PETITIONER:
GEEP FLASHLIGHT INDUSTRIES LTD.
Vs.
RESPONDENT:
UNION OF INDIA AND ORS.
DATE OF JUDGMENT28/10/1976
BENCH:
RAY, A.N. (CJ)
BEG, M. HAMEEDULLAH
SHINGAL, P.N.
CITATION:
1977 AIR 456 1977 SCR (1) 983
1976 SCC (4) 677
ACT
Limitation--Period of limitation in respect of suo motu
revision by Central Government to annual or modify any order
of erroneous refund of duty, when begins--Customs Act, 1962
Ss. 28, 131(1)(3)(5) scope of.
HEADNOTE
The appellant succeeded before the revisional authority
and obtained the orders of refund of duty levied and col-
lected on the consignment of ten metric tonnes of Manganese
dioxide. As no action was taken, the appellant gave a
notice on October 3, 1974 u/s 80 C.P.C. for institution of a
suit for recovery of refund. On February 10, 1975 the
respondent gave a notice u/s 131(3) of the Customs Act 1962
to the appellant for suo motu revision of the order of the
refund. The Writ Petition filed in the Delhi High Court,
impeaching the said order was dismissed directing the appel-
lant to raise all objections including those raised in the
Writ Petition before the Central Government.
Dismissing the appeal by special leave, the Court
Held: (1) S. 28 of the Customs Act, 1962 speaks of three
kinds of errors in regard to duties. One is non-levy, the
second is short levy, and the third is erroneous refund.
Levy is. linked to assessment. In the process of assessment
two kinds of errors may occur. One is non levy and the
other is short levy. The expression "erroneously refunded"
means refunded by means of an order which is erroneously
made. [986 F-G]
(2) S. 131 (5) of the Customs Act does not speak of any
limitation in regard to revision by the Central Government
of its own motion to annul or modify any order of erroneous
refund of duty. The provisions contained in Section 131(5)
with regard to non-levy or short levy cannot be equated
with erroneous refund in as much as the three categories of
errors in the levy are dealt with in s. 28. [987 D-E]
(3) Notice u/s 28 of the Customs Act speaks of demand
for money to pay back and the notice is required to be given
within six months from the relevant date. In the case of
erroneous refund, it would be six months from the date of
actual refund. If no refund has in fact been made limita-
tion cannot be said to arise inasmuch as the relevant date
u/s 28 in the case of erroneous refund speaks of the date of
refund. In the instant case the impugned order dated 20,
April 1972 granted refund. Grant of refund is not actual
refund. [986 G-H, 987 A]
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1830 of 1975.
Appeal by Special Leave from the Judgment and Order
dated 10-9-75 of the Delhi High Court in Civil Writ Petition
No. 475/75.
Soli Sorabjee, Ravinder Narain, Talat Ansari and Shri
Narain, for the Appellants.
V.P. Raman, Addl. Sol. Genl. for India, S.K. Mehta and
Girish Chandra, for the Respondent.
The Judgment of the Court was delivered by
RAY, C.J.--This appeal is by special leave from the
judgment dated 10 September 1975 of the Delhi High Court.
984
The appellant is a manufacturer of dry battery cells.
In October 1969 the appellant received a consignment of ten
metric tons of manganese dioxide. The Assistant Collector
levied duty on the consignment under Tariff Item 28. The
appellant preferred an appeal. The Appellate Collector
confirmed the order of the Assistant Collector. The appel-
lant thereafter made an application to the Revisional Au-
thority. The Revisional Authority held that the goods
should be assessed under Tariff Item 26 and ordered refund
of duty.
The appellant asked for refund and sent reminders to
Customs Authorities for refund.
On 3 October 1974 the appellant gave a notice under
section 80 of the Civil Procedure Code for institution of a
suit for recovery of refund.
On 10 February 1975 a notice under Section 131(3) of the
Customs Act 1962 referred to as the Act was. given to the
appellant for revision of the order of refund.
