TMI Blog2021 (2) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... NER OF CUSTOMS (AIRPORT GENERAL) [ 2019 (5) TMI 80 - CESTAT NEW DELHI] . The Supreme Court in the aforesaid two decisions pointed out that when a statute distinguishes between issue of notice and service of notice by using both the expressions in the statute, the requirement of issue of notice would be satisfied when such notice is actually issued and not when it is served. The Supreme Court also pointed out that when there is a limitation for an authority to make an order, date of exercise of that power is the relevant date for exercise of such power and the decision of such authority comes into force or becomes operative and becomes an effective order on the date when it is signed. Thus, the date of communication of the order to the party is not relevant for the purpose of determination whether the power has been exercised within the prescribed time. However, if the statutory provision protects the interest of the person adversely affected by providing a remedy against the order, the period of limitation would commence from the date of communication of the order. Thus, in view of the aforesaid decisions of the Supreme Court in R.K. Upadhyaya and M.M. Rubber and Company, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or regulation 20(1) of the 2013 Regulations is mandatory in nature. - CUSTOM APPEAL NO. 50618 of 2019 - INTERIM ORDER No.: 1/2021 - Dated:- 18-2-2021 - MR. JUSTICE DILIP GUPTA, PRESIDENT Mr. Awneet Singh, Advocate for the Appellant Mr. Sunil Kumar, Authorised Representative for the Respondent ORDER The two Members constituting the Division Bench hearing this appeal have made the following reference: (i) Whether the word issue in Regulation 20(1) CBLR, 2013 should include serve . (ii) Whether the time limit prescribed in Regulation 20(1) CBLR 2013 is mandatory or directory in nature. 2. Though the Division Bench had observed that the matter may be referred to a Larger Bench, but by an order dated January 29, 2021, the matter was directed to be placed before the President as it was apparent from a perusal of the order that there was a difference of opinion between the two Members constituting the Division Bench. The learned Counsel for the Appellant and the learned Authorised Representative of the Department have not raised objection to the order dated January 29, 2021. 3. The issue that arises for consideration is whether the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regulation 17(1) only requires issue of the notice to the Customs Broker within ninety days from the date of receipt of the offence report and this provision was complied with since the notice was signed and also tendered to the Postal Department on August 14, 2018 for service upon the appellant. 6. The learned Member (Judicial) agreed with the contention advanced on behalf of the Department that regulation 17(1) only requires issuance of notice in writing to the Customs Broker within a period of ninety days from the date of receipt of the offence report and does not require that notice should also be served within the aforesaid period of ninety days. The learned Member (Technical), however, took the view that the notice contemplated under regulation 17(1) should be served on the Customs Broker within a period of ninety days from the date of receipt of the offence report. 7. In order to appreciate the contentions advanced by the learned Counsel of the appellant and the learned Authorized Representative of the Department, it would be necessary to reproduce the relevant provisions of the 2018 Regulations. 8. Regulation 3 provides that no person shall carry on busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent has been received within the time-limit specified in the notice referred to in sub-regulation (1), direct the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, to inquire into the grounds which are not admitted by the Customs Broker. (3) xxxxxxxxxxxxx (4) xxxxxxxxxxxxx (5) At the conclusion of the inquiry, the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, shall prepare a report of the inquiry and after recording his findings thereon submit the report within a period of ninety days from the date of issue of a notice under sub-regulation (1). (6) The Principal Commissioner or Commissioner of Customs shall furnish to the Customs Broker a copy of the report of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, and shall require the Customs Broker to submit, within the specified period not being less than thirty days, any representation that he may wish to make against the said report. (7) The Principal Commissioner or Commissioner of Customs shall, after considering the report of the inquiry and the representation thereon, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry, the Deputy Commissioner shall prepare a report of the enquiry and after recording his findings thereon submit the report within a period of ninety days from the date of issue of notice under regulation 17(1). Regulation 17(7) provides that the Commissioner of Customs shall, after considering the report of the enquiry and the representation thereon pass such orders as he deems fit within ninety days from the date of submission of the report by the Assistant Commissioner. 