Holding

The Tribunal has inherent power to recall its own order if sufficient cause is shown, and the limitation provision of Section 129(8)(2) does not bar the application for rectification in such circumstances.

Summary

The Sunita Devi Singhania Hospital Trust, a charitable hospital, imported equipment under Notification 64/88-Cus which exempted it from customs duty provided it reserved 10% of beds for low‑income patients and offered free outpatient treatment to at least 40% of patients. The Customs, Excise and Service Tax Appellate Tribunal held that the Trust had not complied with these conditions and imposed a redemption fine and penalty. The Trust filed an application for rectification of the order, which the Tribunal dismissed as time‑barred under Section 129(8)(2) of the Customs Act. The Supreme Court held that the Tribunal possesses an inherent power to recall its own order when sufficient cause is shown and that the limitation provision does not bar the application in such circumstances, emphasizing the principles of natural justice. Consequently, the Court set aside the Tribunal’s dismissal and remitted the matter to the Tribunal for fresh consideration of the Trust’s contentions.

Issues considered

The applicability of the limitation period prescribed in Section 129(8)(2) of the Customs Act to an application for rectification of a Tribunal order when the Tribunal failed to consider material facts.
Whether the Customs, Excise and Service Tax Appellate Tribunal has inherent power to recall or set aside its own order notwithstanding the limitation provision.
Whether natural justice requires the Tribunal to consider all material facts and contentions raised by the appellant.
Whether the Trust had complied with the conditions of Notification 64/88-Cus and was therefore exempt from customs duty, fine and penalty.

Legislation cited

Customs Act, 1962s. 129(8)(2)
Limitation Act, 1963s. 14

Subjects

Customs duty exemptionCharitable trustInherent jurisdiction of tribunalLimitation periodNatural justiceRectification of mistakeRedemption finePenalty

Judgment

[2008] 16 S.C.R. 121

-'> SUNITADEVI SINGHAN1A HOSPITAL TRUST AND ANR. A
v.
UNION OF INDIA & ANR.
(Civil Appeal No. 6704 of 2008)
NOVEMBER 17, 2008 B
[S.B. SINHA AND CYRIAC JOSEPH, JJ.]
''
Customs Act, 1962 - s. 129(8)(2) - Powers of tribunal
- Scope of- Period of limitation u/s. 129(8)(2)-Applicabi/ity C
of .:.. Import of equipments by charitable trust - Exemption
from payment of custom duty - Grant of, on basis of
Notification - Non-compliance of the conditions laid down in
Notification - Imposition of redemption fine and penalty by
Custom Authorities - Upheld by tribunal - Application for
rectification of quantum of redemption fine and penalty D
allowed-Appeal before Supreme Court b.v Trust that tribunal
did not consider the fact that Trust had complied with the
conditions laid down in the Notification - Withdrawal of appeal
- Application for rectification of mistake - Dismissal of, by
tribunal holding that application time barred - Upheld by E
High Court - On appeal held: Tribunal has inherent power to
recall its own order if sufficient cause is shown therefor -
Omission to notice the facts involved in the appeal by tribunal
is violative of principles of natural justice - Records of the .
judges are considered to be final ~ When certain questions F
are raised before the court of law or tribunal but not
considered by it, and when it is brought to its notice, only the
appropriate authority is to consider the said questions -
. Period of limitation u/s.129(8)(2) is required to be observed
but is not attracted in the instantcase-.Tribunal was required G
to consider the application filed by appellant which was filed
within a reasonable time - It did not consider the matter on
·merit - Thus, matter remitted back to tribunal for
consideration afresh - Notification 64188 Gus dated 1.3.1988 .
121 H
122 SUPREME COURT REPORTS [2008] 16 S.C.R.

A - Constitution of India, 1950 - Article 142 - Principles of r-.
natural justice.

Grindlays Bank Ltd. vs. Central Government Industrial
Tribunal and Ors 1980 (Suppl) SCC 420; Sangham Tape
B Co. v. Hans Raj 2005 (9) SCC 331; Rabindra Singh v.
Financial Commissioner, Cooperation, Punjab and Ors. 2008
(8) SCALE 242 and Jet Ply Wood (P) Ltd. and Anr. vs.
Madhukar Nowlakha and Ors. 2006 (3) SCC 699, referred to.
Case Law Reference:
c
1980 (Suppl) SCC 420 Referred to. Para 22

2005 (9) SCC 331 Referred to. Para 23

2008 (8) SCALE 242 Referred to. Para 24
D 2006 (3) sec 699 Referred to. Para 25

CIVIL APPELLATE JURISDICTION : Civil Appeal No.
6704 of 2008.

