1. This appeal to the Tribunal is directed against an order passed by the Collector of Central Excise, Pune on 3-10-1983 whereby he reviewed the order dated 18-11-1980 passed by Assistant Collector, Central Excise, Pune. The impugned order of the Collector was passed in pursuance to Review Notice having been served bearing the date 13-11-1981 in exercise of the power vested in him under Section 35A(2) of the Central Excises and Salt Act, 1944, as it then existed, (hereinafter referred to as the Act).
2. The facts, so far as relevant to the controversy now before us, are that the Assistant Collector had served two successive notices on the appellants, one dated 12-3-1980 and the other dated 16-5-1980 raising demand for butter, pasteurised/unpasteurised, alleged to have been manufactured, and cleared by the Military Dairy Farm, Kirkee, Pune (appellants herein) during the period 1976-77 to 31-3-1980. The Assistant Collector, after consideration of the material before him, confirmed the demand of duty with reference to non- pasteurised butter, only for the period 18-6-1977 to 31-3-1978 which came to Rs. 5053.40.
He held other clearances, which were subject-matter of the notices of demand, to be exempt from duty partly by reference to the Exemption Notification No. 215/77 dated 15-7-1977, and partly by virtue of Notification No. 71/78 dated 1-3-1978. Consequently, only demand for Rs. 5053.40 under Rule 10(1) (a) of the Central Excise Rules, 1944 was confirmed by means of the said order, passed by the Assistant Collector.
3. The Collector, however, on examination of the records and the order, felt that the Assistant Collector had erred in giving benefit of the Notification No. 71/78 to the assessee inasmuch as the goods manufactured and clearances made in all the Military establishments all over India had to be taken into account and it was for the assessee to have satisfied that the proceeds of all such establishments did not exceed the limit prescribed by the Notification. In respect to Notification No. 215/77 dated 15-7-1977, the Collector opined that the Assistant Collector had wrongly excluded the whole quantity of unpasteurised butter cleared during the period prior to issue of this Notification, and that it was also liable to excise duty; besides the special excise duty leviable from 1-3-1978 which also, in his view, had to be included in the demand of duty amounting to Rs. 5,053.40, as determined by the Assistant Collector.
4. This Review Notice was confirmed by order dated 3-10-1983, and it is this order which is assailed in this appeal, on a number of grounds; the foremost being that there was a clear restriction on the power of the Collector to issue review notice on account of nonlevy or shortlevy within a period of six months, from the date of the order which is sought to be reviewed, which limitation was provided by Sub-section (3)(b) of Section 35A, with reference to which the Collector had exercised his power to review the Assistant Collector's order. It was pleaded that the notice having been issued on 13-11-1981 whereas the original order was passed on 18-11-1980, on this ground alone, the order of the Collector was liable to be set aside. It was, however, further pleaded that there was no wilful mis-statement or fraud or suppression of facts on the part of the appellants, and that even the original demands were barred by time, so far as they related to a period beyond six months of the respective notices, as only the normal period provided by Rule 10(1) was available to the Department, while making original demands, and that no circumstance existed justifying, recourse to the larger period as provided by proviso to Rule 10(1).
5. At the time of hearing, Shri M. Chandrashekharan, Advocate appeared for the appellants, and although broadly the facts were referred to but the learned counsel, at the outset, made it clear that he rested his case on the plca of time-bar, qua the review notice, as according to him the language of Sub-section (3)(b) of Section 35A was unequivocal to the effect that any notice, issued for review of an order passed more than six months earlier to the date of the review notice, was liable to be quashed.
6. Since this point goes to the root of the matter, he was allowed to confine his arguments to this point on the understanding that in case we were not inclined to accept his contention in this respect, then further hearing would be fixed to enable him to argue on the remaining pleas of the appellants. Shri Chandrasekharan accordingly concluded his arguments by urging that the language of Sub-section (3)(b) of Section 35A of the Act was very clear, and as a specific time-limit, by cross-reference to Section 11A of the Act, which provided for a time of six months for issue of notice of demand, had been provided; any notice to review the Assistant Collector's order issued after six months of the passing of the said order was not sustainable.