15. It is, therefore, seen that different expressions have been used in the said regulation 17 like shall issue a notice , submit the report within a period of ninety days from the date of issue of a notice under sub-regulation (1) , and from the date of submission of the report . Different meanings will have to be assigned to the words issue and submit , more particularly, when under regulation 17(5), a report has to be submitted within a period of ninety days from the date of issue of the notice under regulation 17(1). 16. The use of the expression issue in regulation 17(1) makes sense for the reason that certainty has to be attached when limitation is involved. The Commissioner is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Not only in the notification dated 7-9-1981 but also in the notification dated 5-6-1985 paddy husk is not mentioned. By reason of notification dated 6-6-1996 paddy husk was inserted. Even then, the rice husk was not deleted. No explanation was offered therefor. Both rice husk and paddy husk, thus, found place in the notification. Indisputably, therefore, paddy husk was subjected to for the first time by reason of the said notification dated 6-6-1996. Yet again, while giving a purported new look to the entry in the notification dated 15-1-2000, the words rice husk and paddy husk have respectively been mentioned. Even then no attempt was made to issue any clarification. Two expressions having been used ordinarily two different meanings should be assigned thereto. If by reason of a notification, taxes are sought to be imposed upon a new commodity applying Heydon s Rules (3 Co. Rep: 7a; 76 E.R. 637), it must be held that the mischief was sought to be remedied thereby. It is, therefore, difficult to agree with Mr. Gupta that rice husk and paddy husk denote the same commodity. 21. The 2018 Regulations have been framed under section 146 (2) of the Customs Act. The prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e person to whom it is issued and if such mode is not practicable for any reason, then, by affixing a copy thereof on the notice board of the office or uploading on the official website, if any. (emphasis supplied) 25. A perusal of the aforesaid amended section 153 shows that a notice may be served by registered post to the person for whom it is issued or by sending it to the e-mail address provided by the person to whom it is issued . 26. Sub-sections (c) and (d) of section 153 (1) of the Customs Act also use the expression the person to whom it is issued . 27. In this context it would also be pertinent to refer to section 28 of the Customs Act. Section 28(1) uses the expression serve notice, while section 28(3) uses the expression issue the notice . Section 28(4) uses the expression serve notice and section 28(9) uses the expression within one year from the date of notice . Reference also needs to be made to section 110(2) of the Customs Act. The relevant words are no notice in respect thereof is given . 28. The Customs Act, it is seen, refers to serve notice, issue the notice and notice is given . 29. The Courts have he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that as the said decision has attained finality since no appeal has been filed by the Department against this order, the Department cannot take a contrary stand in this appeal. Learned Counsel categorically stated that this statement that the decision of the Tribunal in R.P Cargo Handling has attained finality has been made on the basis of instructions received from the appellant. 34. Learned Authorized Representative of the Department took time to verify this statement. A communication dated February 5, 2021 was sent by the Authorized Representative mentioning therein that the field formation of the Department had telephonically informed the Authorized Representative that the decision of the Tribunal in R.P Cargo Handling was challenged by the Department before the Delhi High Court in an appeal and written confirmation would be submitted on February 8, 2021. The written confirmation has been placed. It mentions that Customs Appeal No. CUS/AA 223/2019 is pending in the Delhi High Court. Copies of the orders dated September 27, 2019, September thirty, 2019 and October 15, 2019 passed by the High Court have also been placed. The order dated September 27, 2019 passed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Kundan Lal Behari Lal to hold that issue would mean serve. It would, therefore, have to be examined whether the decision of the Supreme Court in Banarsi Debi has been explained or distinguished subsequently by the Supreme Court. 