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PETITIONER: INDIAN TEXTILE PAPER TUBE CO. LTD.

       Vs.

RESPONDENT: COLLECTOR OF CUSTOMS, MADRAS

DATE OF JUDGMENT04/05/1990

BENCH: SAWANT, P.B. BENCH: SAWANT, P.B. MUKHARJI, SABYASACHI (CJ) PUNCHHI, M.M.

CITATION:  1990 SCR  (3)  96        1990 SCC  (4)  65  JT 1990 (2)   585        1990 SCALE  (1)111

ACT:     Customs  Act, 1962: Sections 28(1), (3)and 131(1),  (3), (5)---Suo   motu   revision   by   Central   Government   to annul/modify  order of erroneous refund of  duty--Period  of limitation--What is.     Mere order granting refund is not actual refund--Limita- tion to run from date of actual refund.

HEADNOTE:     The  appellant  imported Top Line  Tube  Winder  Endless Belts which were assessed to duty under heading  40.05/16(3) at  40%  plus countervailing duty at the rate of  25%  under Item 16-A(4) of the Customs Tariff Act, 1975.     Thereafter, the appellant made an application for refund of  the excess of duty so charged contending that the  goods were in fact liable to be classified under heading 59.16/17, and without countervailing duty.     The Assistant Collector rejected the claim by his  order dated  October  12, 1979 and against it the  appellant  pre- ferred an appeal under Section 128 of the Customs Act,  1962 to  the Appellate Collector who allowed the  appeal  holding that the goods were classifiable under heading 59.16/17.     The  Government, however, issued a suo motu  show  cause notice  dated November 21, 1981 to the appellant under  Sec- tion  131(3), asking the appellant to show cause as  to  why the goods should not be classified under heading 39.07 which attracted  duty at 100% ad valorem, and also as to  why  the order  dated May 2, 1981 passed by the  Appellate  Collector should not be annulled.     Against  the  aforesaid show cause, the  appellant  pre- ferred  an  appeal to the Customs Excise  and  Gold  Control (Appellate) Tribunal, contending that the show cause  notice was  barred by limitation under sub-section (5)  of  Section 131  read with Section 28 of the Act, which was  six  months from the date of short-levy, and in any case six months from the date of the Appellate order. 97     The  Tribunal  dismissed  the appeal  holding  that  the notice  was in time, and that the assessment proposed to  be made under heading 39.07 was proper and set aside the  order of the Appellate Collector allowing the revision.

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   In the appeal to this Court, the question for considera- tion was: whether the Central Government violated the bar of limitation while exercising suo motu revisional powers under Section 13: of the Customs Act, 1962. Dismissing the appeal by a 2:1 Majority, this Court,     HELD: (Sabyasachi Mukharji, CJ. and P.B. Sawant, J.--Per Sawant, J.)     1.  The provisions of Section 131(5) and  therefore  the limitation  laid down in section 28 of the Act do not  apply to the action taken by the government under section  131(3). [103D]     Geep  Flashlight  Industries  Ltd. v.  Union  of  India, [1977] 1 SCR 983, followed.     2. Even if it was held that the limitation as laid  down in Section 28 would apply to the initiation of action  under Section  131(3),  since the appellate order in  the  instant case, has only allowed the appeal of the appellant declaring him  as being entitled to the refund, and no refund has  yet been made the action of the Government under section  131(3) is clearly not barred by limitation-[102G-H]     3.  In  the case of erroneous refund, the  notice  under section 28 of the Act has to be given within six months from the  date of ’actual’ refund. If no refund has in fact  been made,  limitation  cannot be said to arise inasmuch  as  the ’relevant  date’ under section 28 in the case  of  erroneous refund  speaks  of the date of refund-  The  Order  granting refund is not actual refund. Admittedly, in the instant case no refund has been made to the appellant under the appellate customs  order dated May 2, 1981. Hence even if it  is  held that  the  provisions of subsection (3) of Section  131  are governed  by  sub-section (5) thereof  and,  therefore,  the limitation laid down under section 28 of the Act applied  to the  action  of  the Government under  section  131(3),  the present  show  cause  notice is not  barred  by  limitation- [103C-D]      4.  It is clear from the provisions of sub-section  (3) of  Section 131 that it does not give power to  the  Central Government to act suo motu 98 to annul or modify an order passed by the original assessing authority. On the other hand, the provisions of  sub-section (5)  of Section 131 contemplate proceedings against  actions of  the original assessing authority which have resulted  in either  not  levying or short-levying the goods.  That  sub- section  by implication also covers cases of  refunds,  when goods are cleared initially under a provisional  assessment, and the final assessment shows that the assessee is entitled to  a refund of duty charged in excess earlier. But all  the cases whether of non-levy, short-levy or of refund which are contemplated in sub-section (5) are cases arising out of the acts of omissions and commissions of the original  assessing authority, and it is when such orders passed by the original assessing  authority  which  are sought to  be  annulled  or modified,  that  the provision of  limitation  contained  in Section 28 applies. [103G-H; 104A-B]     5. Thus, the situations contemplated by sub-section  (3) and by sub-section (5) of Section 131 are mutually exclusive in  that whereas sub-section(3) speaks of the  annulment  or modification  of  the appellate or revisional  orders,  sub- section  (5)  speaks of the orders passed  by  the  original assessing authority. [104B]     6.  Hence,  the limitation applies when  the  Government seeks  to annul or modify orders of the  original  assessing authority  under subsection (5) and not when the  Government takes action to annul or modify the appellate or  revisional

