmachi, Ogalawadi ) Tal. Karad, District Satara ).. RESPONDENT AND CENTRAL EXCISE APPEAL (LODGING) NO. 362 OF 2006 WITH NOTICE OF MOTION NO. 1053 OF 2007 The Commissioner of Central Excise ) Thane II, Navprabhat Chambers, ) Ranade Road, Dadar (West), Mumbai 400 028. ).. APPELLANT Versus M/s Asian Paints (I) Ltd. ) Asian Paint House, 6A, Shantinagar ) Vakola, Santacruz (East) ) Mumbai 400 055 ).. RESPONDENT AND CENTRAL EXCISE APPEAL (LODGING) NO. 66 OF 2008 WITH NOTICE OF MOTION NO. 1646 OF 2008 The Commissioner of Central Excise ) Pune II, Ice House, 41-A, Opp. Wadia College ) Sasoon Road, Pune 411 001 ).. APPELLANT Versus -3- M/s Rocket Engineering Corporation Ltd. ) D-19, MIDC, Shiroli, Kolhapur. ).. RESPONDENT AND CENTRAL EXCISE APPEAL (LODGING) NO. 96 OF 2008 WITH NOTICE OF MOTION NO. 2030 OF 2008 The Commissioner of Central Excise ) Pune I, Ice House, 41-A ) Sasoon Road, Pune 411 001 ).. APPELLANT Versus M/s Tata Engineering & Locomotive Co. Ltd. ) (Mawal Foundry), Somatne Fhata ) Tal Mawal, Pune 411 506 ).. RESPONDENT AND CENTRAL EXCISE APPEAL (LODGING) NO. 115 OF 2008 WITH NOTICE OF MOTION NO. 2045 OF 2008 The Commissioner of Central Excise ) Pune II, Pune, Ice House, 41-A ) Opp. Sasoon Road, Pune 411 001 ).. APPELLANT Versus M/s Shreyas International Ltd. ) Plot No. D-22, MIDC, ) Lote Parshuram, Tal. Khed ) District Ratnagiri ).. RESPONDENT Mr A.S. Rao, Mrs. N.V. Masurkar, Mr. S.D. Bhosale, Mrs. S.V. Bharucha, Mr. P.S. Jetly, Mr K.R. Chaudhari and Mr. Yogesh Bhate for the Appellant-Department -4- CORAM: SWATANTER KUMAR, C.J. AND A.P. DESHPANDE , J. JUDGMENT RESERVED ON : 5TH AUGUST 2008 JUDGMENT PRONOUNCED ON : 29TH AUGUST 2008 JUDGMENT : (PER SWATANTER KUMAR, C.J.) By this common order, we will dispose of the above seven Appeals preferred by the Commissioner of Central Excise, Pune under Section 35G of the Central Excise Act, 1944 (hereinafter referred to as “the Act”). All these Appeals are barred by time. The Appellant in all the present Appeals have taken out Notices of Motion for condonation of delay varying from 3 days to 79 days in filing the present Appeals. Thus, it is not necessary for us to deal in greater detail with the facts of each case and for the purposes of brevity, we would be referring to the facts of Central Excise Appeal (Lodging) No. 114 of 2008 to answer the question of law in the present Appeals. 2. M/s Shruti Colorants Limited, the assessee, are carrying on the business of manufacture of Dye Intermediate falling under CSH 3204.19 of the First Schedule to the Central Excise Tariff Act, 1985. The assessee was availing the facility of Cenvat Credit on inputs and capital goods used in or in relation to manufacture of their final products -5- under Rule 57A of the erstwhile Rules of 1944. They were also undertaking job work of M/s Shreyas Intermediates Limited and getting the raw material under Rule 57F(4) Challans for conversion and on processing, sending it back to the principal i.e. the said concern M/s Shreyas Intermediates Ltd. on the same challans only. During the year 2001-2002, assessee had also undertaken the job work by using their own inputs like TCB and they were raising Cenvat Credit for manufacture of CPC Blue Crude TCB. According to the case put forth by the Revenue, as per the provisions of Rule 57C of the Rules, no credit of the specified duty is allowed on such quantity on inputs which is used in manufacture of final products which are exempted from the whole of the duty of excise leviable thereon or are chargeable to nil rate of duty. In the case of the assessee, 2,26,350 kgs of CPC Blue Crude produced and cleared to the principal by using 18,108 kg of TCB by assessee has not been suffered any duty and therefore the credit of duty so raised on the above TCB and used in job work while producing CPC Crude Blue was not allowable under Rule 57D(2) of the Central Excise Rules, 1944. The Revenue Department issued a show cause cum demand notice bearing No. III/IAD-Shruti/16/SCL(EA.2000)05 dated 8th July 2005 vide which the assessee was required to show cause why the duty demanded with interest and penalty be not -6- recovered from the assessee. The assessee filed reply to the notice. The Assistant Commissioner of Central Excise, Division Ratnagiri, vide his order dated 24th January 2006 and after following prescribed procedure and in accordance with the principles of natural justice, confirmed the reversal of Rs.69,535/- and also Rs.36,797/- on account of interest and imposed a penalty equal to the amount i.e. Rs.69,535/- under Section 11AC. This order was assailed by the assessee before the Commissioner (Appeals), Central Excise, Pune-II, who vide his order dated 28th April 2006 partly allowed the Appeal of the assessee by upholding the reversal of the credit with interest but waived the penalty. The Revenue felt aggrieved from the order of the Commissioner (Appeals) in waiving the penalty, thus preferred an Appeal before the Customs Excise and Service Tax Appellate Tribunal, West Zone at Mumbai. The Appeal of the Department was dismissed by the Tribunal which held that, in view of the judgments in CCE vs Machino Montel, 2004 (168) ELT 466, and Gaurav Mencantiles Ltd, 2005 (190) ELT 11 (Bom), no interference was called for and dismissed the Appeal. 