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PETITIONER:

THE COLLECTOR OF CENTRAL EXCISE, MADRAS

Vs.

RESPONDENT:

M/S. M.M. RUBBER & CO. TAMIL NADU.

DATE OF JUDGMENT04/09/1991

BENCH:

RAMASWAMI, V. (J) II

BENCH:

RAMASWAMI, V. (J) II

RANGNATHAN, S.

OJHA, N.D. (J)

CITATION:

1991 AIR 2141 1991 SCR (3) 862

1992 SCC Supl. (1) 471 JT 1991 (3) 587

1991 SCALE (2)473

ACT:

Central Excises & Salt Act, 1944--Section 35E--Legisla-

tive intention, indicated--Power under Section 35E--Nature

of--Authority authorised to exercise a power--Failure to

exercise-Effect of.

Central Excises & Salt Act, 1944 Section 35E(3)--Calcu-

lation of the period of one year--Relevant date- "From the

date of decision or order"--Construction.

Central Excises & Salt Act, 1944 Section 35E--Collec-

tor's order dated 28. 11. 1984 Communicated on 21.2.

1984---Board's direction to Collector to move Tribunal for

correct determination--Whether the adjudicating authority

aggrieved of own order--Legality of action after the period

of limitation.

HEADNOTE:

The appellant, an adjudicating authority held the demand

from the respondent towards excise duty on biaxially orien-

tal polypropylene films as set ant in the show cause notice

dated 25.10.1983 as barred by limitation and dropped further

proceedings. A copy of the order despatched on 21.12.1984

was received by the respondent on 21.12.1984.

The Central Board of Excise and Customs after considera-

tion of the order, on 11.12.198S directed the appellant to

apply under Section 3SE(1) of the Central Excises & Salt

Act, 1944, to the Customs, Excise & Gold (Control) Appellate

Tribunal for correct determination of the points arising out

of the order dated 21.12.1984 and the appellant filed the

application under section 35E(4) of the Act.

Before the Tribunal the respondent urged that the rele-

vant date of the Collector's (adjudicating authority's)

order for the purposes of Section 35E(3) should he taken as

28.11.1984 and not 21.12.1984 when it was received by the

respondent and on that basis the order of the Board under

Section 35E(1) of the Act should he held as beyond the

period of one year from the date of the decision or order of

the adjudicating authority and therefore the application

before the Tribunal was incompetent.

863

The Tribunal dismissed the application holding that the

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application was not maintainable.

In this appeal tided under Section 35L of the Act, the

appellant contended that mere writing an order in file

kept in the office was no order in the eye of law in the

sense of affecting the rights of the parties for whom the

order was meant and that though the order of the adjudicat-

ing authority was made on 28.11.1984 a copy of the same was

sent to the respondent only on 21.12.1984 and received by

him on the very day and that therefore the limitation would

start only at the earliest from 21.12.1984; that enabling

the giving of the direction under Section 35E(1) and the

application under Section 35E(4) in pursuance of that direc-

tion should he treated as if a right of appeal given to the

department; that the departmental authorities and the pri-

vate parties were to he treated equally as aggrieved persons

for the purposes of calculating the time for making the

direction under Section 35E(3) of the Act.

On the question, what is the relevant date for the

purpose of calculation of the period of one year provided

under Section 35E(3) of the Central Excises & Salt Act,

1944, dismissing the appeal, this Court,

HELD: 1. If an authority is authorised to exercise a

power or do an act affecting the rights of parties, he shall

exercise that power within the period or limitation pre-

scribed therefore. The order or decision of such authority

comes into force or becomes operative or becomes an effec-

tive order or decision on and from the date when it is

signed by him. The date of such order or decision is the

date on which the order or decision was passed or made; that

is to say when he ceases to have any authority to tear it

off and draft a different order and when.he ceases to have

any locuspaetentiae. Normally that happens when the order or

decision is made public or notified in some form or when it

can he said to have left his hand. The date of communication

of the order to the party whose rights are affected is not

the relevant date for purposes of determining whether the

power has been exercised within the prescribed time. [869D-

F]