The appellant impeached the aforesaid notice dated 10
February 1975. The notice inter alia stated that "since the
goods ’were processed ore, not meant for extraction of
metallic manganese they ceased to qualify as an ’ore’ within
the normally accepted sense of the term as in item 26 Indian
Customs Tariff. The notice thereafter said "It, therefore,
appears to the Government that the appellate order does not
appear to be sustainable. Therefore, in exercise of the
powers under section 131(3) of the Customs Act, 1962 the
Government of India proposes to annul the order in Appeal
No. 590-593/1972 passed by the Appellate Collector of Cus-
toms, Calcutta".
The appellant made an application under Article 226 and
moved the Delhi High Court. The appellant in the applica-
tion asked for a writ in the nature of prohibition restrain-
ing the "Opposite party" thereto from taking any proceeding
pursuant to the impugned notice. The appellant also asked
for a writ of certiorari to quash the notice. The appellant
also asked for a writ of mandamus not to withhold the
excess duty paid by the petitioner and ordered to be refund-
ed.
The contention of the appellant was that the power of
suo motu revision under section 131(3) of the Act in so far
as it relates to a case of non-levy or short levy of duty
must be exercised within the period of limitation prescribed
in section 131(5) of the Act. In short, the appellant’s
contention is that the power of suo motu revision contained
in section 131(3) of the Act is subject to the provisions
contained in section 131(5) of the Act.
The provisions contained in section 131(3) of the Act
at3 as follows:
"The Central Government may of its own motion annual or
modify any order passed under section 128 or section 130."
985
The provisions contained in section 131(5) of the Act
are as follows :--
"Where the Central Government is of
opinion that any duty or customs has not been
levied or has been short-levied, no order
levying or enhancing the duty shall be made
under this section, unless the person affected
by the proposed order is given notice to show
cause against it within the timelimit speci-
fied in section."
Section 28 of the Act provides for notice for payment of
duties not levied, short-levied or erroneously refunded.
Under section 28 when any duty has not been levied or has
been short-levied or erroneously refunded, the proper offi-
cer may, within six months from the relevant date, serve
notice on the person chargeable with the duty which has
not been levied or which has been short-levied 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.
Counsel for the appellant extracted the provisions
contained in sections 28 and 131 (3) and 131 (5) of the Act
in support of the contention that any notice for suo motu
revision by the Central Government in so far as it relates
to a case of non-levy or short levy of duty must be given
within the period of six months from the date of levy.
Counsel for the appellant further contended that if the
Government wanted to revise orders for refund on the ground
that there should not be any refund, it would also be a case
of short-levy, and, therefore, the limitation of six months
as provided in section 28 of the Act should apply.
Broadly stated Counsel for the appellant submitted that
section 28 of the Act is a substantive provision relating to
notice for non-levy or short-levy and section 131(3) of the
Act is a procedural section and power under section 131(3)
of the Act cannot be exercised in such a manner as to render
section 28 of the Act nugatory.
The alternative contention of Counsel for the appellant
is that power under section 131(3) of the Act is to be
exercised within a reasonable time and the periods mentioned
in section 131 of the Act supply the yard-stick or give an
indication of what is reasonable time.
The Delhi High Court held that all the objections which
the petitioner wishes to raise to the notice, including the
objections raised in the writ petition, should be raised
before the Central Government. The Delhi High Court, there-
fore, directed the Government to give a hearing to the
appellant and further held that the Government should con-
sider all the objections. The Delhi High Court went on to
say that the decision of the Government should be taken
within three months unless the appellant himself took ad-
journment and caused delay in the disposal of the case. The
Delhi High Court also said that if any money was to be
refunded, .it should be refunded within two months from the
date of the decision.
The provisions contained in section 28 of the Act speak
of non-levy, short-levy and erroneous refund. The provi-
sions state that notice
986
of non-levy, short-levy or erroneous refund should be given
within six months from the relevant date. Section 28(3)
states what the "relevant date" means. In the case of duty
not levied, the "relevant date" is the date on which the
proper officer makes an order for the clearance of the
goods. In a case where duty is provisionally assessed under
section 18 of the Act, the relevant date is the date of
adjustment of duty after the final assessment. In a case
where duty has been ’erroneously refunded, the relevant date
is the date of refund. any other case, the relevant date is
the date of payment of duty.
