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TMI Blog1986 (8) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners manufactured and cleared by the appellants were package type (water cooled) air-conditioners. One order was in respect of Rs. 92,535/- and the other for an amount of Rs. 19,84,600/-. These orders were set aside by the Appellate Collector. 2. The arguments before us by the two sides centred only on one point. The learned counsel for M/s. Fedders Lloyd Corporation, Mr. Soli J. Sorabjee maintained that the notice of the Government issued under Section 36(2) of the Central Excises and Salt Act, 1944 is, dated l5th November, 1978, while the order of the Appellate Collector is, dated 9-12-1977. This notice is time barred under proviso to Section 36 which reads thus :- Provided also that where the Central Government is of opinion that any duty of excise has not been levied or has been short levied or erroneously refunded, no order levying or enhancing the duty, or no order requiring payment of the duty so refunded, shall be made under this section unless the person affected by the proposed order is given notice to show cause against it within the time limit specified in Section 11A. 3. The learned counsel for the department, Mrs. Zutshi, however, said that the main questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aying that this decision had already been decided by the New Delhi High Court in 1981 E.L.T. 421 re.: Associated Cement Company. The court had, in fact, gone into this question of what happened when the notice does not refer to short levy or non-levy. In the Associated Cement Company case also the same problem arose in the notice of the Government seeking to review the Appellate Collector s order. It was argued on behalf of the Government that the notices were under the proviso 2 and that they were, therefore, not barred by limitation as they were issued within the period of one year from the dates of the orders of the Appellate Collector. This, the High Court said, was contrary to the scheme of Section 36(2) including the provisos. 7. The learned counsel said that the notice must be read as a composite whole to get at the total meaning behind its issue. If the interpretation given by the learned counsel for the department is accepted, then the Government can, by omitting all reference to short levy and by omitting to state its desire to recover a demand, exclude the operation of proviso 3, and claim that its notice would operate within the longer one year limit of proviso 2. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgments of the Supreme Court : (1) A.I.R. 1967 S.C. 297 re.: Barium Chemicals and (2) A.I.R. 1969 S.C. 707 re.: Rohtas Industries. The Central Government must form the opinion and must declare such opinion in the notice so that the receiver of the notice can say that there was such an opinion before the notice was served on him. However, the notice served on M/s. Fedders Lloyd did not declare the formation of such an opinion and did not say that the Central Government had formed the opinion or was of the opinion that any duty of excise had not been levied or had been short levied. The Central Government merely declared that it was of the opinion that the order of the Appellate Collector was not proper, legal and correct. This is the language found not in proviso 3 but in Section 36(2) itself and provides for the Central Government calling and examining the records of the proceedings in which a decision or an order has been passed under Section 35 or Section 35A for the purpose of satisfying itself as to the correctness, legality or propriety of such decision or order, and by virtue of which, the Central Government may pass an order thereon as it thinks fit. But the present no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he authority concerned is nevertheless required to arrive at such an opinion from circumstances suggesting the conclusion set out in Uub-clauses (i), (ii) and (iii) of Section 237(b) and the expression circumstances suggesting cannot support the construction that even the existence of circumstances is a matter of subjective opinion. One of the two judges observed further that it was hard to contemplate that the legislature could have left to the subjective process both the formation of opinion and also the existence of circumstances on which it is to be founded; it was not reasonable to say that the clause permitted the authority to say that it had formed the opinion on circumstances which in its opinion exist and which in its opinion suggest an intent to defraud or a fraudulent or unlawful purpose. 12. Two other judges held that the power conferred on the Central Government under Section 237(b) was a discretionary power and no facet of that power was open to judicial review. The 5th judge in that bench did not express any opinion on this aspect of the case. The judges in Rohtas Industries appeal, therefore, said that it had become necessary for them to sort out the requirement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings before the Appellate Collector. We cannot answer this question by reference to these two judgments. 15. The learned counsel for the department said that the Government had not formed an opinion that there had been a short levy and she repeated this statement a number of times. She was then asked by the Bench: What did the Central Government seek? There was no answer to this except that the Central Government was simply of the opinion that the order of the Appellate Collector was incorrect and improper and needed modification and that the order the Government proposed was to change that order. The same answer was returned when the question was repeated. Therefore, when the Bench asked whether the Government would, after modification of the Appellate Collector s order, stand to recover any money as short levied duty from M/s. Fedders Lloyd, there was no answer from the learned SDR. 16. We are not satisfied that this is a mere matter of passing another order because the order of the Appellate Collector was incorrect or mistaken. As pointed out by the learned counsel, Mr. Sorabjee, by the simple device of omitting to say that there had been a short levy, the Central Government ..... X X X X Extracts X X X X X X X X Extracts X X X X
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