2. If the intention or design of the statutory provi-

sion was to protect the interest of the person adversely

affected, by providing a remedy against the order or deri-

sion any period of limitation prescribed with reference to

invoking such remedy shall he read as commencing from the

date of communication of the order. But if it is a limita-

tion for a competent authority to make an order the date of

exer-

864

cise of that power and in the case of exercise, of suo moto

power over the subordinate authorities' orders, the date on

which such power was exercised by making an order are the

relevant date for determining the limitation. [871H-872B]

3. Section 35E comes under the latter category of an

authority exercising its own powers under the Act. It is not

correct to equate the Board to one of the two parties to a

quasi-judicial proceeding before the Collector and the

Board's right under Section 35E to the exercise of the right

of appeal by an aggrieved assessee from an order passed to

its prejudice. [872B-C]

4. The power under Section 35E is a power of superin-

tendence conferred on a superior authority to ensure that

the subordinate officers exercise their powers under the Act

correctly and properly. Where a time is limited for the

purposes by the statute, such power should he exercised

within the specified period from the date of the order

sought to he reconsidered. To hold to the contrary would he

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inequitable and will also introduce uncertainties into the

administration of the Act. [872C-E]

5. The direction to file an appeal under Sections

35E(1)(2) of the Act by the Board and the Collector, as the

case may he, is to the very adjudicating authority who would

otherwise he bound by his own order and not expected to he

aggrieved by the same. When an appeal is filed on such

direction, the appellant will be the adjudicating authority

himself and not the authority who gave the direction.

[867D-E]

6. The period of one year fixed under sub-section (3) of

Section 35E of the Act should he given its literal meaning

and so construed the impugned direction of the Board was

beyond the period of limitation prescribed therein and

therefore invalid and ineffective. [872G]

Annamalai Chetti v. Col. J.G. Cloete, [1883] ILR 6 Mad.

189, Seshamma v. Sankara, [1889] ILR 12 Mad. 1; The Secre-

tary of State for India in Council v. Gopisetti Narayanaswa-

mi Naidu Guru, ILR 34 Madras 151; Raja Harish Chandra Raj

Singh v. The Deputy Land Acquisition Officer & Anr., [1962]

1 SCR 676; Asstt. Transport Commissioner (Administration)

U.P. & Ors. v. Sri Nand Singh, [1981] 1 SCR 131; Muthia

Chettiar v. CIT, ILR 1951 Mad. 815 and Viswanathan Chettiar

v. Commissioner of Income Tax, Madras, 25 ITR 79, referred

to.

865

JUDGMENT:

CIVIL APPELLATE JURISDICTION: CiVil Appeal No. 6071 (NM)

of 1990.

From the Order dated 31.5.90 of the Customs, Excise and

Gold (Control) Appellate Tribunal, New Delhi in Appeal No.

E/2586/86-C with E/Cross/478/86-C. (Order No. 541/90-C).

M. Gauri Shankarmurthy, K. Swamy and P. Parmeshwaran for

the Appellant.

Santosh Hegde and K.R. Nambiar for the Respondent.

The Judgment of the Court was delivered by

V. RAMASWAMI, J. The short question of law that arises

for consideration in this appeal is as to what is the rele-

vant date for the purpose of calculation of the period of

one year provided under section 35E(3) of The Central Ex-

cises & Salt Act, 1944 (hereinafter called the Act). Briefly

stated the question arises in the following circumstances.