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orders under sub-section (3) [104C]     7. The above interpretation is also consistent with  the provisions  of  sub-sections  (1) and (4)  of  Section  131. [104D]     8.  The  conclusion is inescapable that  the  limitation prescribed  by Section 28 is applicable when under  sub-sec- tion  (5)  of Section 131 the Government seeks to  annul  or modify orders other than those passed under Sections 128 and 130.  It  is not applicable to the action taken  under  sub- section  (3) for annulling or modifying orders passed  under Sections 128 and 130. [104G-H]     9.  In the instant case, since the impugned  show  cause notice  is  issued to annul/modify the order passed  by  the Appellate Collector of Customs under Section 128, it is  not barred by limitation. [105A] (Per M.M. Punchhi, J.--dissenting)     1(a)  Section  28  envisages three kinds  of  errors  in regard  to custom duties. One is non-levy. This  means  that the goods were not 99 classified  to  duty whereas they could be.  The  second  is short-levy.  In this could be included a case in  which  the goods could be classified in one Entry but were  erroneously classified  under another Entry resulting in  short-levy  of custom duty, or the like. The third is the case of erroneous refund.  This category springs up in the process of  assess- ment only where two kinds of error, i.e. non-levy or  short- levy may occur and lead to an erroneous refund. [108H; 109A]     (b) It is clear from section 28 that in case of duty not levied  or short-levied, the ’relevant date’ is the date  on which the concerned officer makes some orders for the clear- ance  of the goods on payment of duty on framing  the  final assessment as the case may be. [109E]     Geep  Flashlight  Industries Ltd. v. Union  of  India  & Ors., [1977] 1 SCR 983, referred to.     2. Since levy is linked to assessment, a case for refund may arise which may be erroneous. [109A]     In the instant case, the Tribunal seems to take the view that  sub-section (3) of Section 131, if employed,  eclipses sub-section (5) of Section 131. It was of the view that when the  Central Government on its own motion proposes to  annul or modify any order passed under Section 128 or Section  130 then  it  is  not lettered by the  time-limit  specified  in Section  28 even though it entertains the opinion  that  any duty  of  customs  has either not been levied  or  has  been short-levied.  This  approach appears to  wholly  erroneous. [108D-E]      3. There is nothing in the language of sub-section  (3) to suggest that it over powers or renders otiose sub-section (5).  Both the sub-sections need not militate  against  each other,  components  as they are of the singular  power  con- ferred  by  the legislature on the  Central  Government  for revision. [108E]      4.  The  harmonious way is, therefore,  to  read  these sub-sections would be that the Central Government is  empow- ered  on its own motion to annul or modify any order  passed under  Section  128 or Section 130, but if it  is  an  order whereby  any duty of customs has either not been  levied  or has  been short-levied, the Central Government can  levy  or enhance  the duty by giving the person affected by the  pro- posed order a notice to show-cause against it but within the time-limit specified in Section 28, which is six months from the date of the order. [100F-G] 100     5.  Merely because the Central Government had the  power

