Full Judgment Text
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PETITIONER:
THE COLLECTOR OF CENTRAL EXCISE, MADRAS
Vs.
RESPONDENT:
M/S. M.M. RUBBER & CO. TAMIL NADU.
DATE OF JUDGMENT04/09/1991
BENCH:
RAMASWAMI, V. (J) II
BENCH:
RAMASWAMI, V. (J) II
RANGNATHAN, S.
OJHA, N.D. (J)
CITATION:
1991 AIR 2141 1991 SCR (3) 862
1992 SCC Supl. (1) 471 JT 1991 (3) 587
1991 SCALE (2)473
ACT:
Central Excises & Salt Act, 1944--Section 35E--Legisla-
tive intention, indicated--Power under Section 35E--Nature
of--Authority authorised to exercise a power--Failure to
exercise-Effect of.
Central Excises & Salt Act, 1944 Section 35E(3)--Calcu-
lation of the period of one year--Relevant date- "From the
date of decision or order"--Construction.
Central Excises & Salt Act, 1944 Section 35E--Collec-
tor’s order dated 28. 11. 1984 Communicated on 21.2.
1984---Board’s direction to Collector to move Tribunal for
correct determination--Whether the adjudicating authority
aggrieved of own order--Legality of action after the period
of limitation.
HEADNOTE:
The appellant, an adjudicating authority held the demand
from the respondent towards excise duty on biaxially orien-
tal polypropylene films as set ant in the show cause notice
dated 25.10.1983 as barred by limitation and dropped further
proceedings. A copy of the order despatched on 21.12.1984
was received by the respondent on 21.12.1984.
The Central Board of Excise and Customs after considera-
tion of the order, on 11.12.198S directed the appellant to
apply under Section 3SE(1) of the Central Excises & Salt
Act, 1944, to the Customs, Excise & Gold (Control) Appellate
Tribunal for correct determination of the points arising out
of the order dated 21.12.1984 and the appellant filed the
application under section 35E(4) of the Act.
Before the Tribunal the respondent urged that the rele-
vant date of the Collector’s (adjudicating authority’s)
order for the purposes of Section 35E(3) should he taken as
28.11.1984 and not 21.12.1984 when it was received by the
respondent and on that basis the order of the Board under
Section 35E(1) of the Act should he held as beyond the
period of one year from the date of the decision or order of
the adjudicating authority and therefore the application
before the Tribunal was incompetent.
863
The Tribunal dismissed the application holding that the
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application was not maintainable.
In this appeal tided under Section 35L of the Act, the
appellant contended that mere writing an order in file
kept in the office was no order in the eye of law in the
sense of affecting the rights of the parties for whom the
order was meant and that though the order of the adjudicat-
ing authority was made on 28.11.1984 a copy of the same was
sent to the respondent only on 21.12.1984 and received by
him on the very day and that therefore the limitation would
start only at the earliest from 21.12.1984; that enabling
the giving of the direction under Section 35E(1) and the
application under Section 35E(4) in pursuance of that direc-
tion should he treated as if a right of appeal given to the
department; that the departmental authorities and the pri-
vate parties were to he treated equally as aggrieved persons
for the purposes of calculating the time for making the
direction under Section 35E(3) of the Act.