By order in Original No. 34 of 1984 dated 28.11.1984,

the Collector of Central Excise, Madras as an adjudicating

authority within the meaning of the Act, held as barred by

limitation the demand from the respondent towards excise

duty on biaxially oriental polypropylene films as set out in

the show cause notice dated 25.10.1983 and dropped further

proceedings against the respondent. A copy of this order was

attested by the Superintendent of the office on 21.12.1984

and despatched to the respondent. It was received by the

respondent on 21.12.1984. The Central Board of Excise and

Customs (hereinafter called the. Board), after consideration

of the order, on 11.12.1985 directed the Collector of Cen-

tral Excise, Madras under the provisions of Section 35E(1)

to apply to the Customs, Excise & Gold (Control) Appellate

Tribunal, New Delhi, for correct determination of the points

arising out of the aforesaid order and accordingly the

Collector filed the application before the Tribunal 'as

provided under Section 35E(4) of the Act.

Before the Tribunal the respondent urged that the rele-

vant date of the Collector's (adjudicating authority) order

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for the purposes of Section 35E(3) should be taken as

28.11.1984 and not 21.12.1984 when it was received by the

respondent and on that basis the order of the Board under

Section 35E(1) of the Act should be held as beyond the

866

period of one year from the date of the decision or order of

the adjudicating authority and therefore the application

before the Tribunal was incompetent. The Tribunal accepted

this contention and held that the application was not main-

tainable.

In this appeal filed under Section 35L of the Act the

learned counsel for the appellant contended that mere writ-

ing an order in file kept in the office is no order in the

eye of law in the sense of affecting the rights of the

parties for whom the order is meant and that though the

order of the adjudicating authority was made on 28.11.1984 a

copy of the same was sent to the respondent only on

21.12.1984 and received by him on the very day and that

therefore the limitation would start only at the earliest

from 21.12.1984. He stated that the order was received by

the Board also only subsequent to 21.12.1984. His further

submission was that enabling the giving of the direction

under Section 35E(1) and the application under Section

35E(4) in pursuance of that direction shall be treated as if

a right of appeal given to the department. On this basis his

argument was that the departmental authorities and the

private parties are to be treated equally as aggrieved

persons for the purposes of calculating the time for making

the direction under Section 35E(3) of the Act.

Before we discuss the arguments of the learned counsel,

it is necessary to set out some relevant provisions in the

Act. Section 35 of the Act, provides for an appeal to a

person aggrieved by any decision or order passed under the

Act by a Central Excise Officer lower than a Collector of

Central Excise' and that such an appeal will have to be

filed "within three months from the date of the communica-

tion to him of such decision or order". Clause 5 of Section

35A requires that on the disposal of the appeal, the Collec-

tor (Appeals) shall communicate the order passed by him to

the Appellant, the adjudicating authority and the Collector

of Central Excise- Section 35B provides for a right of

appeal to any person aggrieved by, among other orders, (1)

an order passed by the Collector (Appeals) under Section 35A

and (2) a decision or order passed by the Collector of

Central Excise as an adjudicating authoritY. Such an appeal

will have to be filed "within three months from the date on

which the order sought to be appealed against is communicat-

ed to the Collector of Central Excise or as the case may be

the other party preferring the appeal." The Appellate Tribu-

nal also is required to send a copy of the order passed in

the appeal to the Collector of Central Excise and the other

party to the appeal. Section 35E(1) authorises the Board "of

its own motion, call for and examine the record of any

proceeding in which a Collector of Central Excise as

867

an adjudicating authority has passed any decision or order

under this Act for the purpose of satisfying itself as to

the legality or propriety of any such decision or order and

may, by order, direct such Collector to apply to the Appel-

late Tribunal. or as the case may be the Customs and Excise

Revenues Appellate Tribunal established under Section 3 of

the Customs and Excise Revenues Appellate Tribunal Act, 1986

for the determination of such points arising out of the

decision or order as may be specified by the Board in its

order." As sub-section (2) is also relevant for considera-

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tion that may also be set here and that reads:

"2. The Collector of Central Excise may, of

his own motion, call for and examine the

record of any proceeding in which an adjudi-

cating authority subordinate to him has passed

any decision or order under this Act for the

purpose of satisfying himself as to the legal-

ity or propriety of any such decision or order

and may, by order, direct such authority to

apply to the Collector (Appeals) for the

determination of such points arising out of

the decision or order as may be spcified by

the Collector or Central Excise in his order.