3. Aggrieved from the order of the Tribunal, the Revenue has challenged the legality and propriety of this order in the present Appeal. According to the Appellant, question of law whether the Tribunal had -7- jurisdiction to waive penalty levied under Section 11AC of the Central Excise Act, 1944 arises for consideration in the present Appeal. 4. As already noticed, the present Appeal was filed on 29th April 2008 and the Appellant took out Notice of Motion No. 2028 of 2008 praying for condonation of 72 days of delay in filing the present Appeal. In fact, there was not much opposition to this application and no reply has been filed. The principal question that arises for consideration in the present Appeal and of which the Court is expected to take suo motu note is whether, under the provisions of the Act, the High Court while entertaining an appeal under Section 35G of the Act at all has the power to condone the delay. As this matter goes to the very root of jurisdiction of the Court, the sufficiency or otherwise of the delay in filing of the Appeal loses much of its significance. Admittedly, the order of the Tribunal dated 30th July 2007 is stated to have been received by the Department on 21st August 2007 and despite the fact that the draft Appeal was received on 29th March 2008, still the Appeal was filed on 29th April 2008. Thus, the delay is hardly appropriately explained. As already noticed, the Court is primarily concerned with the aspect relating to jurisdiction rather than sufficiency of cause for condonation of delay in these Appeals. Thus, we proceed to discuss this legal issue. -8- 5. Before we proceed to deliberate on the legal issues arising in the present case, it is necessary to note that Section 35G of the Act as well as Section 130 of the Income Tax Act, 1962, came to be repealed by the National Tax Tribunal Act, 2005 (49 of 2005) with effect from 28th December 2005. Section 15 of the National Tax Tribunal Act, 2005 (hereinafter referred to as the “2005 Act”), provided for appeals from the orders passed by the Appellate Tribunal under both these Acts. Under Section 15, an appeal would lie to the National Tax Tribunal that too where the Tribunal is satisfied that the case involves a substantial question of law within the period of limitation specified under that provision. Appeal from the order of the National Tribunal would lie to the Supreme Court in terms of Section 24 of the 2005 Act. Section 23 of the 2005 Act further postulates that the cases pending before the High Court on and from such date as the Central Government may by notification specify, all matters and proceedings including appeals and references under the direct taxes and indirect taxes pending before any High Court immediately before that date shall stand transferred to the National Tax Tribunal on and from such date as the Central Government may notify. The High Court then would transfer the records pertaining to such matters or proceedings to the National Tax Tribunal. It is -9- commonly conceded before us that the Central Government has not issued any Notification fixing the date as contemplated under Section 23 (1) of the 2005 Act. It has also been brought to our notice that various provisions of the 2005 Act were challenged before the Supreme Court being unconstitutional and ultra vires on various grounds and the said Special Leave Petitions are pending for regular hearing before the Supreme Court of India and even certain interim orders were passed by the Supreme Court including the order dated 9th January 2007. 6. It also needs to be noticed that the constitutional and validity of various provisions of the National Tax Tribunal Act, 2005 were also challenged before this Court in the case of P.C. Joshi vs. Union of India, (2006) 282 ITR 39. This Writ Petition had been filed by an Advocate who is a Senior Tax Practitioner. The Court while adjourning the matter for directions, passed the following interim order :- “.... In the meanwhile, there will be an ad interim order restraining respondents Nos. 1 to 3 from constituting the National Tax Tribunal and transferring the matters pending in this court to the said Tribunal.” 7. It is obvious that as a result of the above interim order, no Notification has been issued by the Central Government constituting the National Tax Tribunal or the Notification contemplated under Section 23 -10- (1) of the 2005 Act. It is in this background that the provisions of Section 35G of the Act are still operative and Appeals to this Court are being filed under those provisions. Therefore, we must refer to the provisions of Section 35G for proper appreciation of legal principles. Section 35G of the Central Excise Act reads as under :- “SECTION 35G. Appeal to High Court – (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law. (2) The Commissioner of Central Excise or the other party aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be - (a) filed within one hundred and eighty days from the date on which the order appealed against is received by the Commissioner of Central Excise or the other party; (b) accompanied by a fee of two hundred rupees where such appeal is filed by the other party; (c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved. (3) Where