Holding

The one‑year limitation under Section 35E(3) is to be computed from the date the adjudicating authority makes the order, not from its communication, rendering the Board’s direction beyond the limitation and invalid.

Summary

The Collector of Central Excise, Madras issued an order on 28‑Nov‑1984 holding a demand for excise duty barred by limitation and sent a copy to the respondent on 21‑Dec‑1984. The Central Board, on 11‑Dec‑1985, directed the Collector to seek a review of that order before the Customs, Excise & Gold (Control) Appellate Tribunal under Section 35E(1). The Tribunal held the application was out of time, reasoning that the one‑year limitation in Section 35E(3) must be measured from the date the adjudicating authority made the order, not from its communication to the parties. The Supreme Court affirmed this view, stating that for a suomoto power the relevant date is when the order is signed and becomes operative. Consequently, the Board’s direction was beyond the statutory period and ineffective, and the appeal was dismissed.

Issues considered

The appropriate date for calculating the one‑year limitation under Section 35E(3) of the Central Excises & Salt Act, 1944 – whether it is the date of the order’s issuance or the date of its communication to the affected party.
Whether the Board’s direction dated 11‑Dec‑1985 was within the statutory limitation period.

Legislation cited

Central Excises & Salt Act, 1944s. 35, s. 35A, s. 35B, s. 35E
Customs and Excise Revenues Appellate Tribunal Act, 1986s. 3

Subjects

limitation periodSection 35ECentral Excisesuomoto poweradjudicating authorityappellate tribunalcommunication of orderstatutory interpretation

Judgment

THE COLLECTOR OF CENTRAL EXCISE, MADRAS
A
v.
M/S. M.M. RUBBER & CO. TAMIL NADU.

SEPTEMBER 4, 1991

B [S. RANGANATHAN, V. RAMASWAMIANDN.D.OJHA,JJ.]

Central Excises & Salt Act, 1944-Section 35E-LeRi.vlative inten-
tion, indicated-Power under Section 35E-Nature of-Authority
authorised to exercise a power-Failure to exercise-Effect of.

C Central Excises & Salt Act, 1944-Section 35£(3)-Ca/cu/ation of
the period of one year-Relevant date-"From the date of decision or
order''-Construction.

Central Excises & Salt Act, 1944-Section 35£-Co/lector's order
dated 28. 11. 1984-Communicated on 21.2. 1984-Board's direction to
D Collector to move Tribunal for correct determination-Whether• the
adjudicating authority aggrieved of own order-Legality of action after
the period of limitation.

The appellant, an adjudicating authority held the demand from
the respondent towards excise duty on biaxially oriental polypropylene J
E films as set out in the show cause notice dated 25.10.1983 as barred by
limitation and dropped further proceedings. A copy of the order
despatched on 21.12.1984 was received by the respondent on
21.12.1984.

The Central Board of Excise and Customs after consideration of
F the order, on U.12.1985 directed the appellant to apply under Section
35E(l) of the Central Excises & Salt Act, 1944, to the Customs, Excise &
Gold (Control) Appellate Tribunal for correct determination of the
points arising out of the order dated 21.12.1984 and the appellant filed
the application under section 35E(4) of the Act.

G Before the Tribunal the respondent urged that the relevant date of
the Collector's (adjudicating authority's) order for the purposes of
Sedion 35E(3) should be taken as 28.11.1984 and not 21.12.1984 when
it was received by the respondent and on that basis the order of the
Board under Section 35E(l) of the Act. should be held as beyond the
period of one year from the date of the decision or order of the
H adjudicating authority and therefore the application before the Tri-
bunal was incompetent.
862
COLLECTOR v. M.M. RUBBER 863

The Tribunal dismissed the application holding that the applica-
A
lion was not maintainable.