It may be seen that the direction to file an appeal

under these two sub-sections by the Board and the Collector,

as the case may be, is to the very adjudicating authority

who would otherwise be bound by his own order and not ex-

pected to be aggrieved by the same. When an appeal is filed

on such direction, the appellant will be the adjudicating

authority himself and not the authority who gave the direc-

tion.

Sub-Section (3) of Section 35E of the Act which deals

with the limitation for exercise of the powers under sub-

sections (1) and (2) of the Act and which is the relevant

provision for consideration in this appeal reads as follows:

"No order shall be made under sub-section (1)

or subsection (2) after the expiry of one year

from the date of the decision or order of the

adjudicating authority."

At this stage itself we may state that sub-section (4)

of the Act provides that the adjudicating authority shall

file the application before the Tribunal in pursuance of the

order made under sub-section (1) or sub-section (2)"within a

period of. three months from the date of communication of

the order under sub-section (1) or sub-section (2) to the

adjudicating authority."

868

The words "from the date of decision or order" used with

reference to the limitation for filing an appeal or revision

under certain statutory provisions had come up for consider-

ation in a number of cases. We may state that the ratio of

the decisions uniformly is that in the case of a person

aggrieved filing the appeal or revision, it shall mean the

date of communication of the decision or order appealed

against. However, we may note a few leading cases on this

aspect.

Under section 25 of the Madras Boundary Act, 1860 the

starting point of limitation for appeal byway of suit al-

lowed by that section was the passing of the Survey Offi-

cer's decision and in two of the earliest cases, namely,

Annamalai Chetti v. Col. J.G. Cloete, [1883] ILR 6 Mad. 189

and Sesharnrna v. Sankara, [1889] ILR 12 Mad. 1, it was held

that the decision was passed when it was communicated to the

parties. In The Secretary of State for India in Council v.

Gopisetti Narayanaswami Naidu Guru, ILR 34 Madras 151,

construing a similar provision in the Survey and Boundary

Act, 1897 the same High Court held that a decision cannot

properly be said to be passed until it is in some way pro-

nounced or published under such circumstances the parties

affected by it have a reasonable opporunity of knowing what

it contains. "Till then though it may be written out, signed

and dated, it is nothing but a decision which the officer

intends to pass. It is not passed so long it is open to him

to tear off what he has written and write something else."

In Raja Harish Chandra Raj Singh v. The Deputy Land Acquisi-

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tion Officer & Anr., [1962] 1 SCR 676 construing the proviso

to Section 18 of the Land Acquisition Act which prescribed

for applications seeking reference to the Court, a time

limit of six weeks of the receipt the notice from the Col-

lector under Section 12(2) or within six months from the

date of the Collector's award whichever first expires, this

Court held that the six months period will have to be calcu-

lated from the date of communication of the award. In Asstt.

Transport Commissioner (Administration) U.P. & Ors. v. Sri

Nand Singh, [1981] 1 SCR 131 construing the provision of

Section 15 of the U.P. Motor Vehicle Taxation Act, it was

held that for an aggrieved party the limitation will run

from the date when the order was communicated to him.