42. In R.K. Upadhyaya vs. Shanabhai P. Patel [ AIR 1987 SC 1378 ], the Supreme Court very elaborately explained the difference between issue of notice and service of notice. The provisions under consideration were sections 148 and 149 of the Income Tax Act 1961. They are reproduced below:- 148(1) --Before making the assessment, reassessment or recomputation under section 147, the Income-tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 139; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section. (2)....................................... 149(1) -- No notice under section 148 shall be issued , (a)..................................... (b) In cases falling under clause (b) of section 147, at any time after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a condition precedent to making of the order of assessment. The High Court in our opinion lost sight of the distinction and under a wrong basis felt bound by the judgment in 53 ITR 100. As the Income-tax Officer had issued notice within limitations, the appeal is allowed and the order of the High Court is vacated. (emphasis supplied) 44. It is clear from the aforesaid decision of the Supreme Court that when section 149(1) of the Income Tax Act, 1961 provides that no notice under section 148 shall be issued in cases falling under section 147(b) at any time after the expiry of four years from the end of the relevant assessment year, the requirement is satisfied if the notice is actually issued within this time and service of notice is not a condition precedent. In fact, service of notice is a condition precedent to making an order of reassessment under section 148. The Supreme Court, therefore, distinguished its earlier decision in Banarsi Debi. 45. It would also be relevant to refer to a decision of the Supreme Court in The Collector of Central Excise vs. M/s M.M. Rubber Co. Tamil Nadu [ AIR 1991 SC 2141 ]. The issue that arose before the Supreme Court w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 seeking the remedy the limitation starts from the date on which the order was communicated to him on the date on w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (emphasis supplied) 46. To appreciate the aforesaid decision of the Supreme Court, it would be necessary to note the essential facts. The Collector of Central Excise, by order dated November 28, 1984, dropped the proceedings. A copy of this order was dispatched to the assessee, which was received by him on December 21, 1984. The Board, on December 11, 1985, directed the Collector of Central Excise under section 35E (1) to apply to the Tribunal for correct determination of the points and the Collector filed an application before the Tribunal, as provided under section 35E (4). Sub-section (3) of section 35E provides that no order shall be made after the expiry of one year fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation is prescribed with reference to the issuance of the notice. The scheme of the Act is that an Income-lax Officer must first have reason to believe that income chargeable to tax has escaped assessment either by reason of the omission or failure on the part of the assessee to make a return or to disclose fully and truly all material facts or in consequence of information in his possession. He is then required to record his reasons. He is then required to issue the notice prescribed by Section 148 within the period prescribed in Section 149. This notice must be served before the Income-tax Officer can proceed to make the assessment or re-assessment under S, 147. That is the scheme of the present Act and there is no reason why the expression issued occurring in Section 149 should not be given its natural meaning instead of the strained, wider meaning served . The departure from the old provision in Section 34 of the 1922 Act is a conscious departure and it is our duty to give full effect to it. (emphasis supplied) 48. The decision of the Delhi High Court in Purushottam Jajodia vs. Directorate of Revenue [ Writ petition No. 416 of 2014 decided on July 24, 2014. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed by the Supreme Court in R.K. Upadhyaya. 51. It, therefore, clearly transpires that the decision of the Supreme Court in R.K. Upadhyaya and M.M. Rubber and Company and the decision of the Full Bench of the Punjab and Haryana High Court in Jai Hanuman Trading Company were not brought to the notice of the Bench deciding R. P Cargo Handling . The Supreme Court in the aforesaid two decisions pointed out that when a statute distinguishes between issue of notice and service of notice by using both the expressions in the statute, the requirement of issue of notice would be satisfied when such notice is actually issued and not when it is served. The Supreme Court also pointed out that when there is a limitation for an authority to make an order, date of exercise of that power is the relevant date for exercise of such power and the decision of such authority comes into force or becomes operative and becomes an effective order on the date when it is signed. Thus, the date of communication of the order to the party