V.P. Gopalan Nambiyar, C.J.
1. The Customs Authorities and the Union of India have appealed against the judgment of a learned Judge, allowing the 1st Respondent's writ petition to quash Ex. P12 order of the Government of India, revising suo motu, Ex. P6 order of the Collector of Customs, allowing refund of countervailing duty levied on and collected from the 1st Respondent. The learned Judge quashed the order on the only ground that the provisional order was passed beyond the period of limitation provided under Section 131(5) of the Customs Act. The merits of the order were not gone into. The Union of India has attacked the reasoning and the conclusion of the learned Judge. Besides supporting this aspect of the case, Counsel for the 1st Respondent argued also on the merits to sustain Ex. P12 order and Counsel for the Union of India replied to the said argument.
2. The 1st Respondent is a firm which applied for the import of an Amerio Plates Freezer. Ex. P1 is the exemption certificate dated 16-3-1971 granted to the 1st Respondent by the Director of Industries and Commerce, Trivandrum. The description of goods appended to the end of the exemption certificate reads :
'Amerio Model 12 Double contact place Freezer with accessories and equipments.'
Its value was shown at Rs. 43,500/-. It is the case of the 1st Respondent as stated in the writ petition that on account of a limited foreign exchange sanctioned to it, the petitioner imported only the freezer and essential spare parts less compressor, the Condensing Unit, motor pump and cooling tower. The commodity was allowed to be cleared by the Customs Authorities on payment of duty at 10% under item 72 (25) of Indian Customs Tariff together with countervailing duty 40% plus 33-1/3% under Item 29A (1) of the Central Excise Tariff. For the sake of convenience, we may notice Section 12 of the Customs Act, 1962 and Sections 2 and 2A, read with Schedule I, item 72 (21) of the Indian Tariff Act, 1934.
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It will thus be seen that Customs duties are imposed as specified in the Act, and the Schedule thereto, and countervailing duty is levied as provided under Section 2A of the Indian Tariff Act. The imported goods were cleared on payment of 10% of the Customs duty under Section 72 (25) of the Indian Customs Tariff together with a countervailing duty at 40% plus 33-1/3% under Section 29A/(1) of the Customs and Central Excise Tariff. The 1st Respondent thereafter made Ex. P2 application for refund of the countervailing duty.
The application was made in a specified form. Clauses (3) and (5) of the application are material and are as follows :
3. Description of goods and numbers 1 case Freezer &
of packages covered Bill of Parts
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5. Amount of refund claimed with R.s. 19,270.05
details of working This is a Freezing
Plant hence as per
Bond executed only
10% duty is leviable
whereas CV duty also
collected, which is
The Collector of Customs and Central Excise, Cochin, by Ex. P3 order held that the imported goods are parts of a freezing plant, and the freezing plant is assessable to duty at 10% ad valorem and further with countervailing duty at 40% plus 33-1/3% under Section 29A (1) of the Central Excise Tariff. He was therefore of the view that the assessment made was in order and no order for refund could be made. The claim for refund was therefore rejected. On appeal, by Ex. P6 order dated 7-1-1972 the Appellate Collector held that the Unit was imported without the condensing unit compressor motor, cooling tower etc. and the whole plant is expected to be assembled using the freezer now imported with condensing unit, compressor motor, cooling tower etc. which are to be indigenously acquired. Hence it was held that the levy of countervailing duty was unjustified. A refund of countervailing duty was accordingly directed in favor of the appellant. Ex. P7 notice dated 18th August, 1973 was issued to the appellant by the Government of India to show cause why Ext. P6 order should not be suo motu revised and annulled and Ex. P3 order should not be restored. The appellant made his submissions by Ex. P8. Thereupon Ex. P12 order was passed allowing the suo motu revision under Section 131(3) setting aside Ex, P6 order, and restoring Ex. P3. The learned Judge held that . the order was barred under Section 131(5) of the Customs Act. We may quote Section 131 of the Act.
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The reasoning of the learned Judge briefly was that where the Appellate Collector of Customs cancels the levy of duty in appeal, but the Central Government was of the opinion that it ought not have been cancelled and that the levy by the Assistant Collector must be restored, the resultant order of the Government is either a case of short-levy or non-levy which would be attracted by Section 131(5) of the Act, The learned Judge further recorded that on the facts of the case, there was no reason to exclude Section 131(5) merely because action had been taken under Section 131(3). ven to such an action, according to the learned Judge, Sub-section (5) would apply, in case the conditions of that section are satisfied. The learned Judge held that they were so satisfied.
3. In order to appreciate the position, it is necessary to refer to the relevant statutory provisions. Section 28 in so far as it is material reads :
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We stress that three different types of actions have been dealt with by the Section, viz. (1) non-levy; (2) short-levy; and (3) erroneous refund. Section 27 deals with the application for refund of duty. We refer to that only to show that a claim for refund of duty is expressly dealt with and provided for. We next turn to Section 131 of the Act which has already been quoted. Sub-section (5) of the Section expressly covers only two types of cases-of non-levy, and ofshort-levy. It does not cover the third case expressly 'mentioned by Section 28(1) and (3), viz. the case of erroneous refund. We cannot regard this as a cases omissus in Section 131(5). Therefore the rule of limitation provided by that clause applies only to revision in cases of non-levy or short-levy. A revision in cases of erroneous refund would not be attracted by any time-limit for its exercise and would fall under Sub-section (3) of Section 131. That the order sought to be revised by the Government in this case was an order of erroneous refund, to our mind, admits of no doubt. Ext. P2 application was made by the 1st Respondent expressly for refund of countervailing duty. That was rejected by the Assistant Collector by Ex. P3; but allowed on appeal by the Collector by Ext. P6 order, who directed a refund of the countervailing duty levied on and collected from the 1st Respondent. It is this order of erroneous refund that is sought to be suo motu revised under Section 131 by the Government. The consequence of setting aside the erroneous order of refund maybe to revive the imposition of countervailing duty; but that would not make the order passed in revision any the less an order revising one for erroneous refund of duty. We are therefore of the opinion that the view taken by the learned Judge that the suo motu revisional power exercised in this case was beyond the time-limit provided in Section 131(5) of the Act cannot be sustained, as that section itself has no application.