The ratio of these judgments were applied in interpret-

ing section 33A(2) of the Indian Income Tax Act, 1922 in

Muthia Chettiar v. CIT, ILR 1951 Mad. 815 with reference to

a right of revision provided to an aggrieved assessee.,

Section 33A(1) of the Act on the other hand authorised the

Commissioner to suo moto call for the records of any pro-

ceedings under the Act in which an order has been passed by

any

869

authority subordinate to him and pass such order thereon as

he thinks fit. The proviso, however, stated that the Commis-

sioner shall not revise any order under that sub-section" if

the order (sought to be revised) has been made more than one

year previously". Construing this provision the High Court

in Muthia Chettiar's case held that the power to call for

the records and pass the order will cease with the lapse of

one year from the date of the order by the subordinate

authority and the ratio of date of the knowledge of the

order applicable to an aggrieved party is not applicable for

the purpose of exercising suo moto power. Similarly in

another decision reported in Viswanathan Chettiar v. Commis-

sioner of Income Tax, Madras, 25 ITR 79 construing the time

limit for completion of an assessment under section 34(2) of

the Income Tax Act, 1922, which provided that it shall be

made "within four years from the end of the year in which

the income, profit and gains were first assessable," it was

held that the time limit of four years for exercise of the

power should be calculated with reference to the date on

which the assessment or reassessment was made and not the

date on which such assessment or reassessment order made

under Section 34(2) was served on the assessee.

It may be seen therefore, that, if an authority is

authorised to exercise a power or do an act affecting the

rights of parties, he shall exercise that power within the

period of limitation prescribed there for. The order or

decision of such authority comes into force or becomes

operative or becomes an effective order or decision on and

from the date when it is signed by him. The date of such

order or decision is the date on which the order or decision

was passed or made: that is to say when he ceases to have

any authority to tear it off and draft a different order and

when he ceases to have any locuspaetentiae. Normally that

happens when the order or decision is made public or

notified in some form or when it can be said to have left

his hand. The date of communication of the order to the

party whose rights are affected is not the relevant date for

purposes of determining whether the power has been exercised

within the prescribed time.

So far as the party who is affected by the order or

decision for seeking his remedies against the same, he

should be made aware of passing of such order. Therefore

Courts have uniformly laid down as a rule of law that for

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seeking the remedy the limitation starts from the date on

which the order was communicated to him on the date on which

it was pronounced or published under such circumstances that

the parties affected by it have a reasonable opportunity of

knowing of passing of the order and what it contains, The

knowledge of the party

870

affected by Such a decision, either actual or constructive

is thus an essential element which must be satisfied before

the decision can be said to have been concluded and binding

on him. Otherwise the party affected by it will have no

means of obeying the order or acting in conformity with it

or of appealing against it or otherwise having it set. This

is based upon, as observed by Rajamanner, CJ in Muthia

Chettiar v. CIT, supra "a salutary and just principle". The

application' of this rule so far as the aggrieved party is

concerned is not dependant on the provisions of the particu-

lar statute, but it is so under the general law.

In Muthia Chettiar's case (supra) both these aspects

came up for consideration. The relevant provisions consid-

ered therein were Section 33A(1) and (2) of the' Indian

Income Tax Act, 1922, which read as follows:

"33A. (1) The Commissioner may of his own

motion call for the record of any proceeding

under this Act in which an order has been

passed by any authority subordinate to him and

may make such inquiry or cause such. inquiry

to be made and, subject to the provisions of

this Act, may pass such order thereon, not

being an order prejudicial to the assessee as

he thinks it:

Provided that the Commissioner shall

not revise any order under this sub-section

if-

(a) x x x

(b) x x X x

(c) the order has been made more than one year

previously."

"(2) The Commissioner may, on application by

an assessee for revision of an order under

this Act, passed by any authority subordinate

to the Commissioner, made within one year from

the date of the order,.... call for the

record of the proceeding in which such order

was passed, and..... may pass such order

thereon...... as he thinks fit:

Interpreting these provision the Court observed:

"In a case falling under sub-section (1) the

Commissioner acts of his own motion. There is

no question of the

871

aggrieved party invoking his jurisdiction,

there can therefore be no occasion to apply

the rule enunciated in Secretary of State for

India in Council v. Gopisetti Narayanaswami

Naidu, [1910] ILR 34 Mad, 15 1. It may be said

that the Commissioner's power to call for the

record ceases with the lapes of one year from

the date of the order by the subordinate

authority. But in a case failing under sub

section (2) the party aggrieved has got to

take the step of applying for revision and he

is allowed one year from the date of the

order. The provision is, therefore, certainly

in the nature of a time-limit for the applica-

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tion for revision."