7. Shri Tayal though conceding that the time-limit as contemplated by Section 11A would apply inasmuch as the notice in this case had been issued after 17-11-1980 by which time Section 11A had come into force and con- sequently, the controversy which had been raised by virtue of judgment of Bombay High Court in case of Patel Prabhudas Purshottamdas v. Union of India and Ors. (1982 E.L.T. 112), on the view that Section 11A having not come into operation at the time, the review notice in that case had been issued, the time-limit of six months set therein would not apply, did not arise in the present case. He, however, strenuously argued that since at no stage, there had been disclosure on the part of the appellants of the factum of manufacture of butter, pasteurised or unpasteurised, it was a case where the larger period of live years, as contemplated by proviso to Section 11A (1), would be available, and that that being so, the review notice in this case having been issued in about a year's time, would be saved. On being observed by the Bench that proviso to Section 11A could not seemingly apply to such like situa- tions, and was meant to relate to original demands, Shri Tayal contended that this could not be so, and once a reference to Section 11A had been made, it could be invoked fully otherwise according to him, purpose of legislation by reference would be lost, and this reference to Section 11A as a whole would become meaningless.
8. Shri Chandrasekharan in reply while clarifying that what the appellants manufactured was only unpasteurised butter; controverted Shri Tayal's inter- pretation by urging that this plea of larger time bar could not be invoked in the review notice because the allegation of suppression, or fraud, or mis-statement could not be raised with reference to an adjudication order. He further urged that otherwise also, there was no case of wilful mis-statement or suppression even at the original stage because it was a case of one Department of the Government, dealing with another Departmental and there can be no intent to evade duty or mala fide intention, and it would at the most be a case of non- conformity with rules due to ignorance.
9. We have given our very careful thought to this aspect of the matter and we find that it has been categorically provided in Sub-section (3) (b) of Section 35A that a notice to review, to be issued by the Collector jn relation toany order passed by an officer subordinate to him, has to be within the time- limit prescribed by Section 11 A. The scope of this cross-reference has been interpreted firstly by a Division Bench of Delhi High Court, in the case of Associated Cement Companies Ltd. v. Union of India reported as 1981 E.L.T. 421 and thereafter by Bombay High Court,-also a Division Bench-, [1984 (16) E.L.T. 177] and it has been clearly held that the period of six months is to be calculated from the date of the passing of the order of Assistant Collector. The doubt which was raised by the earlier judgment of Bombay High Court, in the case of Patel Prabhudas (supra), has been set at rest by this later judgment of the said Court in Corn Products Co, (India) Ltd. and Anr. v. Union of India and Anr. reported as 1984 (16) E.L.T. 177, where the view of the Delhi High Court has been endorsed, to the effect that a period of six months has to be reckoned for the purpose of review notice from the date of the order of the Assistant Collector.
10. We, therefore, find it to be a settled issue, and this was rightly not contested by Shri Tayal, that the starting point for computation of limitation for the purpose of review notice of the Collector would be the date of the order of the Assistant Collector. The only contention raised by the learned SDR was that in this case, the period available to the Collector would be five years in view of the proviso to Section 11 A, because according to him, the facts established beyond doubt that the appellants had not disclosed the factum of manufacture and clearances of butter, although the period, when the duty was leviable.
11. We have given our earnest thought to this aspect of the argument, canvassed by Shri Tayal but we are not able to subscribe to this view for the short reason that the suppression or wilful mis-statement as finds reference in proviso to Section HA is apparently at the time of clearances, and the fact of such an alleged suppression or mis-statement would be relevant at the time the original notice for demand is issued as the Department is then within its right to say that the fact of manufacture or clearances having not been disclosed to them, they were prevented by such act of the assessee himself, from raising a demand within the prescribed period. But once a notice of demand had been issued, and adjudication proceedings had been duly held, and an adjudication order passed, which order the Collector differs from and seeks to review, it does not lie with the Department to contend that because of the original suppres- sion or concealment, again a period of five years would be available to the Collector to review the Assistant Collector's order because we fail to see as to how the Collector could be considered to have been handicapped from issuing the review notice, due to those alleged facts of mis-statement or concealment. We can understand a situation where there is an allegation that as a result of some information having been held back during adjudication proceedings, the Assistant Collector had committed some error, and that correct facts came to light subsequently, and that on account of those new revelations the Collector took up the review proceedings but there is no such allegation here. The Collector, in this case, as a plain reading of the review notice will indicate, basis of his action on the facts which were already before the Assistant Collector, and which formed part of the original notices of demand, but differs from the view taken by the Assistant Collector. We are thus very clear on the point, that in this situation respondent cannot now urge that Collector could have recourse to larger period, as covered by proviso to Section 11 A.12. We are, therefore, of our firm view that the review notice issued long after the expiry of six months, which was the period available at the relevant time'under Section 11 A, was barred by time and any order based on such a review notice is liable to be quashed. We accordingly set aside the order of the Collector based on review notice dated 13-11-1981, and allow the appeal.