4. Counsel for the Union of India rather belatedly brought to our notice the rent decision of the Supreme Court in Income-tax Commissioner v. J.K. Commercial Corporation (A.I.R. 1977 S.C. 456), which has covered the point directly in his favour. Paragraphs 22 and 23 of the judgment are appropriate, and are as follows :
'22. 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.
23. The provisions contained in Section 131(5) of the Act speak of 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 duty. The provisions contained in Section 131(5) with regard to non-levy or short-ievy cannot be equated with erroneous refund in as much as the three categories of errors in the levy are dealt with separately.'
5. Counsel for the 1st Respondent then contended before us that Ext. P6 order of refund was justified on the merits and therefore the judgment of the learned Judge quashing Ext. P12 and sustaining Ex. P6 must be affirmed. That leads to an examination of the merits of the order. Counsel for the 1st Respondent contended that what was imported was not a plate freezer but only its cabinet minus compressor cooling tower etc. This is stated in paragraph 2 of the writ petition. It was therefore contended that Item 29A of the Customs and Central Excise Tariff which we have extracted earlier would not be attracted. That item only requires that the refrigerators and other refrigerating appliances, which are ordinarily sold or offered for sale as ready assembled units'. In other words the test is not actual sale as assembled unit, but whether the commodity in question is ordinarily sold as assembled unit. That focusses attention on the question what was the commodity imported by the 1st Respondent? We have Ext. P1 exemption certificate in which the description of the goods was set out. We do not set much store by it, as it was before the import itself.
6. Next we get Ex. P2 application for refund made by the 1st Respondent, columns 3 and 5 of which we have set out. In Column 3 the goods are described as one freezer and parts. The expression 'freezer' strikes us as significant. This is amplified in column 5 where the commodity is described as a freezing plant, leviable to 10% duty and not liable to countervailing duty. Ext. P4 is the appeal preferred by the 1st Respondent against Ex. P3 order. There, we get the following :
'The appellants had imported at Cochin Port one Amerio Plate Freezer with essential spare parts for the purpose of initial setting up of a freezer plant in their factory at Palluruthy, Cochin-6. The importation was covered by exemption certificate No. C7/15724/71, dated 16-3-1971, issued by the Director of Industries and Commerce, Trivandrum. On account of the limited foreign exchange sanctioned for the purpose, the appellants imported only the freezer and essential spares, less the condensing unit, compressor, motor, pump and cooling tower. The freezer was allowed clearance on payment of duty @18% under item 72 (25) with countervailing duty @40% plus 33-1/3% while the essential spares were allowed clearance on assessment under different items, on merits, with countervailing duty wherever applicable.'
The opening sentence of the above paragraph describes the imported commodity as Amerio Plate Freezer, with essential parts, for setting up a freezer plant. The fact that the import was minus the condensing unit, compressor, motor, pump and cooling tower, does not make any difference. If the article imported viz. the Amerio Plate Freezer ordinarily is sold as an assembled unit, that is sufficient to attract the countervailing duty.
7. Next, we refer to Ex. P7 show cause notice taken for action under Section 131(3) of the Act. That action referred to the consignment imported by the 1st Respondent as Amerio Model 12 Refrigerant Double Contact Plate Freezer and indicated that although it was imported without certain parts such as Compressor etc. it was not exempt from countervailing duty under Section 2(A) of the Tariff Act, read with Item 29A(1) of the Central Excise Tariff. Ext. P12 a copy of the reply sent by the 1st Respondent, stated the position thus :
'The contact freezer cabinet as a component part for the initial setting up of a refrigeration unit and that vital parts like the condensing unit, compressor, cooling tower and the necessary motors were acquired indigenously and were installed not in the freezer cabinet, but adjacent to the freezer with inter-connecting pipe lines.
From the materials thus disclosed we are of the opinion that the consignment imported was an Amerio Model 12 Plate Freezer minus certain parts and that the article is ordinarily sold as an assembled unit.
8. There is an additional circumstance that confirms our impression. If as the 1st Respondent would now contend, that was actually imported by it, was not an assembled unit, but only parts of a freezer plant, then the assessment to duty would or should have been at the higher rate of 50% ad valorem under Section 29A, Clause (3), and not at the lower rate of 40% under Section 29A(1). Counsel for the Union of India stressed before us that having obtained the benefit of an assessment to duty at the lower rate under Section 29A(1), the 1st Respondent was now making an ingenious attempt to build up a case for refund by pleading a case which would actually attract Section 29A (3) to the levy of Customs duty. The argument appeals to us.
9. On the materials disclosed, and on the facts and the circumstances presented we see no ground in Article 226 proceedings to interfere on the meritswith Ext. P12 order. In the result, we allow this appeal, and set aside the order of the learned Judge and direct that O.P. No. 4274 of 1973 will stand dismissed. There will be no order as to costs.