From the final Judgment and Order dated 18.1.2008 of the
E High Court of Judicature at Bombay in Writ Petition No. 76 of
2008.

S. Ganesh, Tarun Gulati, Neil Hildreth, Tushar Jarwal and
Praveen Kumar for the fl.ppellants.
F
R.K. Abichandani, Krishna Kumar, SanjeevBhardwaj, B.V.
Balaram Das and Mrs. Anil Katiyar for the Respondents.

The following Order of the Court was delivered :

G ORDER

1. Leave granted.
2. Appellants are before us being aggrieved by and dis-
•
satisfied with an order dated 18.1.2008 passed by a Division
H Bench of the High Court of judicature at Bombay dismissing
SUNITADEVI SINGHANIA HOSPITAL TRUST AND ANR. 123
v. UNION OF INDIA & ANR.
-,
the writ petition filed by the appellants herein on the ground that A
it was not a fit case to exercise the Court's extraordinary
jurisdiction.

3. The basic fact of the matter is not in dispute.

4. Appellant No.1 which is a Charitable Tust runs a hospital B
on no profit basis. It imported certain equipments invoking the
Notification 64i88-Cus. dated 1.3.1988 issued by the
Government of India in terms whereof exemption from payment
of custom duty was granted in respect thereof subject to an
obligation that it would reserve 10% of the beds for patients c
from families having a income of less than Rs.500i- per month
and provision for free treatment of at least 40% of the outdoor
patients shall be made.

5. An investigation was carried out in the year 1999 as to D
whether the appellant No.1 had fulfilled all such conditions or
not. The matter went before the Customs Excise and Service
Tax Appellate Tribunal, West Regional Bench at.Mumbai. The
appeal ofthe appellant before the Tribunal was heard along with
the cases of Mis Miraj Medical Centre W. Hospital and Mis
Balabhai Nanavati Hospital. E

6. By reason of a judgment and order dated 19.1.2006,
the Tribunal having held that the appellants before it had
continuous obligation to fulfill the aforementioned conditions
laid down under the said Notification dated 1.3.1988 and F
~aving not com~lied therewith the redemption fine and penalty
imposed upon 1t by the Customs Authorities were justified.

7. Indisputably, appellant filed an application for rectification
of mista_ke before the Tribunal in regard to the quantum of
redemption fine and penalty. The said application was allowed. G
)

. 8. An appeal was preferred against the order of the
Tribunal before this Court.

9. It is stated before us by Shri S.Ganesh, learned senior H
124 SUPREME COURT REPORTS [2008] 16 S.C.R. .•

A counsel appearing on behalf of the appellants and we have no •-
reason to disbelieve him that one of the contentions raised
before this Court was that the Tribunal had not taken into
consideration the fact involved in the matter and had the same
been done it could have been established that the appellant had
B in fact fulfilled all its obligations in terms of the said Notification.
Several other points were also said to have been urged before
the Tribunal.

10. This Court, presumably, on the premise that Judges'
record is final and if an apparent error has been committed by
C the Tribunal in not taking into consideration the contentions
raised before it by the appellants, permitted it to withdraw the
appeal with liberty to file an appropriate application before the
Tribunal, stating:

D " Learned counsel states that several other points
had been argued before the Tribunal which have not been
taken note of by. it. Learned counsel states that an
appropriate application shall be filed.before the Tribunal
and seeks permission of the Court to withdraw the appeal.
E The appeal is dismissed as withdrawn accordingly."

11. Pursuant thereto or in furtherance thereof the appellant
No.1 ·filed an application before the Tribunal purported to be
an application for rectification of mistake wherein, inter alia, the
following grounds were raised:
F
"8. While disposing of the appeals by a common
order dated 19.1.2006, this Hon'ble Tribunal has only
recorded the facts as applicable to one of the appellants,
namely, the Miraj Medical Centre and has failed to
G appreciate the difference in facts and circumstances in the
applicants case, inter-alia, as regards the following:
(a) The applicants had actually reserved 10% of the
hospital beds for poor and indigent persons and had
advertised on several occasions the facility of free
H
SUNITADEVI SINGHANIA HOSPITAL TRUST AND ANR. 125
. ,. v. UNION OF INDIA & ANR.
treatment to such people without means; A