_. In this appeal filed under Section 35L of the Act, the appellant
contended that mere writing an order in file kept in the office was no
order in the eye of law in the sense of affecting the rights of the parties
for whom the order was meant and that though the order of the B
adjudicating authoritY was made on 28.11.1984 a copy of the same was
sent to the respondent only on 21.12.1984 and received by him on the
very day and that therefore the limitation would start only at the
earliest from 21.12.1984; that enabling the giving of the direction under
~ Section 35E(l) and the application under Section 35E(4) in pursuance of
that direction should he treated as if a right of appeal given to the
department; that the departmental authorities and the private parties c
''!'

were to he treated equally as aggrieved persons for the purposes of
calculating the time for making the direction under Section 35E(3) of
the Act.
I
On the question, what is the relevant date for the purpose of D
calculation of the period of one year provided under Section 35E(3) of
the Central Excises & Salt Act, 1944, dismissing the appeal, this Court,
~
HELD: 1. If an authority is authorised to exercise a power or do
an act affecting the rights of parties, he shall exercise that power within
the period of limitation prescribed therefore. The order or decision of E
such authority comes into force or becomes operative or becomes an
effective order or decision on and from the date when it is signed by
him; The date of such order or decision is the date on which the order or
· decision was passed or made; that is to say when he ceases to have any
\ authority to tear it off and draft a different order and when he ceases to
have any /ocuspaetentiae. Normally that happens when the order or F
decision is made public or notified in some form or when it can he said
to have left his hand. The date of communication of the order to the
party whose rights are affected is not the relevant date for pnrposes of
determining whether the power has been exercised within the pres-
crihed time, [869D-F]
G
2. If the intention or design of the statutory provision was to
• · protect the interest of the person adversely affected, by providing a
remedy against the order or decision any period of limitation pres-
cribed with reference .to invoking snch remedy shall he read as com-
mencing from the date of communication of the order. But if it is a
limitation for a competent authority to make an order the date of exer- H
864 SUPREME COURT REPORTS [ 1991] 3 S.C.R.

A cise of that power and in the case of exercise, of suo moto power over the
subordinate authorities' orders, the date on which such power was
exercised by making an order are the relevant date for determining
•the limitation. [871H-872B] .._
~(r

3. Section 3SE comes under the latter category of an authority
B
exercising its own powers under the Act. It is not correct to equate the
Board to one of the two parties to a quasi-judicial proceeding before the
Collector and the Board's right under Section 35E to the exercise of the

c
right of appeal by an aggrieved assessee from an order passed to its
prejudice. [872B-C]

4. The power under Section 35E is a power of superintendence
conferred on a superior authority to ensure that the subordinate
officers exercise their powers under the Act correctly and properly.
'r, '
·-,
Where a time is Hmited for the purposes by the statute, such power
should be exercised within the specified period from the date of the
order sought to be reconsidered. To hold to the contrary would be
D
inequitable and will also introduce uncertainties into the administra-
lion ofthe Act. [872C-E]

5. The direction to me an appeal under Sections 35E(l)(2) of the ~
Act by the Board and the Collector, as the case may be, is to the very
adjudicating authority who would otherwise be bound by his own order
E and not expected to be aggrieved by the same. When an appeal is f'tled
on such direction, the appellant will be the adjudicating authority him-
self and not the authority who gave the direction. [8670-E]

6. The period of one year fJXed under sub-section (3) of Section
35E of the Act should be given its literal meaning and so construed the
F impugned direction of the Board was beyond the period of limitation
prescribed therein and therefore invalid and ineffective. [872G I

Annamalai Chetti v. Col. J.G. Cloete, [1883] ILR 6 Mad. 189,
Seshammav. Sankara, [1889] ILR 12 Mad. l; The Secretary of State for
India in Council v. Gopisetti Narayanaswami Naidu Guru, ILR 34
G Madras 151; Raja Barish ChanJra Raj Singh v. The Deputy Land
Acquisition Officer & Anr., [1962[ I SCR 676; Asstt. Transport Com·
missioner /Administration) U.P. & Ors. v. Sri Nand Singh, [1981] 1 •
SCR 131; Muthia Chettiar v. CIT, ILR 1951 Mad. 815 and Viswanathan
Chettiar v. Commissioner of Income Tax, Madras, 25 ITR 79, referred
to.
H
COLLECTOR v. M.M. RUBBER [RAMASIVAMI. J.] 865

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6071 A
(NM) of 1990.

From the Order dated 31.5.90 of the Customs, Excise and Gold
(Control) Appellate Tribunal, New Delhi in Appeal No. E/2586/86-C
with E/Cross/478/86-C. (Order No. 541/90-C).
B
M. Gauri Shankarmurthy, K. Swamy and P. Parmeshwaran for
the Appellant.

