1990 (11) TMI 170 - SC - Central Excise

Whether the notice dated 22-5-1982 issued by the Collector of Central Excise is barred by time under the provisions of Section 35A(3)(b) of the Act? Held that - The final conclusion of the Allahabad High Court in the judgment under appeal has to be upheld without going into all possible different interpretations of Section 35A. On those aspects of the matter we express no opinion. We confine ourselves to the question whether in a case like the present where fraud collusion etc. are alleged the initiation of proceedings within one year is valid and answer that question in the affirmative. In the result this appeal stands dismissed.

Summary

Issues:
1. Interpretation of Section 35A(3)(b) of the Central Excises & Salt Act, 1944 regarding the time limit for issuing show cause notices.
2. Whether the notice issued by the Collector of Central Excise was within the period of limitation.
3. Reconciliation of Section 35A(3)(b) and Section 35A(4) in cases of duty evasion allegations.
4. Comparison of decisions in similar cases by different High Courts and the Tribunal.

Detailed Analysis:
1. The case involved a petition for special leave to appeal from the High Court of Allahabad regarding a show cause notice issued to the assessee for alleged excise duty evasion. The notice was issued by the Superintendent (Preventive), Central Excise, alleging duty evasion in the price lists filed by the assessee. The Assistant Collector initially dropped the proceedings, but later, the Collector of Central Excise issued a show cause notice proposing to revise and confirm the demand of duty allegedly evaded by the assessee. The main issue was whether the notice issued by the Collector was within the time limit specified in Section 35A(3)(b) of the Act.

2. The High Court held that the notice issued by the Collector was within the period of limitation as per Section 35A(3)(b) and Section 35A(4) of the Act. The Court concluded that the Collector could revise an order within one year from the date of the decision sought to be revised. The High Court's decision was based on the interpretation that the notice was issued within the prescribed time limits under Section 11A, which provides for two periods of limitation - 6 months and 5 years. The Court rejected the argument that only the shorter period of limitation applied, confirming the validity of the proceedings initiated by the Collector.

3. The Supreme Court agreed with the High Court's interpretation of Section 35A(3)(b) and Section 35A(4), upholding the conclusion that the notice in the case was issued within the period of limitation. The Court discussed the reconciliation of the seemingly inconsistent provisions of sub-sections (3) and (4) of Section 35A. It considered the role of sub-section (4) in imposing a further limitation or relaxation of the period of limitation specified in sub-section (3)(b). The Court clarified that even if sub-section (4) applied to cases of fraud or collusion, the initiation of proceedings within one year was valid in the present case.

4. The petitioner cited decisions from the High Courts of Delhi and Bombay, along with Tribunal decisions, to support the argument that the limitation issue had been decided in favor of the petitioner in similar cases. The Supreme Court distinguished these cases from the present one, emphasizing that the cases cited did not involve fraud, suppression, or collusion. The Court clarified that the present case fell within the extended period of limitation available under Section 11A, and the initiation of proceedings within one year was valid, irrespective of the applicability of Section 35A(4). The Court upheld the High Court's conclusion without delving into different interpretations of Section 35A, expressing no opinion on those aspects.