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Wednesday, July 22, 2015

“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,- 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; 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; 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.”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 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.

                                                                  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 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 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 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,-
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;
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;
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 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 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  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.



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