Santos:; Hegde and K.R. Nambiar for the Respondent.

The Judgment of the Court was delivered by
c
V. RAMASWAMI, J. The short question of law that arises for
consideration in this appeal is as to what is the relevant date for the
purpose of calculation of the period of one year provided under
section 35E(3) of The Central Excises & Salt Act, 1944 (hereinafter
called the Act). Briefly stated the question arises in the following D
circumstances.

By order in Original No. 34 of 1984 dated 28.11.1984, the
Collector of. Central Excise, Madras as an adjudicating authority
within the meaning of the Act, held as barred by limitation the demand
from the respondent towards excise duty on biaxially oriental poly- E
propylene films as set out in the show cause notice dated 25.10.1983
and dropped further proceedings against the respondent. A copy of
this order was attested by the Superintendent of the office on
21.12.1984 and despatched to the respondent. It was received by the
respondent on 21.12.1984. The Central Board of Excise and Customs
(hereinafter called the Board), after consideration of the order, on F
11.12.1985 directed the Collector of Central Excise, Madras under the
provisions of Section 35E( 1) to apply to the Customs, Excise & Gold
(Control) Appellate Tribunal, New Delhi, for correct determination
of the points arising out of the aforesaid order and accordingly the
Collector filed the application before the Tribunal as provided under
Section 35E( 4) of the Act. G

Before the Tribunal the respondent urged that the relevant date
of the Collector's (adjudicating authority) order for the purposes of
Section 35E(3) should be taken as 28.11.1984 and not 21.12.1984 when
it was received by the respondent and on that basis the order of the
Board under Section 35E(l) of the Act should be held as beyond the H
866 SUPREME COURT REPORTS I 19911 3 S.C.R.

A period of one year from the date of the decision or order of the

..
adjudicating authority and therefore the application before the Tri-
bunal was incompetent. The Tribunal accepted this contention and
. held that the application was not maintainable.

In this appeal filed under Section 35L of the Act the learned
B counsel for the appellant contended that mere writing an order in file
kept in the office is no order in the eye of law in the sense of affecting
the rights of the parties for whom the order is meant and that though
the order of the adjudicating authority was made on 28.11.1984 a copy
of the same was sent to the respondent only on 21.12.1984 and ~

received by him on the very day and that therefore the limitation
~--
would start only at the earliest from 21.12.1984. He stated that the
c order was received by the Board a!:;o only subsequent to 21.12.1984. ~'.'
i·
His further submission was that enabling the giving of the direction
under Section 35E(l) and the application under Section 35E(4) in
pursuance of that direction shall be treated as if a right of appeal given.
to the department. On this basis his argument was that the depart-
D mental authorities and the private parties are to be treated equally as
aggrieved persons for the purposes of calculating the time for making
the direction under Section 35E(3) of the Act.
~
Before we discuss the arguments of \he learned counsel, it is
necessary to set out some relevant provisions in the Act. Section 35 of
E the Act, provides for an appeal to a person aggrieved by any decision
or order passed under the Act by a Central Excise Officer lower than a
Collector of Central Excise and that such an appeal will have to be
filed "within three months from the date of the communication to him
of such decision or order". Clause 5 of Section 35A requires that on t
the disposal of the appeal, the Collector (Appeals) shall communicate
F the order passed by him to the Appellant, the adjucicating authority
and the Collector of Central Excise. Section 35B provides for a right of
appeal to any person aggrieved by, among other orders, (1) an order
passed by the Collector (Appeals) under Section 35A and. (2) a deci-
sion or order passed by the Collector of Central Excise as an adjudicat-
ing authority. Such an appeal will have to be filed "within three
G months from the date on which the order sought to be appealed against
is communicated to the Collector of Central Excise or as the case may ;
be the other party preferring the appeal." The Appellate Tribunal also
is required to send a copy of the order passed in the appeal to the
Collector of Central Excise and the other party to the appeal. Section ·
35E(l) authorises the Board "of its own motion, call for and examine
H the record of any proceeding in which a Collector of Central Excise as
COLLECTOR v. M.M. RUBBER [RAMASWAIV)I. J.J 867

an adjudicating authority has passed any decision or order under this
A
Act for the purpose of satisfying itself as to the legality or propriety of
any such decision or order and may, by order, direct such Collector to
.... apply to the Appellate Tribuna> . r as the case may be the Customs and
Excise Revenues Appellate Tribunal established under Section 3 of
the Customs and Excise Revenues Appellate Tribunal Act, 1986 for
the determination of such points arising out of the decision or order as B
may be specified by the Board in its order." As sub-section (2) is also
relevant for consideration that may also be set here and that reads:

