By TIOL News Service

NEW DELHI, APR 28, 2015: THE appellant is engaged in ship breaking activity at Alang Ship Breaking Yard. The appellant imported a vessel, namely, M.V . Olinda , for the purpose of breaking the same, and filed a Bill of Entry when the vessel was imported on 7.2.1992. It declared in the said Bill of Entry that the Light Displacement Tonnage of the vessel was 7009 metric tons. On 19.2.1992, the appellant was informed by the Superintendent of Customs and Central Excise Alang that the Light Displacement Tonnage of the ship is actually 8570 tons and that customs duty was to be levied on this tonnage. On 3.3.1992, the appellant cleared the vessel on payment of customs duty on the basis of 7009 metric tons and executed a bank guarantee for Rs.19 ,90,275 /- being the difference in customs duty on 1561 metric tons. On 25.3.1992, the Collector of Customs, Rajkot, directed the Assistant Collector, Bhavnagar to encash the bank guarantee furnished by the appellant. On 2.4.1992, the Superintendent of Customs and Central Excise sent a letter to the appellant communicating the decision of the Collector, as aforesaid. The bank guarantee was duly encashed on 3.4.1992. After protesting against the said illegal action of the Department in encashing the bank guarantee, the appellant preferred an appeal against the Superintendent's letter dated 2.4.1992 and the Collector's order dated 25.3.1992 before CEGAT . On 23.6.1998, the Appellate Tribunal allowed the appeal and set aside the order of the Collector dated 25.3.1992. In the year 2000, the Department preferred an appeal before the Supreme Court. On 12.3.2003, the Supreme Court allowed the appeal holding:

the reasoning of CEGAT cannot be sustained. The decision taken by the Collector was not taken in his capacity as Collector (Appeals). Also the order by which respondent is aggrieved is the order passed by the Superintendent. An appeal against that order has to be filed before the Commissioner (Appeals) under Section 128. By virtue of Section 129-A, CEGAT has no jurisdiction to entertain such an appeal.

After this judgment, on 23.5.2003, the appellant filed an appeal before the Commissioner (Appeals) against the order passed by the Superintendent, Customs dated 2.4.1992 which was dismissed on 27.10.2003 by the Commissioner of Customs (Appeals) on the ground of delay stating that the appeal had been filed way beyond the period of 60 days plus 30 days provided for in Section 128 of the Customs Act. Against this order, CESTAT dismissed the appeal of the appellant stating that the Commissioner (Appeals) had no power to condone delay beyond the period specified in Section 128.

The appellant is before the Supreme Court.

Appellant argued that the entire period starting from 25.3.1992 up till 12.3.2003 ought to be excluded by applying Section 14 of the Limitation Act. Section 14 (Exclusion of time of proceeding bona fide in court without jurisdiction ) of the Limitation Act would apply to exclude this period from the period of 90 days allowed in filing an appeal filed to the Collector (Appeals) inasmuch as vide Section 29 (2) of the Limitation Act Section 14 of the Limitation Act would also apply to Tribunals set up under special or local Acts. The entire period with which he was prosecuting, with due diligence, the abortive appeal filed before CEGAT should be excluded, which would include the period even prior to 22.6.1992 when the abortive appeal was filed. As an alternative submission, on the assumption that Section 14 applied only to Courts and not to Tribunals, it was submitted that the principle of Section 14 would then apply. According to him, Section 128 of the Customs Act before its amendment in 2001 would be attracted on the facts of this case giving him a period of 90 days plus an extended period of a further period of 90 days within which the present appeal could be filed. This being the case, on an application of Section 14, the appeal would be filed with no delay at all even if the period from 3.4.1992 to 22.6.1992 and 12.3.2003 to 23.5.2003 is to be taken into account, as that would be less than 180 days given to file the appeal under the old Section 128.

Department argued that Section 128 of the Customs Act excluded the application of Section 14 of the Limitation Act in that the scheme of the Section is that only a limited period should be given to an assessee beyond which the appeal would become time barred. In the present case, Section 128 as amended post 2001 would apply to the facts of this case and on the appellant's own showing the appeal is out of time by eleven and a half years. Section 128 only gives the appellant 60 days plus another 30 days which have long gone. It is also argued that Section 14 of the Limitation Act would not apply to Tribunals but only to Courts, and the Collector (Appeals) was at best a quasi-judicial Tribunal. Further, according to him, no question of any principle of section 14 would get attracted. In fact, there is no pleading qua Section 14 at all - the only pleading is for condonation of delay and not for exclusion of time. Section 14 requires that five necessary ingredients must be satisfied on facts before it can be attracted. The appellant has neither pleaded nor proved any of these ingredients.

Whether the Principle of Section 14 of the Limitation Act would apply to an appeal filed under Section 128 Customs Act: The Supreme Court has held that the Limitation Act including Section 14 would not apply to appeals filed before a quasi-judicial Tribunal such as the Collector (Appeals) mentioned in Section 128 of the Customs Act. However, this does not conclude the issue. There is authority for the proposition that even where Section 14 may not apply, the principles on which Section 14 is based, being principles which advance the cause of justice, would nevertheless apply.

The Supreme Court observed, "Suppose, in a given case, the person entitled to institute a proceeding not governed by the Limitation Act were a minor, a lunatic or an idiot, would he not be entitled to institute such proceedings after such disability has ceased, for otherwise he would be barred by the period of limitation contained in the particular statute governing his rights. This Section again is a pointer to the fact that courts always lean in favour of advancing the cause of justice where a clear case is made out for so doing."

Is Section 128 a complete code by itself which necessarily excludes the application of Section 14 of the Limitation Act ? . There is a vital distinction between extending time and condoning delay. Like Section 34 of the Arbitration Act, Section 128 of the Customs Act is a Section which lays down that delay cannot be condoned beyond a certain period. Like Section 34 of the Arbitration Act, Section 128 of the Customs Act does not lay down a long period. In these circumstances, to infer exclusion of Section 14 or the principles contained in Section 14 would be unduly harsh and would not advance the cause of justice.

The principle of Section 14 would apply not merely in condoning delay within the outer period prescribed for condonation but would apply de hors such period being the difference between exclusion of a certain period altogether under Section 14 principles and condoning delay. When a certain period is excluded by applying the principles contained in Section 14, there is no delay to be attributed to the appellant and the limitation period provided by the concerned statute continues to be the stated period and not more than the stated period.

Supreme Court Held : the principle of Section 14 which is a principle based on advancing the cause of justice would certainly apply to exclude time taken in prosecuting proceedings which are bona fide and with due diligence pursued, which ultimately end without a decision on the merits of the case.

The Supreme Court allowed the appeal and set aside of the order of the Tribunal and remanded the case to the Commissioner (Appeals) to decide the issue on merits.

(See 2015-TIOL-89-SC-CUS)