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to suo motu revise the orders of refund passed by the Appel- late Collector it does not follow a fortiori that it had the power  to  revise the orders of short-levy  at  that  stage. [110D]     6.  The orders of levy of duty in the instant case,  had two facets. The duty from the point of view of the appellant had  been excessively levied necessitating him to  challenge the same and seek refund. On the other hand, from the  point of  view  of  the Revenue, the duty  had  been  short-levied giving rise cause to have it levied under proper heading. It was incumbent on the Central Government to exercise its  suo motu  power under sub-section (3) read with sub-section  (5) of Section 131 within six months from 6.8.79, the date  when the duty was short-levied and undeniably the Central Govern- ment  did  not take such timely step even though  it  had  a cause  to do so. The appellant, however, made claim for  the refund of the excess duty levied taking shelter under anoth- er heading and on its refusal by the Assistant Collector  on 12.10.79  had its appeal accepted on 2.5.81 from the  Appel- late  Collector who ordered refund. The  Central  Government then  got  a  cause to take suo motu  action  under  Section 131(3)  of the Customs Act to annul or modify the  order  of the  Appellate Collector or the actual refund  itself  under that order. It being a case of erroneous refund  sub-section (3) of Section 131 was attracted and not sub-section (5)  of Section  131 as at that point of time it was not a  case  of non  levy or short-levy, and these two categories of  errors could  not  be equated with the error  of  erroneous  refund inasmuch  as  these three categories of errors  are  treated separately in the scheme of things. [109H; 100A-B]     7.  The error committed by the Tribunal, in the  instant case,  is so patent that it cannot be allowed to  go  uncor- rected as a tolerable error. The appeal has, therefore, to be allowed- The orders of the Tribunal passed in appeal have to  be modified so as to revive the order of  the   original assessment  dated  6.8.79  and the order  of  the  Assistant Collector  of  Customs  dated 12.10.79,  keeping  upset  the orders dated 2.5.81 of the Appellate Collector of Customs. [ 110G-H]

JUDGMENT:      CIVIL  APPELLATE JURISDICTION: Civil Appeal No 5014  of 1984.      From the Judgment and Order dated 3.9.84 of the Customs Excise  and Gold (Control) Appellate Tribunal, New Delhi  in Appeal No. 1604 of 1981-C in Order No. 674 of 1984-C. 101 A. Subba Rao for the Appellant.     Soli  J. Sorabjee, Attorney General, Ms.  Indu  Malhotra and P. Parmeshwaran for the Respondent. The Judgment of the Court was delivered by     SAWANT,  J. The appellant imported Top Line Tube  Winder Enddless  Belts  of the value of Rs.31,101 from  the  United Kingdom  under the Bill of Entry dated 6.8.1979.  The  goods were assessed to duty under heading 40.05/16(3) at 40%  plus countervailing duty at the rate of 25% under Item 16-A(4) of the Customs Tariff Act, 1975. The appellant thereafter  made an  application for refund of the excess of duty so  charged contending that the goods were in fact liable to be  classi- fied under heading 59.16/17 and without countervailing duty. The  Assistant Collector rejected the claim by his order  of 12.10.1979.  Against it, the appellants preferred an  appeal under  Section  128 of the Customs  Act,  1962  (hereinafter

