1986 (9) TMI 255 - AT - Customs

Summary

Issues Involved:
1. Competence of the Collector of Customs to exercise powers under Section 130(2) of the Customs Act after the expiry of two years.
2. Applicability of Section 28 of the Customs Act for issuing a notice of short-levy.
3. Nature of the limitation period under Section 130(2) of the Customs Act (mandatory vs. directory).
4. Impact of amendments to Section 130 of the Customs Act on the limitation period.

Detailed Analysis:

1. Competence of the Collector of Customs to Exercise Powers under Section 130(2) of the Customs Act after the Expiry of Two Years:
The appellants challenged the competence of the Collector of Customs to revise the order under Section 130(2) of the Customs Act, arguing that the order was passed after the statutory period of two years from the date of the original assessment order. The Tribunal accepted this argument, emphasizing that the provision, as it stood, created a clear bar on the power of the Collector to pass an order in review or revision after the expiry of two years. The Tribunal noted that the wording of Section 130(2) was imperative and negative, stating, "No decision or order passed by an officer of Customs shall be revised under this Section..." This created a mandatory limitation period for the finalization of the proceedings.

2. Applicability of Section 28 of the Customs Act for Issuing a Notice of Short-Levy:
The appellants contended that the case was one of short-levy and, as such, a notice should have been issued under Section 28 of the Customs Act, which provides a six-month period from the date of payment of duty. Since the relevant period fell between May 1975 and July 1975, the notice issued on 24-1-1977 was barred under Section 130 read with Section 28 of the Act. The Tribunal did not find it necessary to delve into this issue further, as the appeal was allowed on the preliminary point regarding the limitation period under Section 130(2).

3. Nature of the Limitation Period under Section 130(2) of the Customs Act (Mandatory vs. Directory):
The Tribunal examined whether the two-year period mentioned in Section 130(2) was mandatory or directory. The Department argued that the period was directory, citing analogous provisions in other statutes where delays were considered permissible. However, the Tribunal found that the provision was mandatory, relying on the clear language of the statute and previous judgments, including the Tribunal's own decision in the case of M/s Anglo India Jute Mills Co. Ltd. The Tribunal emphasized that the period of limitation under Section 130(2) was for the passing of the final order, not merely for the initiation of proceedings.

4. Impact of Amendments to Section 130 of the Customs Act on the Limitation Period:
The Tribunal noted that the amendment to Section 130, effective from 1-7-1978, changed the limitation period to the commencement of proceedings rather than the finalization of the order. This amendment was seen as an acknowledgment of the practical difficulties under the previous provision. The Tribunal highlighted that the law, as it stood before the amendment, required the final order to be passed within two years, and this understanding was reinforced by the Notes and Clauses to the proposed Bill.

Conclusion:
The Tribunal concluded that the order-in-review dated 8-8-1977, passed after the expiry of two years from the date of the original assessment orders, was not sustainable. The appeal was allowed on this preliminary point, and the order dated 8-8-1977 was set aside. The Tribunal did not find it necessary to address the merits of the case further.