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2024 (2) TMI 1539 - HC - Central ExciseRecovery of excise duty (compounded levy amount and interest) under Section 3A of the Central Excise Act 1944 and Rule 96ZP of the Central Excise Rules 1944 - continuation of proceedings after the omission of the provisions without any saving clause - HELD THAT - In the facts of the case admittedly the show-cause notices were issued prior to the year 2001 however the proceedings continued before this Court and before the Tribunal thereafter and upon remand of the matter by the Tribunal before the Commissioner of Central Excise in the year 2009 the impugned order is passed in the year 2010 and in response to the remanded proceedings the petitioner has raised the dispute with regard to the continuation of the proceedings after the omission of the Rules 96ZP and Section 3A of the Act before the Commissioner of Income Tax. However the respondent Commissioner has without considering such submissions held that the provisions of Sub-rule 3 of Rule 3 of the Hot Rolling Mills Annual Capacity Determination Rules 1997 read with provision of Sub-rule 1 of Rule 96ZP will be applicable in the facts of the case and decided the issue against the petitioner by fixing the APC for the various periods from 1998-99 onwards by raising the demand of Rs.33, 52, 443/-. On perusal of the impugned order it appears that the respondent authorities have not considered the aspect of continuation of the proceedings. However it is also true that at the relevant time the decision of this Court in case of Krishna Processors 2012 (11) TMI 954 - GUJARAT HIGH COURT was not available. This Court has delivered the judgment in case of Krishna Processors 2012 (11) TMI 954 - GUJARAT HIGH COURT in the year 2012 which was considered by the Hon ble Apex Court in the case of Shree Bhagwati Steel Rolling Mills 2015 (11) TMI 1172 - SUPREME COURT in the year 2015 by confirming the same. The Hon ble Apex Court in case of Shree Bhagwati Steel Rolling Mills 2015 (11) TMI 1172 - SUPREME COURT was mainly concerned with the levy of interest and penalty under Rules 96ZO 96ZP and 96ZQ of the Central Excise Rules 1994 which were held to be ultra vires by this Court in the case of Krishna Processors and the rules relating to levy of penalty were struck down as being ultra vires and violative of Articles 14 and 19(1)(g) of the Constitution of India. The Hon ble Apex Court after considering the effect of the decision in case of The Fibre Board s 2015 (8) TMI 482 - SUPREME COURT wherein the view was taken that an omission would amount to a repeal after referring to several authorities of the Hon ble Apex Court and G.P.Singh s Principles of Statutory Interpretation Section 6A of the General Clauses Act 1897 and a passage in Halsbury s Laws of England arrived at the conclusion that omission would amount to a repeal for the purpose of Section 24 of the General Clauses Act and since the same expression namely repeal is used both in Section 6 and Section 24 of the General Clauses of the Act the construction of the said expression in both the sections would therefore include within it omissions made by the legislature. Conclusion - Neither Section 3A nor Rule 96 ZP existed on the statute book when the Commissioner passed the order in November 2010 as the aforesaid provisions have been omitted vide notification no.6/2001 dated 01.03.2001 the aforesaid rule was omitted whereas Section 3A came to be omitted vide Section 121 of the Finance Act 2001 which would amount to repeal of Section 3A as well as Rule 96(ZP). When the order dated 09/10 April 2003 was passed by the Commissioner against which the appeal was preferred before the Appellate Tribunal the provisions were omitted. Petition allowed.
ISSUES PRESENTED and CONSIDERED
The core legal question considered in this judgment was whether the proceedings for recovery of excise duty under Section 3A of the Central Excise Act, 1944, and Rule 96ZP of the Central Excise Rules, 1944, could continue after the omission of these provisions without any saving clause. Specifically, the Court examined if the omission of these provisions amounted to a repeal and whether any pending proceedings could be concluded thereafter. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents Section 3A of the Central Excise Act, 1944, introduced by the Finance Act, 1997, allowed for excise duty to be levied based on the annual production capacity (APC) of certain goods, rather than actual production. Rule 96ZP of the Central Excise Rules, 1944, provided the procedure for determining and collecting this duty. Both provisions were omitted in 2001 without a saving clause. The Court examined precedents, including the decisions in Kolhapur Cane Sugar Works Limited and Rayala Corporation Pvt. Ltd., which held that omission of a statutory provision is tantamount to repeal, and such repeal without a saving clause does not allow for continuation of proceedings under the omitted provisions. Court's Interpretation and Reasoning The Court interpreted the omission of Section 3A and Rule 96ZP as equivalent to a repeal, relying on the principle that omission without a saving clause does not preserve the right to continue proceedings initiated under the omitted provisions. The Court referenced the decision in Shree Bhagwati Steel Rolling Mills, where the Supreme Court confirmed that omission amounts to repeal, thus preventing the continuation of proceedings. Key Evidence and Findings The Court found that the proceedings against the petitioner were initiated based on the omitted provisions. The Commissioner of Central Excise had passed an order for recovery of duties based on APC, which the petitioner contested, arguing that the omission of the provisions rendered such proceedings void. The Court noted that the omission of the provisions occurred before the Commissioner's order was finalized, making the proceedings unauthorized. Application of Law to Facts The Court applied the legal principles regarding omission and repeal to the facts, concluding that since Section 3A and Rule 96ZP were omitted without a saving clause before the final order was passed, the proceedings could not be legally sustained. The absence of a saving clause meant that no further action could be taken under the omitted provisions. Treatment of Competing Arguments The petitioner's argument that the omission of the provisions precluded any further proceedings was supported by the Court's interpretation of the law. The respondent's reliance on Section 38A of the Central Excise Act, which was argued to save obligations and liabilities incurred under the omitted provisions, was not upheld, as the Court found that Section 38A did not apply to omissions. Conclusions The Court concluded that the proceedings against the petitioner for recovery of compounded levy amounts were unauthorized due to the omission of the relevant legal provisions without a saving clause. The impugned order by the Commissioner of Central Excise was quashed. SIGNIFICANT HOLDINGS The Court held that the omission of Section 3A of the Central Excise Act and Rule 96ZP of the Central Excise Rules amounted to a repeal, and without a saving clause, no proceedings could continue under these provisions. The Court emphasized the principle that omission is equivalent to repeal, which precludes continuation of proceedings unless explicitly saved by a legislative provision. The final determination was that the impugned order demanding recovery of excise duty based on APC was without jurisdiction and could not be sustained. The Court quashed the order, affirming that no proceedings were permissible against the petitioner for the periods in question due to the omission of the relevant statutory provisions.
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