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referred  to  as the ’Act’) to the  Appellate  Collector  of Customs. On May 2, 1981, the Appellate Collector allowed the appeal holding that the goods were classifiable under  head- ing 59.16/17.     2. On November 21, 1981, the Government issued a  notice to the appellant under Section 13 1(3) of the Act asking him to  show cause as to why the goods should not be  classified under heading 39.07 which attracted duty at 100% ad  valorem and also to show cause as to why the order of 2nd May,  1981 passed  by the Appellate Collector should not  be  annulled. Against the said show cause notice, the appellant  preferred an appeal to CEGAT. The contention with regard to limitation was  that the show cause notice was barred by limitation  as laid  down by sub-section (5) of Section 131 read with  Sec- tion  28 of the Act, which was six months from the  date  of short-levy  and in any case six months from the date of  the Appellate  Order. The Tribunal dismissed the appeal  holding that  the notice was in time and also further that  the  as- sessment proposed to be made under heading 39.07 was proper. It  is  against this decision of September 3,  1984  of  the Tribunal that the present appeal is preferred.     3. Before us the only contention raised is that the show cause notice was barred by limitation and hence, the Govern- ment  had no power to annul the Appellate Collector’s  Order under  Section 131(3) of the Act. The argument is  that  the limitation  for initiating action under sub-section  (3)  of Section 131 is laid down in sub-section (5) 102 thereof.  For,  the cases in which  the  Central  Government would  initiate action under sub-section (3) can only be the cases either of the absence of levy or of the short-levy  or of refund. In any of the said case,the limitation laid  down under sub-section (1) read with subsection (3) of Section 28 is six months. In the present case, the levy of duty was  on 6.8.1979 and the order of the Appellate Collector was of May 2, 1981, while the show-cause notice was issued on  November 21, 1981. In any case, therefore, the notice was beyond  six months and hence barred by limitation.      4. According to us, this contention is not available to the appellant in view of the decision of this Court in  Geep Flashlight Industries Ltd. v. Union of India & Ors.,  [1977] 1 SCR 983 in which it is held that the provisions of Section 13 1(5) and therefore the limitation laid down in Section 28 of  the Act do not apply to the action taken by the  Govern- ment under Section 131(3). The relevant observations are  as follows: "Once  the  provisions contained in section 131(3)  are  at- tracted, the Central Government may of its own motion  annul or modify any order passed under Section 128 or Section 130. This  provision is the power of Central Government to  annul or modify any order. This power is exercised by the  Central Government suo motu. Of course the power is to be  exercised on giving notice to the person concerned. The provisions contained in section 131(5) of the Act speaks of limitation only with regard to non-levy or short-levy. It is  significant  that section 131(5) does not speak  of  any limitation  in regard to revision by the Central  Government of its own motion to annul or modify any order of  erroneous refund of duty. The provisions contained in section 13  1(5) with regard to non-levy or shortlevy cannot be equated  with erroneous refund inasmuch as the three categories of  errors in the levy are dealt with separately."     5.  Further, even if it was held that the limitation  as laid  down  in Section 28 would apply to the  initiation  of action  under Section 131(3), since the appellate order  has

