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REPORTABLE

IN THE SUPRME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOs. 5631-5632 OF 2015

[Arising out of SLP (Civil) Nos. 22905-22906 of 2014]

SARAL WIRE CRAFT PVT. LTD. … Appellant

Versus  

COMMISSIONER CUSTOMS, CENTRAL EXCISE

& SERVICE TAX, & ORS. …       Respondent

O R D E R

Delay condoned.

Leave granted.

The Appellant is aggrieved by the fact that the right of Appeal bestowed

on the assessee by the Central Excise Act, 1944 (in short ‘the Act’) has virtually

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been  rendered  nugatory  since,  successively,  its  Appeal  has  been  declined

consideration on merits, having instead held as time-barred.

Succinctly  stated,  the  Appellant  had  sought  to  take  advantage  of  a

Notification granting exemption from payment of Central Excise Duty as well

as  Additional  Duty  of  Excise  for  a  period  of  ten  years.   This

moratorium/exemption has been granted by the Central Government with the

objective of giving a fillip to the industrialization of the newly created State of

Uttarakhand.  The dispute is whether the Appellant’s factory/unit is situated on

land which is covered by the aforesaid Notification, but we are not immediately

concerned with this  contentious issue in  theses  Appeals.   It  appears  that  on

28.7.2011, the Assistant Commissioner, Customs and Central Excise Division,

Haldwani had concluded the proceedings and hearings in respect of the show

cause  notice  dated  25.3.2011  issued  to  the  Appellant.   The  Appellant’s

contention is that after a passage of eight months an order came to be passed by

the said Officer on 30.3.2012 holding that the Appellant was not eligible for the

exemptions postulated in the said Notification; a duty of Rs.3,45,629/- along

with penalty of a like amount was imposed under Section 11A of the Act.  We

reiterate that in these Appeals we are not concerned with the legality of that

Order.   

The Appellant filed an Appeal against the said Adjudication Order in the

Office of the Commissioner (Appeals), Customs and Central Excise (Meerut-II)

asserting that consequent upon the initiation of the recovery proceedings by the

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Department,  the  Appellant  learned  for  the  first  time,  on  26.7.2012,  of  the

passing of the aforesaid Order dated 30.3.2012.  The case put forward is that the

Adjudication  Order  dated  30.3.2012  appears  to  have  been  served  on  an

employee of the Appellant, named Sanjay, who according to the Appellant was a

‘Kitchen boy’ employed on daily wages, and was avowedly not authorized to

deal  with communications to and from the Appellant;  he had unauthorisedly

affixed the stamp/seal of the Appellant on the some documents purporting to

establish the service of  the Adjudication Order, on 3.4.2012.  Accepting the

service  to  have  been  properly  effected  on  the  Appellant,  the  Commissioner

(Appeals)  dismissed  the  Appeal  filed  by  the  Appellant  by  an  Order  dated

28.9.2012 on the ground that it was time-barred.  The period was held to have

started to run from 3.4.2012 and since the Appeal had been filed on 22.8.2012 it

was held to be not maintainable, being beyond the prescribed period of sixty

days. The merits of the Appeal were not gone into at all.    

This decision was challenged before the Customs Excise and Service Tax

Appellate Tribunal, New Delhi, which accepted the Department’s version that

the  Adjudication  Order  had been  duly  served/delivered  on the  Appellant  on

3.4.2012; since the Appeal came to be filed on 22.8.2012, the dismissal on the

ground of limitation was held to be in consonance with the Act.    

Thereafter, the Appellant approached the High Court of Uttarakhand at

Nainital, which opined that an Appeal is a creature of statute and therefore its

preferment beyond the period permitted by the relevant statute, reduced it to a

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futile exercise.   Even this endeavour of the Appellant was of no avail to it as the

High Court was of the opinion that there was no power to condone the delay

beyond the statutory period.   We may underscore the important facet of the

Appeal, viz., that the Appeal filed by the Appellant has not been considered on

merits at all.  The Appellate Authorities as well as the High Court failed to keep

in perspective the essential issue - namely - to ascertain the date from which

limitation was to be calculated.

Learned counsel for the Appellant has consistently relied upon Section

37C of the Act, which is reproduced for facility of reference:

“37C. Service  of  decisions,  orders,  summons,  etc.-  (1)  Any decision or order passed or any summons or notices issued under this Act or the rules made thereunder, shall be served,-

(a) by tendering the  decision,  order, summons or  notice,  or sending it by registered post with acknowledgment due, to the person for whom it is intended or his authorized agent, if any;

(b) if the decision, order, summons or notice cannot be served in the manner provided in clause (a), by affixing a copy thereof  to  some  conspicuous  part  of  the  factory  or warehouse  or  other  place  of  business  or  usual  place  of residence  of  the  person  for  whom such  decision,  order, summons or notice, as the case may be, is intended;

(c) if the decision, order, summons or notice cannot be served in the manner provided in clauses (a) and (b), by affixing a copy thereof on the notice board of the officer or authority who or which passed such decision or order or issued such summons or notice.”

