1985 (12) TMI 223 - AT - Customs

Summary

Issues Involved:
1. Validity of the transferred proceedings under Section 131B of the Customs Act.
2. Limitation period for issuing a show cause notice under Section 131(3) of the Customs Act.
3. Applicability of ad hoc exemption order No. 442 dated 11-11-1975 to goods cleared under ad hoc exemption order No. 164 dated 31-3-1975.
4. Authority of the Collector of Customs to review and refund duties already paid.
5. Validity of the show cause notice dated 8-10-1982.

Detailed Analysis:

1. Validity of the transferred proceedings under Section 131B of the Customs Act:
The respondents argued that there were no valid proceedings pending before the Central Government on the appointed date (11-10-1982) that could be transferred to the Tribunal. The show cause notice was signed on 8-10-1982 but was not issued until after the appointed date. The Tribunal concluded that the initiation of proceedings occurred on 8-10-1982 when the notice was signed by the competent authority, despite the actual issue being delayed due to holidays. Therefore, the proceedings were validly initiated and transferred under Section 131B.

2. Limitation period for issuing a show cause notice under Section 131(3) of the Customs Act:
The Tribunal noted that Section 131(3) does not prescribe a limitation period for issuing a show cause notice. The respondents argued that the power should be exercised within a reasonable period. The Tribunal referred to the Supreme Court decision in Geep Flash Light Industries Limited v. Union of India, which established that no limitation period applies to Section 131(3). Consequently, the Tribunal held that the show cause notice issued on 8-10-1982 was not barred by limitation.

3. Applicability of ad hoc exemption order No. 442 dated 11-11-1975 to goods cleared under ad hoc exemption order No. 164 dated 31-3-1975:
The show cause notice proposed that the exemption order dated 11-11-1975 could not apply to goods cleared under the earlier exemption order dated 31-3-1975. The Tribunal examined the letter dated 24-10-1975 from the Ministry of Commerce and the exemption order dated 11-11-1975, which explicitly referred to the total quantity of 1,20,354 bales, including the 66,701 bales already cleared. The Tribunal found that the Government intended to exempt the entire quantity, including the bales already cleared. Thus, the order dated 11-11-1975 was applicable to the previously cleared goods.

4. Authority of the Collector of Customs to review and refund duties already paid:
The respondents contended that the Collector of Customs had no authority to review and refund duties already paid unless the assessment was illegal. The Tribunal noted that the Government had issued a special order under Section 25(2) of the Customs Act, exempting the 66,701 bales from duty, despite the duty already being paid. The Collector was bound to implement this order and refund the duties. The Tribunal held that the Collector's actions were not erroneous.

5. Validity of the show cause notice dated 8-10-1982:
The Tribunal concluded that the show cause notice dated 8-10-1982 was validly initiated and not barred by limitation. However, the Tribunal found no grounds to review and set aside the Collector's orders dated 22-12-1976 and 29-1-1977. The Tribunal discharged the show cause notice and dismissed the appeals.

Separate Judgment:
Shri G. Shankaran and Shri K.L. Rekhi delivered a separate judgment agreeing with the conclusion to discharge the show cause notice and dismiss the appeals but differed on the reasoning. They argued that the proceedings were not validly initiated before the appointed day, as the notice was issued after 11-10-1982. They emphasized that a notice must be given to the affected persons for valid initiation of proceedings under Section 131(3). Despite this, they agreed with the conclusion on the merits of the dispute and dismissed the appeals.