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only  allowed the appeal of the appellant declaring  him  as being entitled to the refund, and no refund has yet -   been made, the action of the Government under Section 131(3) is 103 clearly  not  barred by limitation. Section 28  of  the  Act states that when any duty has been erroneously refunded, the proper  Officer  may, within six months  from  the  relevant date,  serve notice on the persons chargeable with the  duty to whom the refund has erroneously been made, requiring them to  show cause why they should not pay the amount  specified in  the notice. Sub-section (3) of Section 28  then  defines the  expression  "relevant date" for the  purposes  of  sub- section  (1). Clause (c) of the said sub-section (3)  states that  the  "relevant  date" in a case where  duty  has  been erroneously refunded means the date of refund. The  decision in  Geep Flashlight Industries Ltd. case (supra)  has  while dealing  with this very aspect pointed out that in the  case of erroneous refund, the notice under Section 28 of the  Act has to be given within six months from the date of  "actual" refund.  If  no  refund has in fact  been  made,  limitation cannot  be  said to arise inasmuch as  the  "relevant  date" under  Section 28 in the case of erroneous refund speaks  of the date of refund. The Order granting refund is not  actual refund.  Admittedly, in the present case no refund has  been made  to  the appellant under the  Appellate  Customs  Order dated May 2, 1981. Hence, even if it is held that the provi- sions  of  sub-section (3) of Section 131  are  governed  by sub-section (5) thereof and, therefore, the limitation  laid down  under Section 28 of the Act applies to the  action  of the Government under Section 131(3), the present show  cause notice is not barred by limitation.     6.  Even  otherwise  we are also of the  view  that  the orders  which  are  contemplated under  sub-Section  (3)  of Section  131 are orders passed under Section 128 or  Section 130  only, namely, the order passed in appeal by the  Appel- late  Collector  or in revision by the  Board  respectively. Sub-section  (3) does not speak of any other order. That  is clear from the language of the said sub-section which  reads as follows: "(3)  The Central Government may of its own motion annul  or modify any order passed under Section 128 or Section 130".     It is, therefore, clear from the provisions of the  said sub-section  that  it  does not give power  to  the  Central Government  to  act  suo motu to annul or  modify  an  order passed  by  the original assessing authority. On  the  other hand,  the  provisions  of sub-section (5)  of  Section  131 contemplate  proceedings  against actions  of  the  original assessing authority which have resulted in either not  levy- ing or short-levying the goods. That sub-section by implica- tion  also covers cases of refunds. when goods  are  cleared initially under a provisional assessment, and 104 the final assessment shows that the assessee is entitled  to a  refund  of duty charged in excess earlier.  But  all  the cases whether of non-levy, short-levy or of refund which are contemplated in sub-section (5) are cases arising out of the acts of omissions and commissions of the original  assessing authority, and it is when such orders passed by the original assessing  authority  which  are sought to  be  annulled  or modified,  that  the provision of  limitation  contained  in Section 28 applies.     Thus the situations contemplated by sub-section (3)  and by  sub-section (5) are mutually exclusive in  that  whereas sub-section  (3) speaks of the annulment or modification  of the appellate or revisional orders, sub-section(5) speaks of

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the  orders  passed  by the  original  assessing  authority. Hence, the limitation applies when Government seeks to annul or  modify orders of the original assessing authority  under sub-section (5) and not when the Government takes action  to annul  or  modify the appellate or revisional  orders  under sub-section (3).     7.  This  interpretation  is also  consistent  with  the provisions  of  sub-sections (1) and (4) of  Section  13  1. Sub-section  (1)  speaks only of  appellate  and  revisional orders passed under Sections 128 and 130 respectively and of no  other order. Similarly, clauses (a) and (b) of the  sub- section  (4)  make a distinction between the  appellate  and revisional orders passed under Sections 128 and 130  respec- tively.  Where an appellate or revisional order has  already been passed enhancing any penalty or fine in lieu of confis- cation  or confiscating goods of greater value, it does  not permit  Government  to pass any order  again  enhancing  the penalty or fine. It, however, permits passing of such  order in any other case, but within a period of one year from  the date  of the order sought to be annulled or modified.  Hence the legislature has in Section 131 all along maintained  the distinction between the orders passed under Sections 128 and 130,  and other orders. Viewed from this angle also,  it  is necessary  to  read  the provisions of  sub-section  (3)  of Section 131 as being applicable only to orders passed  under Sections  128 and 130 and the provisions of sub-section  (5) as  being confined to orders other than those  passed  under Sections 128 and 130.     8. Hence, the conclusion is inescapable that the limita- tion prescribed by Section 28 is applicable when under  sub- section (5) of Section 131 the Government seeks to annul  or modify orders other than those passed under Sections 128 and 130.  It  is not applicable to the action taken  under  sub- section  (3) for annulling or modifying orders passed  under Sections 128 and 130. Since in the present case the 105 impugned  show-cause  notice is issued to  annul/modify  the order passed by the Appellate Customs under Section 128,  it will have to be held that it is not barred by limitation. 9.  In this view of the matter the appeal fails and is  dis- missed with costs.     PUNCHHI. J. Has the Central Government violated the  bar of  limitation while exercising suo motu  revisional  powers under  section 131 of the Customs Act, 1962 is  the  limited question  which  crops up for consideration in  the  instant appeal against the judgment and order of the Customs, Excise & Gold (Control) Appellate Tribunal. New Delhi dated Septem- ber 3, 1984 passed in Appeal No. CD(SB)(T) 1604/8 I-C.     The  appellant imported a consignment of top  line  tube winder  endless belts valued at Rs.31,101.  The  consignment came from the United Kingdom and was covered under a Bill of Entry dated 6.8.1979. The goods were assessed to duty  under heading 40.05/16(3) at 40% plus counter-vailing duty at  the rate  of 25% under Item 16-A(4) of the Customs  Tariff  Act, 1975. The appellant lodged a refund claim with the Assistant Collector on grounds which are factual in nature,  asserting that  the goods had not correctly been assessed to duty  and that they should have been assessed under a different  head- ing 59.16/17 of the Customs Tariff Act, 1975. On  12.10.1979 the claim for refund was rejected by the Assistant Collector by  an order. On appeal by the appellant the Appellate  Col- lector of Customs took a different view as to the nature  of the  consignment  imported  and assessed it  to  duty  under heading  59.16/17  allowing the  appeal  with  consequential relief.  On the report of the Collector of Customs the  Gov-

