By TIOL News Service

MUMBAI, DEC 31, 2014: THE Petitioner is engaged inter alia in the business of operation of duty free shops at airports and seaports in India.

The case of the Petitioner is that it was granted licence by the Jurisdictional Commissioner of Customs to operate such shops and that has been renewed from time to time. The Petitioner submits that in pursuance of an approval from the Customs Department, the duty free shop/warehouse is declared as bonded store. A dispute arose under a letter of demand dated 1st April, 2011, after which, the Department stopped operations of the Petitioner and did not issue the licence.

The dispute was brought before the High Court by way of Writ Petition and when it was being contested, the third Respondent issued the licence to the Petitioner subject to an undertaking. The Petitioner is abiding by that undertaking and regularly paying the MOT charges.

Nonetheless, a demand notice was issued asking the petitioner to pay the sum of Rs.13,50,001/- as MOT.

In the Writ Petition No. 1705 of 2011 the High Court passed the following order on 30.11.2011/11.12.2011 -

"In these proceedings under Article 226 of the Constitution, the Petitioner has challenged a demand notice dated 1 April 2011 issued by the First Respondent for the recovery of Merchant Overtime Charges. The demand notice has now merged with an order of assessment which has been passed on 27 June 2011. The order of the Assessing Officer dated 27 June 2011 is subject to an Appeal before the Commissioner (Appeals). In the event, that an application for condonation of delay is made before the Appellate Authority, inter alia, on the ground that the Petitioner was bonafide pursuing proceedings before this Court, such an application shall be considered duly and sympathetically.

2. The Petitioner has also sought a direction for the renewal of a licence which has since been renewed. Hence, the relief sought in that respect stands worked out. As regards the claim for refund of cost recovery charges, it would be open to the Petitioner to pursue the claim in accordance with law with the authorities.

3. We accordingly dispose of the Petition leaving it open to the Petitioner to pursue the remedies available in law. There shall be no order as to costs."

Consequently, the Petitioner, on 12th December, 2011, preferred an Appeal u/s 128(1) of the CA, 1962 before the Commissioner of Customs (Appeals). Along with the same, it filed two applications, one seeking condonation of delay and the other for stay of the recovery of the amount pursuant to the order dated 27th June, 2011.

The application for condonation of delay was dismissed by the Commissioner (A) by order dated 27th December, 2012 and this order is now challenged before the High Court.

It is submitted by the petitioner that the said application for COD ought to have been considered sympathetically and reasonably, because the delay in filing the same has been occasioned on account of the Petitioner being advised to file a Writ Petition under Article 226 of the Constitution of India in this Court to challenge the order in original dated 27th June, 2011. And only when the High Court passed the order that the Writ Petition cannot be entertained, as there is an alternate equally efficacious remedy of a statutory Appeal, that the Petitioner became aware of the legal provision and the time limit within which the said Appeal has to be filed; that the period/time, during which this Writ Petition was pending, ought to have been excluded by applying section 14(2) of the Limitation Act, 1963 or principle analogous thereto. Nearly two dozen case laws were relied upon to buttress this stand.

The counsel for the Revenue submitted that there is no merit in the Writ Petition inasmuch as the order-in-original was passed on 27th June, 2011, the period of limitation under the section 128(1) of the CA, 1962 expired after 60 days on 27th August, 2011; the further period of 30 days expired on 27th September, 2011; that mere pendency of a Writ Petition does not halt or stop the running of time; that if the Petitioner does not avail of the statutory remedy within time and the Commissioner (Appeals) having no further power to condone the delay, then, no assistance can be derived from section 5 of the Limitation Act, 1963 or section 14 of the said Act. In fine, it is submitted that the impugned order has been passed by the Commissioner (Appeals) strictly within the parameters determined by law and hence the Writ Petition is devoid of merits and must be dismissed.

The High Court observed -

++ A careful perusal of the dates and events would denote that the Petitioner does not contend that this Court, while entertaining the Writ Petition, had granted any interim or adinterim relief staying the operation, implementation or execution of the order passed by the Respondent No. 3 on 27th June, 2011. In other words, the operation and effect of the order-in-original was never stayed.

++ In the above circumstances, the time stipulated by subsection (1) of section 128 of the Customs Act, 1962 never stopped, but was allowed to run its course. In fact the Petitioner allowed the period of 60 days to expire and then filed the Writ Petition being Writ Petition No. 1705 of 2011 in this Court. Even that Writ Petition, on the own saying of the Petitioner, was not filed within the period of 60 days but thereafter.

