1984 (8) TMI 327 - AT - Customs

Issues Involved:
1. Limitation of Show Cause Notices
2. Applicability of Section 131(3) vs. Section 131(5) of the Customs Act, 1962
3. Interpretation of "levy" and "short levy"
4. Retrospective application of new legislative provisions
5. Differential treatment of erroneous refund and short-levy cases

Detailed Analysis:

1. Limitation of Show Cause Notices:
The primary issue addressed was whether the show cause notices issued by the Government of India were time-barred. The respondents contended that the notices issued on 13-8-1981, proposing to review the appellate order dated 5-4-1980, were beyond the one-year limitation period and thus time-barred. They argued that the notice, though issued under Section 131(3) of the Customs Act, 1962, should be considered under Section 131(5) which aligns with Section 28 of the Act, setting a six-month time limit unless there is collusion or suppression of facts, extending it to five years. It was unanimously agreed that the case did not involve collusion or suppression of facts.

2. Applicability of Section 131(3) vs. Section 131(5) of the Customs Act, 1962:
The respondents argued that the show cause notice was effectively under Section 131(5) rather than Section 131(3), which has no limitation period. The Tribunal agreed with this interpretation, noting that the notice was indeed time-barred under Section 131(5), as it was issued beyond the six-month period stipulated for cases of short-levy or non-levy.

3. Interpretation of "levy" and "short levy":
The Tribunal examined the interpretation of "levy" and "short levy" through precedents, including Supreme Court decisions in Assistant Collector of Central Excises v. National Tobacco Co. and N.B. Sanjana v. The Elphinstone Spinning and Weaving Mills Co. Ltd., and the Allahabad High Court decision in Triveni Sheet Glass Works Ltd. v. Union of India & Ors. These cases clarified that "levy" includes assessment but not collection, and a short-levy occurs when the assessment results in less duty than payable. The Tribunal concluded that the case of M/s. Modi Spinning and Weaving Mills involved a short-levy, making the show cause notice time-barred under Section 131(5).

4. Retrospective application of new legislative provisions:
Shri M.A. Rangaswamy argued that the limitation period for appeals under Section 129A(3) of the Customs Act, 1962, substituted by the Finance Act, 1980, should apply retrospectively to the show cause notice. The Tribunal rejected this argument, stating that Section 131-B(2) explicitly provides for the continuation of proceedings from the stage they were at before the appointed day, without retrospective application of the new limitation period.

5. Differential treatment of erroneous refund and short-levy cases:
The Tribunal distinguished between the cases of M/s. Bharat Vijay Mills and M/s. Modi Spinning and Weaving Mills. For M/s. Bharat Vijay Mills, the show cause notice was not time-barred as it involved an erroneous refund, aligning with the Supreme Court decision in Geep Flash Light Industries v. Union of India & Ors. However, for M/s. Modi Spinning and Weaving Mills, the notice was time-barred as it involved a short-levy, and the Delhi High Court decision in M/s. Associated Cement Companies was applicable.

Separate Judgment:
Member A.J.F. D'Souza dissented regarding M/s. Modi Spinning and Weaving Mills, arguing that the review notice issued within one year from the date of the order was within the time limit prescribed in Section 131. He emphasized that treating the two cases differently would create an unfair distinction. However, the majority decision was accepted, and the show cause notice against M/s. Modi Spinning and Weaving Mills was dropped while the notice against M/s. Bharat Vijay Mills was upheld.

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