(b) The applicants also satisfied the criteria for out
patient treatment, both by giving free treatment at the
hospital's OPD as also by organizing free treatment
camps, and the free treatment camps have been judicially B
f'
recognised as meeiing the purpose of the notification, by
the Hon'ble Madras High Court in Apollo Hospital's case,
which was relied upon by the applicants in their
memorandum of appeal;
(c) The equipment and records were completely c
destroyed in the riots of 2001, which were beyond the
applicants' control;
(d) In any event, the applicants being a hospital run
, by a charitable trust, on a no profit basis, the applicants D
, were eligible for the exemption under Notification No.64/
88-Cus. under Entries 1 & 3 alternatively.

9. The factual position being distinct and different
from the main matter heard by this Hon'ble Tribunal, the
Hon'ble Tribunal ought to have appreciated the difference E
in the facts and ordered accordingly. The non-appreciation
and/ or improper appreciation of facts has resulted in an
error apparent on the face of the record in the Order dated
•' 19.1.2006.
F
10. The Hon'ble Tribunal has failed to appreciate that
if the obligations under Entry 2 in the table annexed to
Notification 64/88 is a continuing obligation, the
compliance with the obligation will also be in the nature of
a continuing compliance i.e. it will have to be measured G
~, over the entire useful life of the equipment and not at any
periodic rests. In the applicants' case, from the date of the
import of the equipment until the destruction of the said
equipment in the riots as aforesaid, the applicants have
satisfied both the in-patient reservation criterion and the H
126 SUPREME COURT REPORTS [2008] 16 S.C.R.
~-.

A out patient free treatment criterion. There was, therefore,
no breach of the continuing obligation by the applicants."

12. We have been informed at the Bar that the Registry of
Central Excise and Service Tax Appellate Tribunal does not
B entertain an application of this nature and, thus, the same was
necessarily required to be labelled as application for _.
1
rectification of mistake,, although, in view of Prayer (a) made
therein it was for all intent and purport an application for review
and/or recall of the order passed by the Tribunal.

C 13. The Tribunal by an order dated-12.10.2007 dismissed
the said application holding that the same was barred by
limitation on the premise that the Tribunal's final order was
passed on 19.1.2006 and the application for rectification of
mistake should have.been filed within six months from the said
D date. It was, furthermore, opined that the Tribunal had no power ~
to condone the delay by reason of the impugned judgment As \
noticed hereinbefore, the High Court refused to interfere
therewith.

'•
.;; SUNITADEVI SINGHANIA HOSPITAL TRUST AND ANR. 127
' . v. UNION OF INDIA & ANR.

• 17. From the Tribunal which is the final Court of fact, an A
assessee is entitled to obtain a judgment wherein all its
contentions have been considered. If what has been contended
.before us by the appellants, namely, it indeed had complied with
' .
~
all the conditions laid down.in the Notification are correct and,
I
thus, was not liable to pay any ;edemption fine or penalty, the B
J ' Tribunal was bound to consider the said contention.

18. Apparently, learned Tribunal only considered the factual
matrix involved in the case of M/s Miraj Medical.Centre W.
Hospital and not the factual aspect of the matter involving factual C
matrix. Appellants'. case had purported to have been
determined on the question of law without taking into
consideration the question whether the law so laid down by the
Tribunal is applicable to the fact of the appellants' case or not.

19. It is true that the period of limitation specified in terms D
of Sub-Section (2) of Section 129(B) of the Customs Act is
required to be observed but the Tribunal failed to notice that it
has inherent power of recalling its own order if sufficient cause
is shown therefor. The principles of natural justice, which in a
case of this nature, in our opinion, envisage that a mistake E
committed by the Tribunal in not noticing the facts involved in
the appeal which would attract the ancillary and/or incidental
power of the Tribunal necessary to discharge its functions
effectively for the purpose of doing justice between the parties,
I

• were required to be complied with.

20. While the judges' records are considered to be final,
F

it is now a trite law that when certain questions are raised
before the Court of law or Tribunal but not considered by it, and
when it is brought to its notice, it is the only appropriate authority
to consider the question as to whether the said contentions are G
correct or not.