The Additional Solicitor General contended that the
provisions in section 28 of the Act indicated that any
notice with regard to non-levy, short-levy or erroneous
refund, require the person to show cause why he should not
pay the amount specified in the notice. This being the case
of erroneous refund, the Additional Solicitor General con-
tended that the limitation would be six months from the date
of actual refund. The order dated 20 April 1972, which is
described as the order of refund, was as follows :--
"I, therefore, allow the appeals and
direct that the goods be re-assessed under
Item 26 of the Indian Customs Tariff and the
consequential refund of duty granted."
It may be stated here that Tariff Item 26 speaks of duty
on metallic ore and Tariff Item 28 speaks of duty on Chemi-
cal and Pharmaceutical products. The appellant succeeded in
appeal in obtaining an order of refund. It is an admitted
feature of the case that refund has not in fact been made.
Counsel for the appellant contended that even if refund
has not been made, the date of refund will be the relevant
date and six months. would be calculated from 20 April 1972,
when refund was ordered and, therefore, the notice dated 10
February 1975 will be hit by the provision of limitation of
six months from the relevant date. The contention of the
appellant is wrong. It is only where refund has in fact
been made and money has been paid, the relevant date will be
six months from the date of actual payment for refund.
The contention of the appellant that refund will also be
a case of short-levy is not correct. Section 28 speaks of
three kinds of errors in regard to duties. One is non-levy,
the second is short-levy and the third is erroneous refund.
Levy is linked to assessment. Section 17th of the Act
speaks of assessment order. In the process of assessment
two kinds of errors may occur. One is non-levy and the
other is short-levy. Refund is dealt with in section 27 of
the Act. The expression "erroneously refunded" means re-
funded by means of an order which is erroneously made.
These are three categories of errors in regard to duties.
The notice under section 28 of the Act speaks of demand
for money to pay back and the notice is required to be given
within six months from the relevant date. In the case of
erroneous refund, it would be six months from the date of
actual refund. If no refund has in fact been made, limita-
tion cannot be said to arise inasmuch as the relevant date
under section 28 in the ease of erroneous refund
987
speaks of the date of refund. The order dated 20 April
1972 granted refund. Grant of refund is not actual refund.
Chapter XV contains sections 128 to 131 Of the Act.
Chapter XV speaks of Appeals and Revision. Section 128
relates to appears, Section 130 deals with powers of revi-
sion of Board. Section 131 speaks of revision by Central
Government. Revision can be asked for by the persons
aggrieved by any order passed under section 128, or any
order passed under section 130. Section 131(2) provides
limitation of six months for an application made under
section 131(1) of the Act.
Once the provisions contained in section 131(3) are
attracted, the Central Government may of its own motion
annul or modify any order passed under section 128 or
section 130. This provision is the power of Central
Government to annul or modify any order. This power is
exercised by the Central Government suo motu. Of course the
power is to be exercised on giving notice to the person
concerned.
The provisions contained in section 131(5) of the Act
speak limitation only with regard to non-levy or short-levy.
It is significant that section 131(5) does not speak of any
limitation in regard to revision by the Central Government
of its own motion to annul or modify any order of erroneous
refund of duty. The provisions contained in section 131(5)
with regard to non-levy or short-levy cannot be equated with
erroneous refund inasmuch as the three categories of
errors in the levy are dealt with separately.
The appellants prayers for writs of Certiorari and
mandamus are misconceived. There is no order either
judicial or quasi-Judicial which can attract certiorari.
No mandamus can go because there is nothing which is
required to be done or for borne under the Act. The issue
of the notice in the present case requires the parties to
represent their case. There is no scope for mandamus to do
any duty or act under the statute. A writ of prohibition
cannot be issued for the obvious reason that the Central
Government has jurisdiction to revise.
For the foregoing reasons, the appeal is dismissed.
The Central Government will hear the appeal on merits. In
view of our conclusion that there is no bar of limitation in
the present case it will not be open to the parties to take
any plea of limitation. The Central Government will hear
the matter as expeditiously as possible. In case the Cen-
tral Government will hold that the order of refund is valid,
the Central Government will pay the amount. We specify the
period of two months from the date of the order as the
period during which payment will be made. The parties will
pay and bear their own costs.
S.R. Appeal
dismissed.
13 --1338SCI/76
988