"2. The Collector of Central Excise may, of his own
motion, call for and examine the record of any proceeding
in which an adjudicating authority subordinate to him has
passed any decision or order under this Act for the purpose C
of satisfying him,elf as to the legality or propriety of any
such decision or order and may, by order, direct such
authority to apply to the Collector (Appeals) for the
determination of such points arising out of the decision or
order as may be specified by the Collector or Central D
Excise in his order.

It may be seen that the direction to file an appeal under .these
two sub-sections by the Board and the Collector, as the case may be, is
to the very adjudicating authority who would otherwise be bound by
his own order and not expected to be aggrieved by the same. When an E
appeal is filed on such direction, the appellant will be the adjudicating
authority himself and not the authority who gave the direction.

Sub-Section (3) of Section 35E 0f the Act which deals with the
limitation for exercise of the powers under-sub-sections ( 1) and (2) of
the Act and which is the relevant provision for consideration in this F
appeal reads as follows:

"No order shall be made under sub-section ( 1) or sub-
section (2) after the expiry of one year from the date of the
decision or order of .the adjudicating authority.,;
G
• At this st~ge itself we may state that sub-section (4) of the Act
provides that the adjudicating authority shall file the application
before the Tribunal in pursuance of the order made under sub-section
(1) or sub-section (2) "within a period of three months from the date
of communication of the order under sub-section ( 1) or sub-section (2)
to the adjudicating authority." H
868 SUPREME COURT REPORTS [1991) 3 S.C.R.

The words "from the date of decision or order" used with refe-
A
rence to the limitation for filing an appeal or revision under certain
statutory provisions had come up for consideration in a number of
cases. We may state that the ratio of the decisions uniformly is that in
the case of a person, aggrieved filing the appeal or revision, it shall
mean the date of communication of the decision or order appealed
B against. However, we may note a few leading cases on this aspect.

Under section 25 of the Madras Boundary Act, 1860 the starting
point of limitation for appeal by way of suit allowed by that section was
the passing of the Survey Officer's decision and in two of the earliest
cases, namely, Annamalai Chetti v. Col. J.G. Cloete, [1883) ILR 6
Mad. 189 and Seshamma v. Sankara, [1889] ILR 12 Mad. 1, it was held
c that the decision was passed when it was communicated to the parties.
~·

In The Secretary of State for India in Council v. Gopisetti Narayana-
swami Naidu Guru, ILR 34 Madras 151, construing a similar provision
in the Survey and Boundary Act, 1897 the same High Court held that a
decision cannot properly be said to be passed until it is in some way
D pronounced or publishsed under such circumstances the parties
affected by it have a reasonable opporunity of knowing what it con-
tains. "Till then though it may be written out, signed and dated, it is
nothing but a decision which the officer intends to pass. It is not passed
so long it is open to him to tear off what he has written and write
1
something else." In Raja Harish Chandra Raj Singh v. The Deputy
E Land Acquisition Officer & Anr., [1962] 1 SCR 676 construing the
proviso to Section 18 of the Land Acquisition Act which prescribed for
applications seeking reference to the Court, a time limit of six weeks of
the receipt of the notice from the Collector under Section 12(2) or
within six months from the date of the Collector's award whichever
first exl'ires, this Court held that the six months period will have tc be
F calculated from the date of communication of the award. In Asstt.
Transport Commissioner (Administration) U.P. & Ors. v. Sri Nand
Singh, [1981] 1 SCR 131 construing the provision of Section 15 of the
U. P. Motor Vehicle Taxation Act, it was held that for an aggrieved
· party the limitation will run from the date when the order Was com-
municated to him.
G
The ratio of these judgments were applied in interpreting section
33A(2) of the Indian Income Tax Act, 1922 in Muthia Chettiar v. CIT,
ILR 1951 Mad. 815 with reference to a right of revision provided to an
aggrieved assessee. Section 33A( 1) of the Act on the other hand
authorised the Commissioner to suo moto call for the records of any
H proceedings under the Act in which an order has been passed by any
COLLECTOR v. M.M. RUBBER [RAMASWAMI. J.[ 869