On the question, what is the relevant date for the
purpose of calculation of the period of one year provided
under Section 35E(3) of the Central Excises & Salt Act,
1944, dismissing the appeal, this Court,
HELD: 1. If an authority is authorised to exercise a
power or do an act affecting the rights of parties, he shall
exercise that power within the period or limitation pre-
scribed therefore. The order or decision of such authority
comes into force or becomes operative or becomes an effec-
tive order or decision on and from the date when it is
signed by him. The date of such order or decision is the
date on which the order or decision was passed or made; that
is to say when he ceases to have any authority to tear it
off and draft a different order and when.he ceases to have
any locuspaetentiae. Normally that happens when the order or
decision is made public or notified in some form or when it
can he said to have left his hand. The date of communication
of the order to the party whose rights are affected is not
the relevant date for purposes of determining whether the
power has been exercised within the prescribed time. [869D-
F]
2. If the intention or design of the statutory provi-
sion was to protect the interest of the person adversely
affected, by providing a remedy against the order or deri-
sion any period of limitation prescribed with reference to
invoking such remedy shall he read as commencing from the
date of communication of the order. But if it is a limita-
tion for a competent authority to make an order the date of
exer-
864
cise of that power and in the case of exercise, of suo moto
power over the subordinate authorities’ orders, the date on
which such power was exercised by making an order are the
relevant date for determining the limitation. [871H-872B]
3. Section 35E comes under the latter category of an
authority exercising its own powers under the Act. It is not
correct to equate the Board to one of the two parties to a
quasi-judicial proceeding before the Collector and the
Board’s right under Section 35E to the exercise of the right
of appeal by an aggrieved assessee from an order passed to
its prejudice. [872B-C]
4. The power under Section 35E is a power of superin-
tendence conferred on a superior authority to ensure that
the subordinate officers exercise their powers under the Act
correctly and properly. Where a time is limited for the
purposes by the statute, such power should he exercised
within the specified period from the date of the order
sought to he reconsidered. To hold to the contrary would he
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inequitable and will also introduce uncertainties into the
administration of the Act. [872C-E]
5. The direction to file an appeal under Sections
35E(1)(2) of the Act by the Board and the Collector, as the
case may he, is to the very adjudicating authority who would
otherwise he bound by his own order and not expected to he
aggrieved by the same. When an appeal is filed on such
direction, the appellant will be the adjudicating authority
himself and not the authority who gave the direction.
[867D-E]
6. The period of one year fixed under sub-section (3) of
Section 35E of the Act should he given its literal meaning
and so construed the impugned direction of the Board was
beyond the period of limitation prescribed therein and
therefore invalid and ineffective. [872G]
Annamalai Chetti v. Col. J.G. Cloete, [1883] ILR 6 Mad.
189, Seshamma v. Sankara, [1889] ILR 12 Mad. 1; The Secre-
tary of State for India in Council v. Gopisetti Narayanaswa-
mi Naidu Guru, ILR 34 Madras 151; Raja Harish Chandra Raj
Singh v. The Deputy Land Acquisition Officer & Anr., [1962]
1 SCR 676; Asstt. Transport Commissioner (Administration)
U.P. & Ors. v. Sri Nand Singh, [1981] 1 SCR 131; Muthia
Chettiar v. CIT, ILR 1951 Mad. 815 and Viswanathan Chettiar
v. Commissioner of Income Tax, Madras, 25 ITR 79, referred
to.
865
JUDGMENT:
CIVIL APPELLATE JURISDICTION: CiVil Appeal No. 6071 (NM)
of 1990.
From the Order dated 31.5.90 of the Customs, Excise and
Gold (Control) Appellate Tribunal, New Delhi in Appeal No.
E/2586/86-C with E/Cross/478/86-C. (Order No. 541/90-C).
M. Gauri Shankarmurthy, K. Swamy and P. Parmeshwaran for
the Appellant.
Santosh Hegde and K.R. Nambiar for the Respondent.
The Judgment of the Court was delivered by
V. RAMASWAMI, J. The short question of law that arises
for consideration in this appeal is as to what is the rele-
vant date for the purpose of calculation of the period of
one year provided under section 35E(3) of The Central Ex-
cises & Salt Act, 1944 (hereinafter called the Act). Briefly
stated the question arises in the following circumstances.