the High Court is satisfied that a substantial question of law is involved in any case, it -11- shall formulate that question. (4) The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question; Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. (5) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit. (6) The High Court may determine any issue which - (a) has not been determined by the Appellate Tribunal; or (b) has been wrongly determined by the Appellate Tribunal, by reason of a decision on such question of law as is referred to in sub-section (1). (7) When an appeal has been filed before the High Court, it shall be heard by a bench of not less than two Judges of the High Court, and shall be decided in accordance with the opinion of such Judges or of the majority of any, of such Judges. (8) Where there is no such majority, the Judges shall state the point of law upon which they differ and the case shall, then, be heard upon that point only by one or more of the other Judges of the High Court and -12- such point shall be decided according to the opinion of the majority of the Judges who have heard the case including those who first heard it. (9) Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section.” 8. It is the contention raised on behalf of the Commissioners of Central Excise that the provisions of Section 5 of the Limitation Act would be applicable to an Appeal filed under Section 35G of the Act. As such, the Court will have the power to condone the delay and to entertain the Appeal on merits. It is also argued and with some vehemence that the word “shall” appearing in Section 35G of the Act will be construed as “may”. Applying the principle of regular construction, the applicability of general principles enunciated for condonation of delay would squarely apply to these cases. Thus narrower construction of these provisions is not called for in the facts and circumstances of the case. 9. The Appeal filed by the Appellant would be controlled by the provisions of the Code of Civil Procedure in terms of Section 35G(9) of the Act which also would attract the applicability of the provisions of the -13- Limitation Act as is applicable to an ordinary appeal filed under the provisions of the Civil Procedure Code, 1908. 10. The law of Limitation from its inception has been construed on the principle of reasonable and plain construction. In the case of Chairman, Board of Mining Examination and Chief Inspector of Mines v Ramjee, AIR 1977 SC 965, the Supreme Court said, “To be liberal in meaning is to see the skin and miss the soul. The judicial key to construction is the composite perception of the deha and the dehi of the provision.” 11. Again there is a non-distinction between applicability of the general provisions of the Limitation Act to other enactments in contra distinction to the specific provision of a specific statute prescribing the period for invocation of a remedy beyond which the right to invoke is taken away. It is settled principle that in construing enactments such as those prescribing a period of limitation for institution of proceedings where the purpose is only to intimate the people that after lapse of a certain time from a certain event a proceeding will not be entertained and where a strict grammatical construction is normally the only safe -14- guide. Mere hardship has not carved out any exception to the applicability of the rule of limitation. Normally, strict grammatical construction of a limitation provision is the only safe guide was the view taken in the case of Lucy v. Henleys Telegraph Works, (1969) 3 ALL ER 456, as well as R. Rudraiah v State of Karnataka, JT 1998 (1) SC 435. Some times hardship could arise from enforcing the provision of limitation of a statute. But this all will depend on the intent of the Legislature which is to be seen from the language of the provision. It is abundantly clear from its language that it excludes the application of other general provisions and intends to give the special provision of the special Act over-riding effect. But once the plain reading of the provision shows exclusion of applicability of other general provisions, per se or by necessary implication, then the Court would be required to enforce those provisions irrespective of the hardship likely to follow as a result of legal bar created by the provisions. A limitation provision within which steps have to be taken for recovery of dues not levied or not paid or short paid or erroneously refunded is subject to the rule of strict construction. (J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. Collector Central Excise, AIR 1998 SC 1270). Thus special provisions curtailing the normal period of limitation for settlement for prosecution have also been strictly construed and benefits of reduced period of -15- limitation, condonation or excuse may not be applicable to such situations. The law of limitation is founded on public policy. Its aim being to secure the quiet of the community and to prevent oppression. The law framers fixed the time for determination of the controversies at different levels and they should be raised and controverted limited to a fixed period of time. It is not expected that they should be immortal. Rule