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2015 (9) TMI 151 - HC - Central ExciseWhether Rule 5 of the Rules is liable to be declared unconstitutional, violative of Article 14 and/or ultra vires Section 3A of the Central Excise Act, 1944 - Rule 5 of the Hot Re-rolling Mills Annual Capacity Determination Rules, 1997 - Held that:- Thus, challenge to Rule 5 is based on the scheme contained in Section 3A of the Act and Rules 1 to 4 of the Rules. This rule according to the appellant, not only runs counter to Section 3A but is also violative of Article 14 of the Constitution. - taxation laws are also subject to fundamental rights guaranteed under the Constitution. It is also settled that tax law cannot be challenged merely on the ground that the rate of tax is very high unless the tax is a colorable devise to confiscate the property. The principle that a tax which is discriminatory is void as violating Article 14 is also indisputable. Though the principle is not in dispute, its application is open to judicial review. Rule provides that if the production during the year 1996-97 was more than the production determined by the formula in Sub-rule (3) of Rule 3 of the Rules, then that has to be taken as the annual capacity for the financial year 1997-98 and the subsequent years. This rule, it seems, was introduced keeping in view the fact that without there being any change in the plant and machinery, including man power, there should not be any reason why factory should have more production in 1996-97 than 1997-98. In other words, without there being any change in the plant and machinery and the other infrastructure including man power, if class 'A' manufacturer in 1996-97 could produce 150 bars/rods there was no reason for him to produce less number of bars/rods in 1997-98 unless there is a reason and the evidence in support thereof and if there is any such reason or evidence the manufacturer can take recourse to sub-section (4) of Section 3A of the Act. It was also to check mischief, if any, on the part of manufacturer to show or go for lower/less production to gain an advantage of the scheme. We find that the classification have a rational nexus with the object sought to be achieved by the law. The State, in the exercise of its governmental power, has, of necessity, to make laws operating differently in relation to different groups or class of persons to attain certain ends. - Rule 5 is neither violative of Article 14 of the Constitution nor ultra vires the provisions contained in Section 3A of the Act - Decided against assessee.
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