By order in Original No. 34 of 1984 dated 28.11.1984,
the Collector of Central Excise, Madras as an adjudicating
authority within the meaning of the Act, held as barred by
limitation the demand from the respondent towards excise
duty on biaxially oriental polypropylene films as set out in
the show cause notice dated 25.10.1983 and dropped further
proceedings against the respondent. A copy of this order was
attested by the Superintendent of the office on 21.12.1984
and despatched to the respondent. It was received by the
respondent on 21.12.1984. The Central Board of Excise and
Customs (hereinafter called the. Board), after consideration
of the order, on 11.12.1985 directed the Collector of Cen-
tral Excise, Madras under the provisions of Section 35E(1)
to apply to the Customs, Excise & Gold (Control) Appellate
Tribunal, New Delhi, for correct determination of the points
arising out of the aforesaid order and accordingly the
Collector filed the application before the Tribunal ’as
provided under Section 35E(4) of the Act.
Before the Tribunal the respondent urged that the rele-
vant date of the Collector’s (adjudicating authority) order
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for the purposes of Section 35E(3) should be taken as
28.11.1984 and not 21.12.1984 when it was received by the
respondent and on that basis the order of the Board under
Section 35E(1) of the Act should be held as beyond the
866
period of one year from the date of the decision or order of
the adjudicating authority and therefore the application
before the Tribunal was incompetent. The Tribunal accepted
this contention and held that the application was not main-
tainable.
In this appeal filed under Section 35L of the Act the
learned counsel for the appellant contended that mere writ-
ing an order in file kept in the office is no order in the
eye of law in the sense of affecting the rights of the
parties for whom the order is meant and that though the
order of the adjudicating authority was made on 28.11.1984 a
copy of the same was sent to the respondent only on
21.12.1984 and received by him on the very day and that
therefore the limitation would start only at the earliest
from 21.12.1984. He stated that the order was received by
the Board also only subsequent to 21.12.1984. His further
submission was that enabling the giving of the direction
under Section 35E(1) and the application under Section
35E(4) in pursuance of that direction shall be treated as if
a right of appeal given to the department. On this basis his
argument was that the departmental authorities and the
private parties are to be treated equally as aggrieved
persons for the purposes of calculating the time for making
the direction under Section 35E(3) of the Act.
Before we discuss the arguments of the learned counsel,
it is necessary to set out some relevant provisions in the
Act. Section 35 of the Act, provides for an appeal to a
person aggrieved by any decision or order passed under the
Act by a Central Excise Officer lower than a Collector of
Central Excise’ and that such an appeal will have to be
filed "within three months from the date of the communica-
tion to him of such decision or order". Clause 5 of Section
35A requires that on the disposal of the appeal, the Collec-
tor (Appeals) shall communicate the order passed by him to
the Appellant, the adjudicating authority and the Collector
of Central Excise- Section 35B provides for a right of
appeal to any person aggrieved by, among other orders, (1)
an order passed by the Collector (Appeals) under Section 35A
and (2) a decision or order passed by the Collector of
Central Excise as an adjudicating authoritY. Such an appeal
will have to be filed "within three months from the date on
which the order sought to be appealed against is communicat-
ed to the Collector of Central Excise or as the case may be
the other party preferring the appeal." The Appellate Tribu-
nal also is required to send a copy of the order passed in
the appeal to the Collector of Central Excise and the other
party to the appeal. Section 35E(1) authorises the Board "of
its own motion, call for and examine the record of any
proceeding in which a Collector of Central Excise as
867
an adjudicating authority has passed any decision or order
under this Act for the purpose of satisfying itself as to
the legality or propriety of any such decision or order and
may, by order, direct such Collector to apply to the Appel-
late Tribunal. or as the case may be the Customs and Excise
Revenues Appellate Tribunal established under Section 3 of
the Customs and Excise Revenues Appellate Tribunal Act, 1986
for the determination of such points arising out of the
decision or order as may be specified by the Board in its
order." As sub-section (2) is also relevant for considera-
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tion that may also be set here and that reads:
"2. The Collector of Central Excise may, of
his own motion, call for and examine the
record of any proceeding in which an adjudi-
cating authority subordinate to him has passed
any decision or order under this Act for the
purpose of satisfying himself as to the legal-
ity or propriety of any such decision or order
and may, by order, direct such authority to
apply to the Collector (Appeals) for the
determination of such points arising out of
the decision or order as may be spcified by
the Collector or Central Excise in his order.
