1986 (8) TMI 200 - AT - Central Excise

Issues Involved:
1. Limitation of the review show cause notice.
2. Validity of the stay order issued unilaterally.
3. Applicability of Section 131(3) versus Section 131(5) of the Customs Act, 1962.
4. Merits of the demand of duty.

Detailed Analysis:

1. Limitation of the Review Show Cause Notice:
The respondent raised a preliminary objection that the review show cause notice is hit by limitation. The Order-in-Appeal was passed on 24th April 1981, and the review show cause notice was issued on 11th February 1982, received by the respondent on 16th February 1982. Under Section 131(5) of the Customs Act, any action should be within the time limit specified under Section 28, which provides for a period of 6 months. Therefore, the review proceedings are claimed to be hit by limitation.

2. Validity of the Stay Order Issued Unilaterally:
The respondents also submitted that the Order-in-Review stayed the operation of the Order-in-Appeal pending the Central Government's decision. This order was deemed unilateral and invalid as the respondents were not given an opportunity to explain their point of view, violating principles of natural justice.

3. Applicability of Section 131(3) versus Section 131(5) of the Customs Act, 1962:
The appellant argued that the review show cause notice was issued under Section 131(3), which has no time limit. Section 131(3) allows the Central Government to annul or modify any Order passed under Section 128 or Section 130. The appellant referenced the Allahabad High Court decision in M/s. Trivani Sheet Glass Works Ltd., which interpreted similar provisions in the Central Excises & Salt Act, 1944, to argue that Section 131(5) is not applicable.

Conversely, the respondent cited the CEGAT decision in Collector of Customs, Bombay v. Bharat Vijay Mills Ltd. and M/s. Modi Spinning and Weaving Mills Ltd., which considered the entire case law and concluded that the review notice should be under Section 131(5) and thus subject to the time limit.

4. Merits of the Demand of Duty:
The review notice asked the respondents to show cause why the Appellate Collector's order annulling the Assistant Collector's Order-in-Original should not be annulled. The grounds for review were that the Appellate Collector's decision was based on incorrect appreciation of facts and misinterpretation of law. The Central Government believed that the deoiled rice bran was chargeable to export duty during the specified period.

Tribunal's Decision:

1. Limitation of the Review Show Cause Notice:
The Tribunal noted that the review show cause notice was issued beyond the six-month period specified under Section 28, thus falling under the limitation prescribed by Section 131(5).

2. Validity of the Stay Order Issued Unilaterally:
The Tribunal did not specifically address the validity of the stay order in its final decision due to its ruling on the limitation issue.

3. Applicability of Section 131(3) versus Section 131(5) of the Customs Act, 1962:
The Tribunal concluded that although the notice was issued under Section 131(3), the matter pertained to non-levy of duty. The Assistant Collector's Order demanded duty not levied on exported goods, and the Appellate Collector's Order had the effect of ordering that no duty could be demanded. Therefore, the notice should be deemed issued under Section 131(5) and is subject to the six-month limitation.

4. Merits of the Demand of Duty:
Given the decision on the preliminary objection regarding limitation, the Tribunal found it unnecessary to delve into the merits of the demand of duty.

Conclusion:
The appeal was dismissed as the review show cause notice was issued beyond the prescribed time limit, rendering it invalid. The Tribunal relied on decisions from the Bombay and Delhi High Courts and previous Tribunal decisions to support its conclusion.

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