Sub-section (a) of Section 37C (supra) states that any decision, order, summons

or notice may either be sent by registered post with acknowledgement due to

the person for whom it is intended or his authorized agent.  If this mode of

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service is unsuccessful then service can be effect by affixation.   It is not the

case of the Department that it simultaneously also dispatched the Order to the

Appellant by registered post with acknowledgment due.  

It is an anathema in law to decide a matter without due notice to the

concerned party.   Every effort must be taken to meaningfully and realistically

serve  the affected party so as not  merely to  ensure that  he  has  knowledge

thereof but also to enable him to initiate any permissible action.  The Appellant

justifiably submits that it was statutorily impermissible for the Respondents to

serve the Adjudication Order on a “kitchen boy”, who is not even a middle

level  officer  and certainly not  an  authorized agent  of  the Appellant.    The

version of the Appellant that it learnt of the passing of the Adjudication Order

dated  30.3.2012 only when,  in  the course of  the recovery proceedings,  the

Department’s officials had visited its unit, is certainly believable.   The fact

that, firstly, the Order had not been passed in the presence of the Appellant, so

as to render its subsequent service a formality, and secondly, that the Order

came to be passed after an inordinate period of eight months should not have

been ignored.  This fact should not have been lost sight of by the Authorities

below as it has inevitably led to a miscarriage of justice.  The Inspector of the

Department should have meticulously followed and obeyed the mandate of the

statute and tendered the Adjudication Order either on the party on whom it was

intended or on its authorized agent and on one else.  It is not the Respondents’

case that Shri Sanjay was the authorized agent.  Even before us, despite several

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opportunities given, the Respondents have failed to file their response to the

Special Leave Petitions so as to controvert the asseveration  of the Appellant

that Shri Sanjay on whom the decision was tendered was a mere daily wager

‘kitchen boy’ and that the Appellant had no knowledge of the passing of the

Adjudication Order.  We are also informed that the recoveries envisaged in the

Adjudication Order have already been effected.

It is in these circumstances that we are of the clear conclusion that a

miscarriage of  justice  has  taken place,  in  that  the Authorities/Courts  below

have failed to notice the specific language of Section 37C(a) of the Act which

requires  that  an  Order  must  be  tendered  on  the  concerned  person  or  his

authorized agent, in other words, on no other person, to ensure efficaciousness.

We must immediately recall the decision in Taylor vs. Taylor (1875) 1 Ch. D

426, rendered venerable by virtue of its  jural acceptance and applicable for

over a century.  It was approved by the Privy Council in Nazir Ahmad v. King

Emperor  (1935-36)  63  IA 372  and  was  subsequently  applied  in  Rao  Shiv

Bahadur Singh v. State of Vindhya Pradesh AIR 1954 SC 322, State of UP v.

Singhara Singh AIR 1964 SC 358,  Babu Verghese v. Bar Council of Kerala

(1999) 3 SCC 422 and more recently in Hussein Ghadially v. State of Gujarat

(2014) 8 SCC 425.  As observed by this Court in  Babu Verghese, “it is the

basic principle of law long settled that if the manner of doing a particular act is

prescribed under any statute, the act must be done in that manner or not at all.”

The Inspector who ostensibly served the copy of the Order should have known

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the  requirements  of  the  statute  and  therefore  should  have  insisted  on  an

acknowledgement  either  by  the  Appellant  or  by  its  authorized agent.   The

Inspector had a statutory function to fulfil, not a mere perfunctory one.  The

Appeals are accordingly allowed and the impugned Orders are set aside.  In the

facts obtaining before us, the computation of the period would commence at

least from the date on which the Appellant asserts knowledge of its existence,

i.e. on 26.7.2012.    So computed, the Appeal filed before the Commissioner

(Appeals) on 22.8.2012 would be within the prescribed period of 60 days and

should, therefore, have been entertained on merits.  It is ordered accordingly.

The  Appellant  shall  appear  before  the  Commissioner  (Appeals)  on  the

forenoon of 3.8.2015.  The Appeal shall  then be taken up and heard on its

merits.  There shall be no order as to costs.   

……………………………..J. (VIKRAMAJIT SEN)

………………………………..J.                                                                 (SHIVA  KIRTI  SINGH)

New Delhi 20th July,  2015.