is not relevant for the purpose of determination whether the power has been exercised within the prescribed time. However, if the statutory provision protec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectory was examined by the Delhi High Court in Indair Carrier Pvt. Ltd. vs Commissioner of Customs (General) and Ors. [ 2016 (337) ELT 41(Del) ] The provisions of the Customs House Agents Licensing Regulations, 2004 [2004 Regulations ] had come up for interpretation. Regulation 22(1) is reproduced below:- 22. Procedure for suspending or revoking licence under Regulation 20 . - (1) The Commissioner of Customs shall issue a notice in writing to the Customs House Agent within ninety days from the date of receipt of offence report, stating the grounds on which it is proposed to suspend or revoke the licence and requiring the said Customs House Agent to submit within thirty days to the Deputy Commissioner of Customs or Assistant Commissioner of Customs nominated by him, a written statement of defense and also to specify in the said statement whether the Customs House Agent desires to be heard in person by the said Deputy Commissioner of Customs or Assistant Commissioner of Customs : Provided that the procedure prescribed in regulation 22 shall not apply in respect of the provisions contained in sub-regulation (2) to regulation 20. 57. The preliminary report conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thirty days in both the cases under the Regulations. 7. This Court has consistently emphasised the mandatory nature of the aforementioned time-limits in several of its decisions . These include the decision in Schankar Clearing Forwarding v. C.C. (Import General) - 2012 (283) E.L.T. 349 (Del.), the order dated 25th April, 2016 passed by this Court in Customs Appeal No. 14/2016 (Commissioner of Customs (General) v. S.K. Logistics) and the order dated 29th April, 2016 in W.P. (C) No. thirty71/2015 (M/s. Sunil Dutt v. Commissioner of Customs (General) New Customs House). The same position has been reiterated by the Madras High Court in Sanco Trans Ltd. v. Commissioner of Customs, Sea Port/Imports, Chennai - 2015 (322) E.L.T. 170 (Mad.) and Commissioner v. Eltece Associates - 2016 (334) E.L.T. A50 (Mad.). 8. Consequently, the Court is unable to sustain the directions issued by the CESTAT in the impugned order dated 11th March, 2015, permitting the Respondents to proceed with and complete the inquiry within a further period of 60 days from the date of the impugned order of the CESTAT despite noting that the mandatory time-limits under the CHALR had not been adhered to . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 22(1) of the 2004 Regulations are mandatory in nature and the relevant paragraphs are as follows:- 13. This Court has in a series of judgments dealt with the question of mandatory nature of time limits set out in CHALR, 2004 and the corresponding provisions under the CBLR, 2013. This Court has in the following judgments reiterated the mandatory nature of the time limits set out in the CHALR, 2004 and corresponding provisions in the CBLR, 2013: (i) Order dated 29th April, 2016 in WP(C) thirty71/2015 [Mr. Sunil Dutt, through Proprietor v. Commissioner of Customs (General), New Customs House] [2016 (337) E.L.T. 162 (Del.)]; (ii) Order dated 12th May, 2016 in CUSAA 25/2015 [Indair Carrier Pvt. Ltd. v. Commissioner of Customs (General)] [2016 (337) E.L.T. 41 (Del.)]; (iii) Order dated 24th May, 2016 in WP(C) No. 1734 of 2016 [HLPL Global Logistics Pvt. Ltd. v. TheCommissioner of Customs (General)] [2016 (338) E.L.T. 365 (Del.)]; (iv) Order dated 1st June, 2016 in WP(C) No. 5thirty0 of 2016 [Impexnet Logistic v. Commissioner of Customs (General)] [2016 (338) E.L.T. 347 (Del.)]. 15. The SCN dated 14th October, 2011 that was issued to the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Customs. 63. After taking note of the earlier decision of the Madras High Court in The Commissioner of Customs, Chennai vs. CESTAT and Others [ 2014 (310) ELT 673 ] , the Madras High Court in Saro International held that the time limit prescribed under regulation 20(1) of the 2013 Regulations is mandatory. The observations of the High Court are as follows:- 24. The Customs Broker Licensing Regulations, 2013 were promulgated in exercise of powers conferred under sub-section (2) of Section 146 of the Customs Act, 1962. It is only under the regulations, the licence is granted and the regulations also contain various provisions to regulate the affairs of the customs broker including the revocation of the licence. The regulations contemplate action against the customs broker de hors the provisions under the Customs Act. Therefore, the regulations cannot be treated as subordinate legislation. Moreover, every implementing authority of any fiscal statute is only performing a public duty. Therefore, it cannot be said that the provision is to be termed as directory just because its adherence is in the nature of performance of a public duty. What is to be considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddressed by the Board after field inspection and by a notification dated 8-4-2010, amendments prescribing time period for initiating action and completing proceedings was made. The same was given effect by notification dated 20-1- 2014. Whereas, under the CBLR, 2013 having found the necessity to prescribe a period, the Central Board, the statutory authority had included the same in the Regulations itself, when they were brought into force. Therefore, when a time limit is prescribed in Regulations, which empowers action under Regulation 18 by following the procedure in Regulation 20(1), the use of the term shall cannot be termed as 21 directory . Under such circumstances, the rule can only be termed as mandatory . 31. Therefore, this Court is of the view that the impugned show cause notice issued by the respondent is without jurisdiction, as it has been issued beyond the period prescribed in the regulations, which have statutory force and hence, not sustainable. (emphasis supplied) 64. Thus, the Delhi High Court and the Madras High Court, while dealing with the provisions of regulation 22(1) of the 2004 Regulations and regulation 20(1) of the 2013 Regulations, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the time line prescribed in the Regulation, is reasonable . This is the only way by which the provisions contained in Regulation 20 can be effectively implemented in the interest of both parties, namely, the Revenue and the Customs House Agent. (emphasis supplied) 67. This decision of the Bombay High Court was subsequently followed by the Bombay High Court in Commissioner of Customs (General) vs. Razvi Shipping Agency [ 2019 (368) ELT 850 (Bom) ] . 68. The Calcutta High Court in OTA Fallons Forwarders Pvt Ltd. vs. Union of India [ 2018 (362) ELT 947 (Cal) ] , after referring to the aforesaid judgments of the Delhi High Court, the Madras High Court and the Bombay High Court followed the view expressed by the Bombay High Court and held that the time limit prescribed in regulation 22(1) of the 2004 Regulations or regulation 20(1) of the 2013 Regulations is not mandatory in nature. Paragraph 16 of the judgment is reproduced below:- 16. Regulations of 2004 as well as the Regulations of 2013 are products of exercise of powers under Section 146 of the Customs Act, 1962. Both the Regulations regulate the affairs of a Customs House Agent, subsequently kno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be followed. Fortunately, this issue has been settled by a Larger Bench (Five Member Bench) of the Tribunal in Collector of Central Excise, Chandigarh vs. Kashmir Conductors [ 1997(96) ELT 257 (Tri.) ] . One issue that was addressed by the Larger Bench was what should be done when the Tribunal is faced with conflicting decisions of High Courts. The five member Larger Bench of the Tribunal held that if the jurisdictional High Court has taken a particular view on an interpretation or proposition of law, that view has to be followed, but if the jurisdictional High Court has not expressed any view in regard to the subject matter and there are conflicting views of other High Courts, then the Tribunal will be free to formulate its own view. The relevant paragraphs of the decision of the Larger Bench are reproduced below:- 10. The question as to how the Tribunal should proceed in the face of conflicting decisions of High Courts has been considered in M/s. Atma Steels P. Ltd. and others v. Collector of Central Excise, Chandigarh reported in l984 (17) E.L.T. 331 wherein the Larger Bench consisting of five Members held that, in view of its All India jurisdiction and peculiar f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the absence of a decision by the jurisdictional High Court with regard to constitutionality of a provisions. The Tribunal has held that since the adjudication of vires of a provision of a statute or Notification is outside the jurisdiction of the Tribunal and the jurisdictional High Court i.e., the High Court having jurisdiction over the authority and the assessee, has not struck down the provision or Notification as ultra vires, the Tribunal has to follow the same and the assessee is entitled to take the stand that he is entitled to the benefit of the particular provision or Notification since the jurisdictional High Court has not struck it down, even though some other High Court may have done so. In case the conflict of decisions among High Courts does not relate to vires of any provision or Notification, it has been held that the Tribunal has to proceed in accordance with the decision in Atma Steels P. Ltd. in the light of the decision of Supreme Court in the East India Commercial Company case i.e. where the jurisdictional High Court has taken a particular view on interpretation or proposition of law, that view has to be followed in cases within such jurisdiction. If th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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