21. For the aforementioned purpose the provisions of
limitation specified in Sub-section (2) of Section 129 B of the
Customs Act would not be attracted. We, however, do not mean H
428 SUPREME COURT REPORTS [2008] 16 S.C.R.
• I

A to lay down a law that such an application can be filed at any ,_
time. If such an application is filed within a reasonable time and
if the Court or Tribunal finds that the contention raised before it
by the applicant is prima-facie correct, in order to do justice,
which is being above law, nothing fetters the judges hands from
B considering the matter on merit.
.\
22. We may notice that this Court in Grindlays Bank Ltd.
Vs. Central Government Industrial Tribunal and Ors. -
1980(Suppl) SCC 420, held that Industrial Tribunal has an
inherent power to set aside an ex-parte award subject of course
c to the condition that the same has not been published in the
Gazette.

23. Grindlays Bank Ltd. [supra] has been followed by this
Court in Sangham Tape Co. v. Hans Raj ((2005)9 SCC 331],
D stating: \

"8. The said decision is, therefore, an authority for the
proposition that while an Industrial Court will have
jurisdiction to set aside an ex parte award, but having
regard to the provision contained in Section 17-A of the
E
Act, an application therefor must be filed before the expiry
of 30 days from the publication thereof. Till then the Tnbunal
retains jurisdiction over the dispute referred .to it for
adjudication, and only up to that date, it has the power to
:~
entertain an application in connection with such dispute.
F r
'
9. It is not in dispute tha1 in the instant case, the High Court
found as of fact that the application for setting aside the
award was filed before' the Labour Court after one month
of the publication of the award.
G "
10. In view of this Court's decision in Grindlays Bank such ,_
jurisdiction could be exercised by the Labour Court within
a limited time frame, namely, within thirty days from the date
of publication of the award. Once an award becomes
enforceable in terms of Section 17-A of the Act, the Labour
H
SUNITADEVI SINGHANIA HOSPITAL TRUST AND ANR. 129
v. UNION OF INDIA & ANR.

Court or the Tribunal, as the case may be, does not retain A
any jurisdiction in relation to setting aside of an award
passed by it. In other words, upon the expiry of 30 days
from the date of publication of the award in the gazette,
the same having become enforceable, the Labour Court
would become functus officio". B

i 24. Yet again in Rabindra Singh v. Financial
Commissioner, Cooperation, Punjab & Ors. (2008 (8) ·SCALE
242], this Court held:

"17. What matters for exercise of jurisdiction is the source C
of power and not the failure to mention the correct
provisions of law. Even in the absence of any express
provision having regard to the principles of natural justice
in such a proceeding, the courts will have ample
jurisdiction to set aside an ex parte decree, subject of D
course to the statutory interdict."

25. This Court, however, in a slightly different context in Jet
Ply Wood (P) Ltd. and Anr. vs. Madhukar Nowlakha & Ors
((2006) 3 sec 699] opir\ed that even an order permitting E
withdrawal of a suit can be allowed to be recalled by a civil court
in exercise of its inherent power.

26. It is only from that point of view this Court passed the
aforementioned order dated 13.4.2007.
F
27. It may be true, as has been contended by Mr.
Abhichandani, learned senior counsel that Section 14 of the
Limitation Act, 1963 will have no application in view of the fact
that provisions governing limitation are contained in the
Customs Act. It is so for in a matter of this nature the.Tribunal G
was required to consider the application filed by he appellant
which was filed within a reasonable time. It should have also
considered that the appellant had been bonafide pursuing its
remedies before this Court.

28. We may place on record that for all intent and purport, H
130 SUPREME COURT REPORTS (2008] 16 S.C.R.

A this Court had granted liberty to the appellants to take recourse
to the remedies suggested by its counsel as the word
'accordingly' has been used before the _words 'the appeal is
dismissed as withdrawn'.

29. The Tribunal did not consider the matter on merit. The
8
Tribunal failed to take .into consideration that, ipso-facto, in a
case of this nature provisions of Section 1298 of t11e Customs
Act as such has no effect Label of an application is not decisive
for consideration by the Tribunal as to whether a case has been
C made out to hear the application on merit, particularly, having
regard to the grounds set out therein.

30. For the reasons aforementioned, we in exercise of our
jurisdiction under Article 142 of the Constitution of India set
aside the impugned judgment with a direction to the Tribunal
D to hear out the appellants afresh on merit on the said
application.

31. The appeal is allowed. There shall, however, be no
order as to costs.

E N.J. Appeal allowed.