It may be seen that the direction to file an appeal
under these two sub-sections by the Board and the Collector,
as the case may be, is to the very adjudicating authority
who would otherwise be bound by his own order and not ex-
pected to be aggrieved by the same. When an appeal is filed
on such direction, the appellant will be the adjudicating
authority himself and not the authority who gave the direc-
tion.
Sub-Section (3) of Section 35E of the Act which deals
with the limitation for exercise of the powers under sub-
sections (1) and (2) of the Act and which is the relevant
provision for consideration in this appeal reads as follows:
"No order shall be made under sub-section (1)
or subsection (2) after the expiry of one year
from the date of the decision or order of the
adjudicating authority."
At this stage itself we may state that sub-section (4)
of the Act provides that the adjudicating authority shall
file the application before the Tribunal in pursuance of the
order made under sub-section (1) or sub-section (2)"within a
period of. three months from the date of communication of
the order under sub-section (1) or sub-section (2) to the
adjudicating authority."
868
The words "from the date of decision or order" used with
reference to the limitation for filing an appeal or revision
under certain statutory provisions had come up for consider-
ation in a number of cases. We may state that the ratio of
the decisions uniformly is that in the case of a person
aggrieved filing the appeal or revision, it shall mean the
date of communication of the decision or order appealed
against. However, we may note a few leading cases on this
aspect.
Under section 25 of the Madras Boundary Act, 1860 the
starting point of limitation for appeal byway of suit al-
lowed by that section was the passing of the Survey Offi-
cer’s decision and in two of the earliest cases, namely,
Annamalai Chetti v. Col. J.G. Cloete, [1883] ILR 6 Mad. 189
and Sesharnrna v. Sankara, [1889] ILR 12 Mad. 1, it was held
that the decision was passed when it was communicated to the
parties. In The Secretary of State for India in Council v.
Gopisetti Narayanaswami Naidu Guru, ILR 34 Madras 151,
construing a similar provision in the Survey and Boundary
Act, 1897 the same High Court held that a decision cannot
properly be said to be passed until it is in some way pro-
nounced or published under such circumstances the parties
affected by it have a reasonable opporunity of knowing what
it contains. "Till then though it may be written out, signed
and dated, it is nothing but a decision which the officer
intends to pass. It is not passed so long it is open to him
to tear off what he has written and write something else."
In Raja Harish Chandra Raj Singh v. The Deputy Land Acquisi-
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tion Officer & Anr., [1962] 1 SCR 676 construing the proviso
to Section 18 of the Land Acquisition Act which prescribed
for applications seeking reference to the Court, a time
limit of six weeks of the receipt the notice from the Col-
lector under Section 12(2) or within six months from the
date of the Collector’s award whichever first expires, this
Court held that the six months period will have to be calcu-
lated from the date of communication of the award. In Asstt.
Transport Commissioner (Administration) U.P. & Ors. v. Sri
Nand Singh, [1981] 1 SCR 131 construing the provision of
Section 15 of the U.P. Motor Vehicle Taxation Act, it was
held that for an aggrieved party the limitation will run
from the date when the order was communicated to him.
