INDIAN TEXTILE PAPER TUBE CO. LTD. versus COLLECTOR OF CUSTOMS, MADRAS

Citation: [1990] 3 S.C.R. 96 · Decided: 04-05-1990 · Supreme Court of India · Bench: SABYASACHI MUKHERJI

cites 1 · see the full citation network in Lexace

Judgment (excerpt)

A 
INDIAN TEXTILE PAPER TUBE CO. LTD. 
v. 
COLLECTOR OF CUSTOMS, MADRAS 
MAY 4, 1990 
B 
[SABYASACHJ MUKHARJI, CJ., P.B. SAWANT AND M.M. 
PUNCHHI, JJ.] 
Customs Act, 1962: Sections 28( 1), (3) and 131( 1), (3), (5)-Suo 
motu revision by Central Government to annul/modify order of 
erroneous refund of duty-Period of limitation-What is. 
Mere order granting refund is not actual refund-Limitation to 
run from date of actual refund. 
The appellant imported Top Line Tube Winder Endless Belts 
which were assessed to duty under heading 40.05 /16(3) at 40% plus 
D 
countervailing duty at the rate of 25% under Item 16-A(4) of the 
Customs Tariff Act, 1975. 
E 
F 
Thereafter, the appellant made an application for refund of the 
excess of duty so charged contending that the goods were in fact liable to 
be classified under heading 59 .16 /l 7, and without countervailing duty. 
The Assistant Collector rejected the claim by his order dated 
October 12, 1979 and against it the appellant preferred an appeal under 
Section 128 of the Customs Act, 1962 to the Appellate Collector who 
allowed the appeal holding that the goods were classifiable under 
heading 59.16/17. 
The Government, however, issued a suo motu show cause notice 
dated November 21, 1981 to the appellant under Section 131(3), asking 
the appellant to show cause as to why the goods should not ~be classified 
nnder heading 39.07 which attracted duty at 100% ad valorem, and also 
as to why the order dated May 2, 1981 passed by the Appellate Collector 
G 
shonld not be annulled. 
Against the aforesaid show cause, the appellant preferred an 
appeal to the Customs Excise and Gold Control (Appellate) Tribunal, 
contending that the show cause notice was barred by limitation under 
sub-section (5) of Section 131 read with Section 28 of the Act, which was 
H 
six months from the date of short-levy, and in any case six months from 
the date of the Appellate Order. 
96 
__ /' 
)"--
TEXTILE PAPER TUBE v. COLLECTOR OF CUSTOMS 
97 
The Tribunal dismissed the appeal holding that the notice was in 
A 
time, and that the assessment proposed to be made under heading 39.07 
was proper, and set aside the order of the Appellate Collector allowing 
the revision. 
In the appeal to this Court, the question for consideration was: 
whether the Central Government violated the bar of limitation while 
B 
exercising suo motu revisional powers under Section 131 of the Customs 
Act, 1962. 
Dismissing the appeal by a 2: I Majority, this Court, 
HELD: (Sabyasachi Mukharji, CJ. and P.B. Sawant, J.-Per 
Sawant, J.) 
I. The provisions of Section 131(5) and therefore the limitation 
laid down in section 28 of the Act do not apply to the action taken by the 
government under section 131(3). [103D] 
c 
Geep Flashlight Industries Ltd. v. Union of India, [1977] I SCR 
D 
983, followed. 
2. Even if it was held that the limitation as laid down in Section 28 
would apply to the initiation of action under Section 131(3), since the 
appellate order in the instant case, has only allowed the appeal of the 
appellant declaring him as being entitled to the refund, and no refund 
E 
has yet been made the action of the Government under section 131(3) is 
clearly not barred by limitation. [102G-H] 
3. In the case of erroneous refund, the notice under section 28 of 
the Act has to be given within six months from the date of 'actual' 
refund. lf no refund has in fact been made, limitation cannot be said to 
F 
arise inasmuch as the 'relevant ·date' under section 28 in the case of 
erroneous- refund ·speaks of the date of refund. The Order granting 
refund is not actual refund. Admittedly, in the instant case no refund 
has bee.n made to the appellant under the appellate custon.s' order 
dated May 2, 1981. Hence even if it is held that the provisions of sub-· 
section (3) of Section 131 are governed by sub-section (5) thereof and, 
G 
therefore, the limitation laid down under section 28 of the Act applied 
to the action of the Government under section 131(3), the present show 
cause notice is not barred by limitation. [103C-D] 
4. It is clear from the provisions of sub-section (3) of Section 131 
that it does not give power to the Central Government to act suo motu 
H 
A 
B 
c 
98 
SUPREME COURT REPORTS 
[ 1990] 3 S.C.R. 
to annul or modify an order passed by the original assessing authority. 
On the other hand, the provisions of sub-section (5) of Section 131 
contemplate proceedings against actions of the original assessin

Excerpt shown. Read the full judgment & AI analysis in Lexace.