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ernment issued a suo motu show cause notice dated 21.11.1981 prima  facie being of the view that the Appellate  Collector was  not  correct  in classifying the  goods  under  heading 59.16/17  of the Customs Tariff Act, 1975, as also that  the original  classification under heading 40.05/16(3)  done  by the  Assistant Collector was also not in order.  The  matter thus was sent to the Customs, Excise & Gold (Control) Appel- late  Tribunal, New Delhi where the plea of  limitation  was raised  by the appellant besides raising factual pleas  with regard to the nature of the consignment and its liability to be classified under an appropriate head. The Tribunal, 106 instead, on facts classified the consignment as articles  of plastic under heading 39.07 of the Customs Tariff Act,  1975 and  not  under heading 59.16/17 as done  by  the  Appellate Collector  and  thus set aside the order  of  the  Appellate Collector allowing the revision.     The  plea  of time bar raised by the appellant  was  re- pelled by the Tribunal in the following words: "On  the  question of time bar we find  that  the  Appellate Collector  issued  the orders on 4.7.1981,  the  show  cause notice  was issued on 21.11.1981 and served on the party  on 24.11.1981. The show cause notice has therefore been  issued within  the  period of six months. Section 13  1(5)  of  the Customs  Act,  1962 refers to a case of non levy  and  short levy. For those cases the time limit of section 128 would be applicable.   Section  131(3) provides for the Central  Gov- ernment  to annul or modify any order passed  under  section 128  or  130.  The Supreme Court in  1983-ELT-1596  held  as follows :- ’The  provisions  contained in section 13 1(5)  of  the  Act speak  of limitation only with regard to non-levy or  short- levy.  It is significant that section 131(5) does not  speak of  any  limitation  in regard to revision  by  the  Central Government of its own motion to annul or modify any order or erroneous  refund of duty. The provisions contained in  sec- tion 13 1(5) with regard to non-levy or short levy cannot be equated with erroneous refund inasmuch as the three  catego- ries of errors in the levy are dealt with separately.’ That was a case of refund. In 1984-( 16)-ELT-332  (Collector of  Customs, Bombay v. Nav Bharat Enterprises, New Delhi,  ) it  was held that section 13 1(3) of the Customs  Act,  1962 empower the Central Government to annul or modify any  order passed  under that Act and that the time limit  provided  in section 131(5) would not be applicable to the notice  issued under 131(3). Further ’relevant date’ as provided under  the third  proviso  to section 36(2) will be computed  from  the date of passing of the Appellate Order and not from the date of  passing the order by the original  assessing  authority. The show cause notice is therefore in time." 107     Learned  counsel  for the appellant  has  confined  this appeal  to  the question of limitation. The  fact  that  the consignment was classifiable under head 39.07 of the Customs Tariff  Act,  1979 remains in  these  circumstances  unques- tioned. Section 131 of the Customs Act, 1962 is as follows: "131: REVISION BY CENTRAL GOVERNMENT--(1) The Central Government may, on the application of any person aggrieved by-- (a) any order passed under section 128, or (b) any order passed under section 130 otherwise than on the application of any aggrieved person, or (c)  any  order passed on the application of  any  aggrieved person  under section 130 where the order is of  the  nature