authority subordinate to him and pass such order thereon as he thinks
fit. The proviso, however, stated that the Commissioner shall not A
revise any ord'er under that sub-section" if the order (sought to be
... revised) has been made more than one year previously". Construing
this provision the High Court in Muthia Chettiar's case held that the
power to call for the records and pass the order will cease with the
lapse of one year from the date of the order by the subordinate autho- B
rity and the ratio of date of the knowledge of the order applicable to an
aggrieved party is not applicable for the purpose of exercising suo
mpto power. Similarly in another decision reported in Viswanathan
Chettiar v. Commissioner of Income Tax, Madras, 25 !TR 79 constru-
<-.
ing the time limit for completion of an assessment under section 34(2)
-"'· of the Income Tax Act, 1922, which provided that it shall be made
"within four years from the end of the year in which the income, profit c
and gains were first assessable," it was held that the time limit of four
years for exercise of the power should be calculated with reference to
the date on which the assessment or reassessment was made and not
the date on which such assessment or reassessment order made under
Section 34(2) was served on the assessee. D

It may be seen therefore, that, if an authority is authorised to
\... exercise a power or do an act affecting the rights of parties, he shall
exercise that power within the period of limitation prescribed therefor.
The order or decision of such authority comes into force or becomes
operative or becomes an effective order or decision on and from the E
date when it is signed by him. The date of such order or decision is the
date on which the order or decison was passed or made: that is to say
when he ceases to have any authority to tear it off and draft a different
order and when he ceases to have any locuspaetentiae. Normally that
\ happens when the order or decison is made public or notified in some
form or when it can be said to have left his hand. The date of com- F
munication of the order to the party whose rights are affected is not
the relevant date for purposes of determining whether the power has
been exercised within the prescribed time.

So far as the party who is affected by the order or decision for
seeking his remedies against the same, he should be made aware of G
.. passing of such order. Therefore Courts have uniformly laid down as a
rule of law that for seeking the remedy the limitation starts from the
date on which the order was communicated to him on the date on
which it was pronounced or published under such circumstances that
the parties affected by it have a reasonable opportunity of knowing of
passing of the order and what it contains. The knowledge of the party H
870 SUPREME COURT REPORTS [1991] 3 S.C.R.

affected by such a decision, either actual or constructive is thus an
A
essential element which must be 'satisfied before the decision can be
said to have been concluded and binding on him. Otherwise the party
affected by it will have no means of obeying the order or acting in
conformity with it or of appealing against it or otherwise having it set.
This is based upon, as observed by Rajamanner, CJ in Muthia Chettiar
B v. CIT, supra "a salutary and just principle". The application of this
rule so far as the aggrieved party is concerned is not dependant on the
provisions of the particular statute, but it is so under the general law.

In Muthia Chettiar's case (supra) both these aspects came up for
consideration. Th·e relevant provisions considered therein were
Section 33A(l) and (2) of the Indian Income Tax Act, 1922, which
c read as follows:

"33A. (1) The Commissioner may of his own motion call
for the record of any proceeding under this Act in which an
order has been passed by any authority subordinate to him
D and may make such inquiry or cause such inquiry to be
made and, subject to the provisions of this Act, may pass
such order thereon, not being an order prejudicial to the
assessee as he thinks it:

Provided that the Commissioner shall not revise any
E order under this sub-section if-

(a) x x x x

(b) x x x x
j

F (c) the order has been made more than one year previously."