The ratio of these judgments were applied in interpret-
ing section 33A(2) of the Indian Income Tax Act, 1922 in
Muthia Chettiar v. CIT, ILR 1951 Mad. 815 with reference to
a right of revision provided to an aggrieved assessee.,
Section 33A(1) of the Act on the other hand authorised the
Commissioner to suo moto call for the records of any pro-
ceedings under the Act in which an order has been passed by
any
869
authority subordinate to him and pass such order thereon as
he thinks fit. The proviso, however, stated that the Commis-
sioner shall not revise any order under that sub-section" if
the order (sought to be revised) has been made more than one
year previously". Construing this provision the High Court
in Muthia Chettiar’s case held that the power to call for
the records and pass the order will cease with the lapse of
one year from the date of the order by the subordinate
authority and the ratio of date of the knowledge of the
order applicable to an aggrieved party is not applicable for
the purpose of exercising suo moto power. Similarly in
another decision reported in Viswanathan Chettiar v. Commis-
sioner of Income Tax, Madras, 25 ITR 79 construing the time
limit for completion of an assessment under section 34(2) of
the Income Tax Act, 1922, which provided that it shall be
made "within four years from the end of the year in which
the income, profit and gains were first assessable," it was
held that the time limit of four years for exercise of the
power should be calculated with reference to the date on
which the assessment or reassessment was made and not the
date on which such assessment or reassessment order made
under Section 34(2) was served on the assessee.
It may be seen therefore, that, if an authority is
authorised to exercise a power or do an act affecting the
rights of parties, he shall exercise that power within the
period of limitation prescribed there for. The order or
decision of such authority comes into force or becomes
operative or becomes an effective order or decision on and
from the date when it is signed by him. The date of such
order or decision is the date on which the order or decision
was passed or made: that is to say when he ceases to have
any authority to tear it off and draft a different order and
when he ceases to have any locuspaetentiae. Normally that
happens when the order or decision is made public or
notified in some form or when it can be said to have left
his hand. The date of communication of the order to the
party whose rights are affected is not the relevant date for
purposes of determining whether the power has been exercised
within the prescribed time.
So far as the party who is affected by the order or
decision for seeking his remedies against the same, he
should be made aware of passing of such order. Therefore
Courts have uniformly laid down as a rule of law that for
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seeking the remedy the limitation starts from the date on
which the order was communicated to him on the date on which
it was pronounced or published under such circumstances that
the parties affected by it have a reasonable opportunity of
knowing of passing of the order and what it contains, The
knowledge of the party
870
affected by Such a decision, either actual or constructive
is thus an essential element which must be satisfied before
the decision can be said to have been concluded and binding
on him. Otherwise the party affected by it will have no
means of obeying the order or acting in conformity with it
or of appealing against it or otherwise having it set. This
is based upon, as observed by Rajamanner, CJ in Muthia
Chettiar v. CIT, supra "a salutary and just principle". The
application’ of this rule so far as the aggrieved party is
concerned is not dependant on the provisions of the particu-
lar statute, but it is so under the general law.
In Muthia Chettiar’s case (supra) both these aspects
came up for consideration. The relevant provisions consid-
ered therein were Section 33A(1) and (2) of the’ Indian
Income Tax Act, 1922, which read as follows:
"33A. (1) The Commissioner may of his own
motion call for the record of any proceeding
under this Act in which an order has been
passed by any authority subordinate to him and
may make such inquiry or cause such. inquiry
to be made and, subject to the provisions of
this Act, may pass such order thereon, not
being an order prejudicial to the assessee as
he thinks it:
Provided that the Commissioner shall
not revise any order under this sub-section
if-
(a) x x x
(b) x x X x
(c) the order has been made more than one year
previously."
"(2) The Commissioner may, on application by
an assessee for revision of an order under
this Act, passed by any authority subordinate
to the Commissioner, made within one year from
the date of the order,.... call for the
record of the proceeding in which such order
was passed, and..... may pass such order
thereon...... as he thinks fit:
Interpreting these provision the Court observed:
"In a case falling under sub-section (1) the
Commissioner acts of his own motion. There is
no question of the
871
aggrieved party invoking his jurisdiction,
there can therefore be no occasion to apply
the rule enunciated in Secretary of State for
India in Council v. Gopisetti Narayanaswami
Naidu, [1910] ILR 34 Mad, 15 1. It may be said
that the Commissioner’s power to call for the
record ceases with the lapes of one year from
the date of the order by the subordinate
authority. But in a case failing under sub
section (2) the party aggrieved has got to
take the step of applying for revision and he
is allowed one year from the date of the
order. The provision is, therefore, certainly
in the nature of a time-limit for the applica-
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tion for revision."