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referred  to in either of the provisions to sub-section  (1) of that section, annul or modify such order. (2)  An  application  under sub-section (1)  shall  be  made within six months from the date of the communication to  the applicant  of  the order against which  the  application  is being made:           Provided that the Central Government may, if it is satisfied  that  the applicant was prevented  by  sufficient cause  from presenting the application within the  aforesaid period  of  six months, allow it to be  presented  within  a further period of six months. (3)  The Central Government may of its own motion  annul  or modify any order passed under section 128 or section 130. (4)  No order enhancing any penalty or fine in lieu of  con- fiscation  or confiscating goods of greater value  shall  be passed under this Section-- (a) in any case in which an order passed under 108 section 128 or section 130 has enhanced any penalty or  fine in   lieu   of  confiscation  or   has   confiscated   goods of greater value; and (b)  in  any other case, unless the person affected  by  the proposed  order has been given notice to show cause  against it, within one year from the date of the order sought to  be annulled or modified. (5) Where the Central Government is of opinion that any duty of  customs has not been levied or has been shortlevied,  no order levying or enhancing the duty shall be made under this section, unless the person affected by the proposed order is given notice to show cause against it within the  time-limit specified in section 28." The Tribunal seems to take the view that sub-section (3)  of section  131, if employed, eclipses sub-section (5) of  sec- tion  131. In other words, the Tribunal seemingly is of  the view  that  when the Central Government on  its  own  motion proposes  to annul or modify any order passed under  section 128 or section 130 then it is not lettered by the time-limit specified in section 28 even though it entertains the  opin- ion  that any duty of customs has either not been levied  or has  been  shortlevied. This approach appears to  us  to  be wholly  erroneous. There is nothing in the language of  sub- section (3) to suggest that it over powers or renders otiose sub-section  (5).  Both the sub-sections need  not  militate against  each other, components as they are of the  singular power conferred by the legislature on the Central Government for revision. The harmonious way to read these  sub-sections would be that the Central Government is empowered on its own motion to annul or modify any order passed under section 128 or  section  130 but if it is an order whereby any  duty  of customs has either not been levied or has been short-levied, the  Central  Government  can levy or enhance  the  duty  by giving the person affected by the proposed order a notice to show cause against it but within the time-limit specified in section 28, which is six months from the date of the order.     Section 28 envisages three kinds of errors in regard  to custom  duties. One is non-levy. This means that  the  goods were  not  classified  to duty whereas they  could  be.  The second  is short-levy. In this could be included a  case  in which  the goods could be classified in one Entry  but  were erroneously  classified  under another  Entry  resulting  in shortlevy  of  customs duty, or the like. The third  is  the case  of erroneous refund. This category springs up  in  the process of assessment only where two kinds of errors.  i.e., non-levy  or short-levy, may occur and lead to an  erroneous