"(2) The Commissioner may, on· application by an assessee
for revision of an order under this Act, passed by any
authority subordinate to the Commissioner, made within
one year from the date of the order, .... call for the record
G of the proceeding in which such order was passed, and
..... may pass such order thereon ..... as he thinks fit:

Interpreting these provision the Court observed:

"In a case falling under sub-section (1) the Commissioner
H acts of his own motion. There is no question of the

'
.,_
COLLECIOR v. M.M. RUBBER [RAMASWAMI, J.) 871

aggrieved party invoking his jurisdiction, there can there- A
fore be no occasion to apply the rule enunciated in Secre-

.. tary of State for India in Council v. Gopisetti Narayanas-
wami Naidu, [1910] ILR 34 Mad. 151. It may be said that
the Commissioner's power to call for the record ceases with
the !apes of one year from the date of the order by the
subordinate authority. But in a case falling under sub B
section (2) the party aggrieved has got to take the step of
applying for revision and he is allowed one year from the
date of the order. The provision is, therefore, certainly in
the nature of a time-limit for the application for revision."

The decision in Viswanathan Chettiar's case (supra) related to C
the reassessment power under Section 34(2) of the Income Tax Act,
1922 which read as follows:

"No order of assessment under Section 23 or of assessment
or reassesment under sub-section ( 1) of this section shaH be
made after the expiry, in any case to which clause (c) of D
sub-section ( 1) of section 28 applies, of eight years and in
any other case, of four years from the end of the year in
which the income, profits or gains were first assessable."

After referring to some of the provisions in the Act and some of
the earlier decisions and in particular Muthia Chettiar's case (supra) . E
the learned judges observed:

"As we have already pointed out, the time limit of four
years for wl]ich sub-section (2) of Section 34 provided was
the period within which the Income-tax Officer had to com-
plete one stage of the proceedings, that is, the assessment F
of the income and determination of the tax payable, and
that stage could be completed by the Income-tax Officer
himself, even if the terms of the order of assessment were
not communicated within that period of four years to the
assessee. The rights of the assessee aggrieved by such an
order of assessment have been specifically provided for by G
other sections of the Act."
•
Thus if the intention or design of the statutory provision was to
protect the interest of the person adversely affected, by providing a
remedy against the order or decision any period of limitation pres-
cribed with reference to invoking such remedy shall be read as com- H
872 SUPREME COURT REPORTS [1991) 3 S.C.R.

A mencing from the date of communication of the order. But if it is a
limitation for a competent authority to make an order the date of
exercise of that power and in the case of exercise of suo moto power
over the subordinate authorities' orders, the date on which such power
was exercised by making an order are the relevant dates for determin-
ing the limitation. The ratio of this distinction may also be founded on.
B the principle that the Government is bound by the proceedings of its
officers but persons affected are not concluded by the decision.
Section 35E comes under the latter category of an authority exer-
cising its own powers under the Act. It is not correct to equate the
Board, as contended by Sri Gaurishankar Murthy, to one of the two
parties to a quasi-judicial proceeding before the Collector and the
c Board's right under Section 35E to the exercise of the right of appeal
by an aggrieved assessee from an order passed to its prejudice. The
power under Section 35E is a power of superintendence conferred on a
superior authority to ensure that the subordinate officers exercise their
powers under the Act correctly and properly. Where a time is limited
for the purposes by the statute, such power, as under Section 33A(2)
D
of the Indian Income-tax Act, 1922 referred to in Muthia Chettiar
(supra), should be exercised within the specified period from the date
of the order sought to be reconsidered. To hold to the contrary would
be inequitable a11d will also introduce uncertainties into the administ-
ration of the Act for the following reason. There appears to be no
provision in the Act requiring the endorsement, by a Collector, of all
E orders passed by him to the Board. If there is such a practice in fact or
requirement in law, the period of one year from the date of the order is
more than adequate to ensure action in appropriate cases particularly
in comparison with the much shorter period an assessee has within
· which to exercise his right of appeal. If, on the other hand, there is no L
such requirement or practice and the period within which the Board
F can interfere is left to depend on the off-chance of the Board coming to
know of the existence of a particular order at some point of time,
however, distant, only administrative chaos can result. We are, there-
fore, of the opinion that the period of one year fixed under sub-section
(3) of Section 35E of the Act should be given its literal meaning and so
construed the impugned direction of the Board was beyond the period
G of limitation prescribed therein and therefore invalid and ineffective.
For the foregoing reasons we are of the view that the Tribunal
was right in holding that the applicatior. before them was out of time.
This appeal is accordingly dismissed. There wiU be no order as to
costs.

V.P.R. Appeal dismissed.

\