The decision in Viswanathan Chettiar’s case (supra)
related to the reassessment power under Section 34(2) of the
Income Tax Act, 1922 which read as follows:
"No order of assessment under Section 23 or of
assessment or reassesment under sub-section
(1) of this section shall be made after the
expiry, in any case to which clause (c) of
sub-section (1) of section 28 applies, of
eight years and in any other case, of four
years from the end of the year in which the
income, profits or gains were first assessa-
ble."
After referring to some of the provisions in the Act and
some of the earlier decisions and in particular Muthia
Chettiar’s case (supra) the learned judges observed:
"As we have already pointed out, the
time limit of four years for which sub-section
(2) of Section 34 provided was the period
within which the Income-tax Officer had to
complete one stage of the proceedings, that
is, the assessment of the income and
determination of the tax payable, and
that stage could be completed by the Income-
tax Officer himself, even if the terms
of the order of assessment were not communi-
cated within that period of four years to the
assessee. The rights of the assessee aggrieved
by such an order of assessment have been
specifically provided for by other sections
of the Act."
Thus if the intention or design of the statutory
provision was to protect the interest of the person adverse-
ly affected, by providing a remedy against the order or
decision any period of limitation prescribed with reference
to invoking such remedy shall be read as com-
872
mencing from the date of communication of the order. But if
it is a limitation for a competent authority to make an
order the date of exercise of that power and in the case of
exercise of suo moto power over the subordinate authorities’
orders, the date on which such power was exercised by making
an order are the relevant dates for determining the
limitation. The ratio of this distinction may also be found-
ed on the principle that the Government is bound by the
proceedings of its officers but persons affected are not
concluded by the decision.
Section 35E comes under the latter category of an au-
thority exercising its own powers under the Act. It is not
correct to equate the Board, as contended by Sri Gaurishan-
kar Murthy, to one of the two parties to a quasi-judicial
proceeding before the Collector and the Board’s right under
Section 35E to the exercise of the right of appeal by an
aggrieved assessee from an order passed to its prejudice.
The power under Section 35E is a power of superintendence
conferred on a superior authority to ensure that the subor-
dinate officers exercise their powers under the Act correct-
ly and properly. Where a time is limited for the purposes by
the statute, such power, as under Section 33A(2) of the
Indian Income-tax Act, 1922 referred to in Muthia Chettiar
(supra), should be exercised within the specified period
from the date of the order sought to be reconsidered. To
hold to the contrary would be inequitable and will also
introduce uncertainties into the administration of the Act
for the following reason. There appears to be no provision
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in the Act requiring the endorsement, by a Collector, of all
orders passed by him to the Board. If there is such a prac-
tice in fact or requirement in law, the period of one year
from the date of the order is more than adequate to ensure
action in appropriate cases particularly in comparison with
the much shorter period an assessee has within which to
exercise his right of appeal. If, on the other hand, there
is no such requirement or practice and the period within
which the Board can interfere is left to depend on the off-
chance of the Board coming to know of the existence of a
particular order at some point of time, however, distant,
only administrative chaos can result. We are, therefore, of
the opinion that the period of one year fixed under sub-
section (3) of Section 35E of the Act should be given its
literal meaning and so construed the impugned direction of
the Board was beyond the period of limitation prescribed
therein and therefore invalid and ineffective.
For the foregoing. reasons we are of the view that the
Tribunal was right in holding that the application before
them was out of time. This appeal is accordingly dismissed.
There will be no order as to costs.
V.P.R. Appeal dis-
missed.
873