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refund. Since levy is linked to assessment, a case 109 for  refund may arise which may be erroneous. These are  the three categories of known errors in regard to duties.     In Geep Flashlight Industries Ltd. v. Union of India and Others,  [1977] 1 SCR 983, this Court had occasion  to  deal with  a  case of erroneous refund and  while  examining  the scope of section 28 of the Act ruled as follows: "The provisions contained in section 28 of the Act speak  of non-levy,  short-levy and erroneous refund.  The  provisions state  that  notice  of non-levy,  short-levy  or  erroneous refund  should be given within six months from the  relevant date.  Section 28(3) states what the ’relevant date’  means. In  the case of duty not levied, the ’relevant date’ is  the date  on  which the proper officer makes an  order  for  the clearance of the goods. In a case where duty is provisional- ly  assessed under section 18 of the Act, the relevant  date is  the date of adjustment of duty after the  final  assess- ment.  In a case where duty has been  erroneously  refunded, the relevant date is the date of refund. In any other  case, the relevant date is the date of payment of duty." It  can thus be clearly gathered that in cases of  duty  not levied  or short-levied the "relevant date" is the  date  on which the concerned officer makes some orders for the clear- ance  of  the  goods on payment of no duty or  the  date  of adjustment  of duty on framing the final assessment, as  the case may be.     Now  reverting  to the facts of the instant case  it  is evident that the goods were classified and assessed to  duty under  one heading, say A, on 6.8.1979 whereafter claim  for refund  was made by the appellant which was rejected by  the Assistant  Collector  on  12.10.1979. The  exercise  of  the Assistant Collector in levying duty under heading A, when it should  have been levied under another heading, say  C,  de- spite  the appellant’s claim that it should be  still  under another  heading, say B, was a case of short-levy in so  far as the goods were classified as attracting lesser duty under heading A whereas higher duty should have been attracted  on classifying  it  under heading C. So the orders of  levy  of duty had two facets. The duty from the point of view of  the appellant  had been excessively levied necessitating him  to challenge the same and seek refund. On the other hand,  from the  point of view of the revenue the duty had  been  short- levied  giving  rise cause to have it  levied  under  proper heading.  If  these two facets are understood in  the  right perspective,  it was incumbent on the Central Government  to exercise its suo motu power under sub-section (3) read  with sub-section  (5)  of  section 131  within  six  months  from 6.8.1979, the date when 110 the duty was short-levied and undeniably the Central Govern- ment  did  not take such timely step even though  it  had  a cause  to do so. The appellant, however, made claim for  the refund of the excess duty levied taking shelter under anoth- er heading and on its refusal by the Assistant Collector  on 12.10.1979  had  its appeal accepted on  2.5.1981  from  the Appellate Collector who ordered refund. The Central  Govern- ment then got a cause to take suo motu action under  section 13  1(3)  of the Customs Act, 1962 to annual or  modify  the order  of  the  Appellate Collector, or  the  actual  refund itself under that order, in accordance with Geep  Flashlight Industries case (supra). It being a case of erroneous refund sub-section  (3) of section 131 was attracted and  not  sub- section  (5) of section 131 as at that point of time it  was not a case of non-levy or short-levy, and these two  catego-

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ries of errors could not be equated with the error of  erro- neous  refund inasmuch as these three categories  of  errors are  treated  separately  in the scheme  of  things.  Merely because  the  Central Government had the power to  suo  motu revise the orders of refund passed by Appellate Collector it does  not follow a fortiori that it had the vower to  revise the orders of short-levy at that stage. The ultimate  analy- sis is that if there was an error of short-levy in the order of the Assistant Collector in classifying goods at A instead of C as claimed by the revenue and not classifying them at B as  claimed by the importer, then on the grant of relief  by the  Appellate Collector classifying them under  heading  B, can at best give occasion to the Central Government to annul or modify the classification brought under head B, and so as to  leave it classified at heading A, but could not have  it re-classified under heading C unless the exercise was under- taken  within  the  period of  limitation  prescribed  under section 28 as required under sub-section (5) of section  131 of the Customs Act, 1962. The error committed by the  Tribu- nal,  for  the view afore-expressed,, is so patent  that  it cannot  be allowed to go uncorrected as a  tolerable  error. Inevitably  this  appeal is to be, and is,  hereby  allowed. modifying  the orders of the Tribunal passed in  Appeal  No. CD(SB)(T) 1604/81-C so as to revive the order of the  origi- nal assessment dated 6.8.1979 and the order of the Assistant Collector of Customs, Madras dated 12.10.1979, keeping upset the  orders  dated 2.5.1981 of the  Appellate  Collector  of Customs, Madras passed in Appeal No C, 3,,2 12/80.    The appellant shall have their costs. ORDER     According  to the decision of the majority.  the  appeal stands dismissed with costs. N.V.K. 111