1980 (4) TMI 122 - HC - Central Excise

Summary

Issues: Proper construction of the third proviso to sub-Section (2) of Section 36 of the Central Excises and Salt Act, 1944 as amended on 1-7-1978.

Analysis:
1. The writ petition raised a question regarding the interpretation of the third proviso to sub-Section (2) of Section 36 of the Central Excises and Salt Act, 1944. The petitioner, a manufacturer of 'portland cement' and 'pozzolana cement,' was called upon to pay duty at a specific rate on pozzolana cement by the Superintendent of Central Excise. Appeals to the Appellate Collector resulted in withdrawal of the demands. Subsequently, the Central Government issued notices under Section 36(2) to review the Appellate Collector's orders, challenging the demands made by the Superintendent. The petitioner contended that the notices were ultra vires of the third proviso to Section 36(2) as they were issued after the limitation period. The main issue was whether the notices fell under the third proviso and were time-barred.

2. Section 36(2) empowers the Central Government to review decisions under Section 35 or 35A for correctness, legality, or propriety. The second proviso allows for the variation of decisions prejudicial to any person within one year. The third proviso, added in 1978, specifically deals with cases where excise duty has not been levied or has been short-levied. The judgment emphasized the distinction between the broad language of the second proviso and the limited scope of the third proviso. The third proviso imposes a shorter limitation period of six months for cases of short-levy or non-levy, reflecting the importance of such cases to both revenue and assesses.

3. The Court highlighted that the impugned notices did not explicitly mention short-levy or non-levy but focused on reviewing the legality, correctness, or propriety of the Appellate Collector's orders. The respondents argued that the notices were under the second proviso and not time-barred. However, the Court disagreed, stating that the language and intent of the notices indicated a revision based on short-levy, falling under the third proviso. The judgment emphasized that the special law of the third proviso prevails over the general law of the second proviso, rendering the notices time-barred and illegal.

4. The Court clarified that the limitation period specified in Section 11A should be read into the third proviso, calculated from the date of the appellate orders. The judgment concluded that since the notices were covered by the third proviso, they could not benefit from the longer limitation period of the second proviso. Consequently, the notices were deemed time-barred and quashed. Other contentions raised by the petitioner against the notices were not considered due to the finding on the limitation issue. Ultimately, the writ petition was allowed, and the impugned show-cause notices were quashed.