of limitation is intended to serve ends of justice by preventing continued litigation and requiring the aggrieved to act with expeditiousness and in any case within the prescribed period of limitation and to ensure that a succeeded party can enjoy fruits of the result of their litigation. In that sense, the object of rule of limitation is preventive and curative. It imposes a statutory bar after a certain period and giving a quietus to the suits to enforce an existing right. The law of limitation is thus feuded on public policy. It is enshrined in the maxim “interest reipublicae ut sit finis litium” (it is for the general welfare that a period be part to litigation). Limitation as such does not destroy the rights of the parties but bars a remedy which otherwise was available to the party within the period prescribed. Object being that an unlimited and perpetual threat of litigation is avoided as it leads to disorder and confusion and creates insecurity and uncertainty. In other words, it also helps in advancing the cause of doctrine of finality. Another principle -16- which would help in construing these provisions is that presumption the legislature was aware of all the relevant laws and opted to word the provision in a particular manner will be a circumstance which will always would be in favour of the legislation. The provisions of Section 35G have been worded by the framers of law with a specific language and clear intent and in face of the existing general provisions of the Limitation Act. Exclusion of applicability of provisions of other statutes to a special statute could be by virtue of specific language or by necessary implication. (Reference : U.N. Mitra's Law of Limitation and Prescription, 12th Edition 2006 and Principles of Statutory Interpretation by Justice G.P. Singh, 11th Edition 2008). 12. Expiration of the period of limitation as a necessary corollary gives rise to a right in favour of the beneficiary of the order. This right attains higher dimensions and greater projection when the provisions relating to such an appeal do not permit condonation in the event the remedy is invoked after the prescribed period. Where the language of the provision is unambiguous and clear, there is no provision under the special Act giving inherent power to the Court to condone the delay and intent of the Legislature is clear to exclude recourse to general provision, the Courts would hardly have any power to condone the delay -17- on general principles or by recourse to inherent powers that may be vested in the Court by its very constitution. 13. In the case of Boota Mal vs. Union of India, AIR 1962 SC 1716, legal principle was stated by the Court that ordinarily the words of a statute have to be given their strict grammatical meaning and equitable considerations are out of place, particularly in provisions of law limiting the period of limitation for filing suits or legal proceedings. This indicates applicability of rule of strict construction to the law of limitation. 14. Furthermore, in the case of Ramlal and others vs. Rewa Coalfields Ltd., AIR 1962 SC 361, was accepted as a principle of law that upon expiration of period of limitation prescribed under a statute, a right in favour of the beneficiary or decree holder to treat the decree or order binding between the parties accrues and this is a legal right which accrues and should not be light heartedly disturbed. 15. Reiterating the above principles with approval, the Supreme Court in the case of Antonysami vs. Arulanandam Pillai (D) by L.Rs. And another, AIR 2001 SC 2967, held as under :- -18- “16. The fixation of periods of limitation are bound to be to some extent arbitrary and may at times result in hardship. But in construing such provisions equitable considerations are out of place and the strict grammatical meaning of the words is the only safe guide. (See AIR 1932 PC 165). The decree was enforceable immediately after the date specified in the decree i.e. 23.9,1966 for the decree-holder to deposit the consideration money. ....” 16. Even in the case of Municipal Corporation of Delhi and others vs. International Security & Intelligence Agency Ltd., (2004) 3 SCC 250, the Supreme Court took the view that law of limitation operates with all its rigour and equitable considerations have no place in applying it. 17. The hardship or equitable grounds per se may not grant power to the Court to condone the delay in face of specific provisions of the Act. Dealing with appeal under Section 39 of the Arbitration Act, 1940 with regard to the provisions of limitation, the Supreme Court in the case of P.K. Ramachandra vs. State of Kerala and another, (1997) 7 SCC 556, held as under :- “6. Law of limitation may harshly affect a particular party but it has to be applied with all its rigour when the statute so prescribes and the courts have no power to -19- extend the period of limitation on equitable grounds. The discretion exercised by the High Court was, thus, neither proper nor judicious. The order condoning the delay cannot be sustained. This appeal, therefore, succeeds and the impugned order is set aside. Consequently, the application for condonation of delay filed in the High Court would stand rejected and the miscellaneous first