The decision in Viswanathan Chettiar's case (supra)

related to the reassessment power under Section 34(2) of the

Income Tax Act, 1922 which read as follows:

"No order of assessment under Section 23 or of

assessment or reassesment under sub-section

(1) of this section shall be made after the

expiry, in any case to which clause (c) of

sub-section (1) of section 28 applies, of

eight years and in any other case, of four

years from the end of the year in which the

income, profits or gains were first assessa-

ble."

After referring to some of the provisions in the Act and

some of the earlier decisions and in particular Muthia

Chettiar's case (supra) the learned judges observed:

"As we have already pointed out, the

time limit of four years for which sub-section

(2) of Section 34 provided was the period

within which the Income-tax Officer had to

complete one stage of the proceedings, that

is, the assessment of the income and

determination of the tax payable, and

that stage could be completed by the Income-

tax Officer himself, even if the terms

of the order of assessment were not communi-

cated within that period of four years to the

assessee. The rights of the assessee aggrieved

by such an order of assessment have been

specifically provided for by other sections

of the Act."

Thus if the intention or design of the statutory

provision was to protect the interest of the person adverse-

ly affected, by providing a remedy against the order or

decision any period of limitation prescribed with reference

to invoking such remedy shall be read as com-

872

mencing from the date of communication of the order. But if

it is a limitation for a competent authority to make an

order the date of exercise of that power and in the case of

exercise of suo moto power over the subordinate authorities'

orders, the date on which such power was exercised by making

an order are the relevant dates for determining the

limitation. The ratio of this distinction may also be found-

ed on the principle that the Government is bound by the

proceedings of its officers but persons affected are not

concluded by the decision.

Section 35E comes under the latter category of an au-

thority exercising its own powers under the Act. It is not

correct to equate the Board, as contended by Sri Gaurishan-

kar Murthy, to one of the two parties to a quasi-judicial

proceeding before the Collector and the Board's right under

Section 35E to the exercise of the right of appeal by an

aggrieved assessee from an order passed to its prejudice.

The power under Section 35E is a power of superintendence

conferred on a superior authority to ensure that the subor-

dinate officers exercise their powers under the Act correct-

ly and properly. Where a time is limited for the purposes by

the statute, such power, as under Section 33A(2) of the

Indian Income-tax Act, 1922 referred to in Muthia Chettiar

(supra), should be exercised within the specified period

from the date of the order sought to be reconsidered. To

hold to the contrary would be inequitable and will also

introduce uncertainties into the administration of the Act

for the following reason. There appears to be no provision

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in the Act requiring the endorsement, by a Collector, of all

orders passed by him to the Board. If there is such a prac-

tice in fact or requirement in law, the period of one year

from the date of the order is more than adequate to ensure

action in appropriate cases particularly in comparison with

the much shorter period an assessee has within which to

exercise his right of appeal. If, on the other hand, there

is no such requirement or practice and the period within

which the Board can interfere is left to depend on the off-

chance of the Board coming to know of the existence of a

particular order at some point of time, however, distant,

only administrative chaos can result. We are, therefore, of

the opinion that the period of one year fixed under sub-

section (3) of Section 35E of the Act should be given its

literal meaning and so construed the impugned direction of

the Board was beyond the period of limitation prescribed

therein and therefore invalid and ineffective.

For the foregoing. reasons we are of the view that the

Tribunal was right in holding that the application before

them was out of time. This appeal is accordingly dismissed.

There will be no order as to costs.

V.P.R. Appeal dis-

missed.

873