Court’s decision
The CESTAT Customs excise and service tax appellate tribunal Chennai allowed the appeals by way of remand, setting aside the appellate order which had rejected the appeals solely on the ground of limitation. The Court held that the period of nearly two years spent by the importer in diligently pursuing a refund claim before the refund-sanctioning authority must be excluded while computing limitation for filing the statutory appeal.
The Tribunal relied on Section 14 of the Limitation Act, 1963, and held that administrative inaction by customs authorities, coupled with delayed communication, constituted sufficient cause. It emphasized that a litigant cannot be penalised for departmental delay, especially where the authority itself advised the appellant belatedly to approach the appellate forum.
The Tribunal further held that the appellate authority had passed a cryptic and non-speaking order, failing to consider core submissions on limitation and exclusion of time. Such an order was held to be legally unsustainable and violative of principles of natural justice.
Accordingly, the matter was remanded to the appellate authority with directions to treat the appeals as within limitation, grant a proper hearing, verify certificates of origin, examine eligibility to exemption, and pass a reasoned order on merits, keeping all issues open including unjust enrichment.
Facts
The importer had cleared goods by paying customs duty at the merit rate because certificates of origin were not available at the time of filing the bills of entry. The goods were otherwise eligible for exemption under a customs notification providing preferential duty benefits for imports from specific countries upon production of certificates of origin.
After clearance, the importer received the certificates of origin and promptly approached the refund-sanctioning authority seeking refund of the duty paid. The refund request remained pending for an extended period, despite repeated follow-ups, ultimately compelling the importer to approach the grievance redressal mechanism to obtain any response.
Nearly two years later, the department responded stating that reassessment could not be granted unless the original assessment was modified through appeal, citing a Supreme Court decision and a public notice that were issued long after the refund request was filed.
Acting on this advice, the importer filed appeals before the appellate authority. These appeals were dismissed as time-barred without examining the merits, leading to the present proceedings before the Tribunal.
Issues
The primary issue before the Tribunal was whether the period spent by the importer in pursuing a refund before an authority lacking jurisdiction could be excluded for the purpose of limitation while filing a statutory appeal.
A connected issue was whether reassessment could be denied solely on the ground that duty had not been paid under protest, without examining the claim on merits.
The Tribunal also examined whether the appellate authority had discharged its obligation to pass a reasoned and speaking order dealing with the submissions advanced by the appellant.
Petitioner’s Arguments
The importer contended that the rejection of the appeals on limitation was unjust, arbitrary, and contrary to settled law. It was argued that the importer had diligently pursued the refund remedy and was prevented from filing an appeal earlier due to complete inaction on the part of the department.
It was submitted that Section 14 of the Limitation Act permits exclusion of time spent before a wrong forum, provided the proceedings were bona fide and diligently prosecuted. The importer emphasized that the refund authority’s two-year silence placed it in a disadvantageous position without any fault on its part.
The importer further argued that the appellate order was vague and non-speaking, having failed to consider submissions on limitation, judicial precedents, and the impact of administrative delay, thereby violating principles of natural justice.
Respondent’s Arguments
The revenue opposed the appeals on the ground that the importer had accepted the assessment by clearing the goods without paying duty under protest. It was argued that once assessment was accepted, reassessment could not be sought subsequently.
The department also contended that the appeals were filed far beyond the statutory period prescribed under the Customs Act and that the appellate authority had no power to condone such delay beyond the permissible limit.
According to the revenue, the impugned appellate order was legally correct and did not warrant interference, as the importer had failed to follow the proper statutory route within the prescribed time.
Analysis of the law
The Tribunal undertook a detailed analysis of Section 14 of the Limitation Act, 1963, reiterating that the provision is intended to advance substantial justice and must be interpreted liberally. It applies where a litigant, acting in good faith, prosecutes a remedy before a forum that ultimately lacks jurisdiction.
The Tribunal held that administrative delay and departmental inaction can render a statutory remedy illusory. Where the authority itself fails to act within a reasonable time and later advises the litigant to pursue an appellate remedy, the intervening period cannot be counted against the litigant.
The Tribunal also examined the obligation of appellate authorities to pass reasoned orders. It reaffirmed that failure to deal with material submissions and legal pleas amounts to violation of natural justice, rendering the order unsustainable in law.
Precedent Analysis
The Tribunal relied on multiple decisions recognising exclusion of time spent before an incorrect forum. These precedents consistently hold that litigants should not be prejudiced for procedural errors or administrative lapses when they act with diligence and bona fides.
The Tribunal also drew support from judgments emphasizing that appellate orders must be speaking orders. The requirement to record reasons is not a mere formality but a substantive safeguard ensuring fairness, transparency, and accountability in adjudication.
By applying these principles, the Tribunal concluded that the impugned order failed to meet minimum legal standards and could not be sustained.
Court’s Reasoning
The Tribunal found that the refund authority’s prolonged inaction of nearly two years was contrary to service delivery obligations and had directly contributed to the delay in filing appeals. It held that such unexplained administrative inertia constituted sufficient cause for exclusion of time.
The Tribunal observed that had the department responded within a reasonable period, the importer could have approached the appellate authority within limitation. The delay was therefore not attributable to negligence or inaction on the part of the importer.
The Tribunal further held that the appellate authority had mechanically rejected the appeals without addressing core legal submissions, rendering the order cryptic and non-speaking. On this ground alone, the order was liable to be set aside.
Conclusion
The Tribunal allowed the appeals by way of remand, holding that the appeals were not barred by limitation once the two-year period of departmental inaction was excluded. The impugned appellate order was set aside for being legally infirm and violative of natural justice.
The appellate authority was directed to hear the matter afresh, verify the certificates of origin, examine eligibility to exemption, and pass a reasoned speaking order on merits. All issues were expressly kept open for adjudication.
Implications
This decision reinforces the principle that procedural technicalities cannot override substantive justice in customs adjudication. It sends a clear message that administrative delay by authorities cannot be used as a weapon to defeat statutory rights.
The ruling has significant implications for importers seeking reassessment or refunds based on subsequently available documents. It also strengthens the jurisprudence on exclusion of time under limitation laws in tax and customs disputes.
Most importantly, the judgment reiterates that reasoned orders are the backbone of fair adjudication and that cryptic dismissals will not withstand judicial scrutiny.