++ The Commissioner was empowered to allow presentation of the Appeal within a further period of 30 days on recording his satisfaction that the Appellant was prevented by sufficient cause from presenting the Appeal within the aforesaid period of 60 days. We do not find in the present case that the Appeal was presented within 60 days. It was not even presented thereafter within 30 days. The Petitioner/Appellant waited till 12th December, 2011 to present the Appeal. If the Petitioner waited for the outcome of a Writ Petition in this Court and in the meanwhile allowed the time to run, then, it has to blame itself.

++ The Petitioner cannot fault the order of the Commissioner (Appeals) refusing to condone delay of 108 days. The Commissioner (Appeals) held, in our view, that she had no power to condone the delay beyond 90 days. The order of rejection of the Appeal as time barred, therefore, cannot be questioned on the ground of failure to exercise the jurisdiction vested in the Commissioner (Appeals) by law. The Commissioner acted within her powers and the impugned order therefore cannot be termed as contrary to law.

To the alternate submission made by the Petitioner that by taking recourse to s.5, section 14(2) of the Limitation Act, 1963, the time, during which the Petitioner was bonafide prosecuting another civil proceeding, namely under Article 226 of the Constitution of India, be excluded, the High Court, after reproducing the three sections of the Limitation Act i.e. section 5, section 14 and section 29 observed -

++ Section 5 of the Limitation Act, 1963 only extends the prescribed period of limitation for filing of an Appeal or Application, other than the one under Order XXI of the Code of Civil Procedure, 1908 and such proceeding can be admitted after the prescribed period, if the Appellant or the Applicant satisfies the Court that he/she had sufficient cause for not preferring the Appeal or making the Application within such period. Thus, the prescribed period of limitation by law such as section 128(1) of the Customs Act, 1962 is extended in certain cases.

++ Thus, even if we assume for purpose of the present case that section 5 of the Limitation Act 1963 can be invoked and applied because of the language of the proviso to subsection (1) of section 128 of the Customs Act, 1962, still, its application is restricted in the sense that by taking recourse to section 5 the Commissioner (Appeals) can allow presentation of the Appeal only within further period of 30 days, but not thereafter.

++ In our case, beyond further period of 30 days and total period of 90 days, there is no further application of section 5 of the Limitation Act, 1963. The extent to which section 5 can be applied having been enumerated and set out in section 128(1) of the Customs Act, 1963, which is a special law, then, for the further delay in filing or presenting the Appeal, applicability of section 5 of the Limitation Act, 1963 is expressly ruled out. The language of section 128(1), which is a special law, therefore cannot be ignored or brushed aside.

++ We rely upon the peculiar facts of this case and the order passed by this Court in the Petitioner's Writ Petition and assume that the Petitioner can invoke subsection (2) of section 14 of the Limitation Act, 1963. We presume that the ingredients thereof have been satisfied. Still, we cannot condone the delay with the aid of this section or subsection of the Limitation Act, 1963, as that provision cannot override section 128(1) of the Customs Act, 1962. We are in agreement ... that the Petitioner cannot get over the period of limitation under subsection (1) of section 128 of the Customs Act, 1962 with the aid of subsection (2) of section 14 of the Limitation Act, 1963.
Thereafter the High Court distinguished the decisions cited by the petitioner and after noting the apex court decision in Union of India vs. West Coast Paper Mills Ltd. 2004-TIOL-14-SC-LMT-LB observed -

"A Writ Petition's pendency will not stand on the same footing always. If the time has not stopped running, then, none of the principles relied upon by the Petitioner will assist it. As we have noted above, in this case, Writ Petition was pending in this Court, but neither it was entertained nor any interim relief was granted, leave alone admitting it. If the Petitioner decides not to approach the appropriate, correct or right Forum, but tries to bypass it by filing a Writ Petition and allows the time to run, then, it cannot request this Court in its discretionary and equitable jurisdiction to set right a wrong, for which it is itself responsible. In other words, the Petitioner is trying to take advantage of its own wrong committed earlier in approaching this Court, though knowing fully well that it had refused to exercise jurisdiction, because the alternate efficacious remedy of Appeal to the Commissioner of Customs was provided by law. The Petitioner did not take steps to file such an Appeal even during the pendency of the Writ Petition and allowed the time to run. In these circumstances, we cannot extend any benefit, as that would allow the Petitioner to take advantage of its own wrong. As a result of the above discussion, the Writ Petition fails...."

The petitions were dismissed.

(See 2014-TIOL-2436-HC-MUM-CUS)