2015 (1) TMI 131 - HC - Central Excise

Production capacity based duty - Whether the Appellate Tribunal is correct in allowing the appeal of the respondent on the ground that the ACP Rules were suffering from the vice of illegality and unconstitutionality right from the day on which they were made and the determination of ACP by the Commissioner and the procedure laid down for matters such as determination of duty liability collection of duty abatement etc. were all futile exercises - Held that - substantial question of law does not survive at this point of time as the Rules under which demand has been made namely Hot Air Stenter Independent Textile Processors ACP Determination Rules 1998 issued under Notification 42 of 1998 dated 10.12.1998 has been struck down by this Court in the case of Beauty Dyers V. Union of India reported in 2001 (12) TMI 95 - HIGH COURT OF JUDICATURE AT MADRAS - Since the issue has already been decided by this Court in the manner stated above pending review is not a ground to keep this appeal pending on the file of this Court. Accordingly the questions of law are academic since the Rule under which demand has been made has been struck down. - Decided against Revenue.

Summary

Issues:
Challenge to the Final Order of the Customs, Excise and Service Tax Appellate Tribunal based on the legality and constitutionality of ACP Rules.

Analysis:
The Civil Miscellaneous Appeal was filed by the Department challenging the Final Order of the Customs, Excise and Service Tax Appellate Tribunal. The substantial question of law raised was whether the Appellate Tribunal was correct in allowing the appeal on the ground that the ACP Rules were illegal and unconstitutional from their inception. However, this question became irrelevant as the Rules in question, the Hot Air Stenter Independent Textile Processors ACP Determination Rules, 1998, were struck down by the Madras High Court in a previous case. The Court held that the Rules did not provide a valid method to determine production capacity for the purpose of levying excise duty, as they were based on a flat rate fixed by the Central Government without a proper basis. Consequently, the Rules were deemed ultra vires Section 3A of the Act, leading to their invalidation.

The Department's subsequent appeals, including Writ Appeal Nos.2366 to 2369 of 2002, were dismissed by the High Court and the Supreme Court, affirming the invalidity of the Rules. Although a review application by the Department was pending before the Supreme Court, the High Court determined that the issue had been conclusively settled by its previous decisions. Therefore, the pendency of the review application did not justify keeping the present appeal alive. The Court emphasized that the questions of law had become academic due to the invalidation of the Rules under which the demand was made.

In conclusion, the Civil Miscellaneous Appeal was dismissed by the High Court, with no costs awarded. The judgment reaffirmed the earlier decisions invalidating the ACP Rules and clarified that the Department's appeal could not be sustained in light of the Rules' annulment. The legal battle surrounding the legality and constitutionality of the ACP Rules had been conclusively resolved through the series of judicial decisions, leading to the dismissal of the Department's appeal.