Difference between Rules and regulations, Other Topics

[RAJESH SANGHVI]

I wanted to know strictly legally speaking what is the difference between rules and regulations ?

Posts / Replies

[KASTURI SETHI]

Dear Rajesh Sanghvi Ji,

Easily available on google or in any legal dictionary.

[raghunandhaanan rvi]

Sir,

The distinction between rules and regulations under Customs Act is that authority to make rules is with the Central Government under section 156 of the Customs Act. Whereas authority to make regulations is with CBIC (Board) under section 157 of the customs act. Rules have to be placed before parliament while regulations are framed by CBIC are not required to be placed before Parliament. But both have statutory force and are enforcesable.

[raghunandhaanan rvi]

Further, Rules are made consistent with provisions of the Customs Act to carry out the purpose of the act, whereas regulations are made by the board consistent with the provisions of the act and rules.

[KASTURI SETHI]

Sh.Raghunandhaanan rv Ji,

Sir, Are you 100 % sure that both rules and regulations have a statutory force ? Pl. confirm. Thanks & regards.

[KASTURI SETHI]

Extract of Board's Circular No. 1063/2/2018-CX, dated 16-2-2018 wherein the judgement of Hon'ble Supreme Court was accepted. The Supreme Court set aside penalty imposed upon the assessee under Rule 96 ZP of erstwhile Central Excise Rules, 1944 on the ground "not being by statute".

"1.2 In the case of M/s. Shree Bhagwati Steel Rolling v. Commissioner of Central Excise & Others [2015 (11) TMI 1172 - SUPREME COURT], the Hon’ble Supreme Court examined the question of law whether interest and penalty provisions under rules 96ZO, 96ZP and 96ZQ which were framed to effectuate the provisions of Section 3A of the Central Excise Act, 1944 are consistent with the provisions of the Act and held that they are ultra vires. An excerpt from the judgment is reproduced below,

“...imposition of a mandatory penalty equal to the amount of duty not being by statute would itself make rules 96ZO, 96ZP and 96ZQ without authority of law. We, therefore, uphold the contention of the assessees in all these cases and strike down rules 96ZO, 96ZP and 96ZQ insofar as they impose a mandatory penalty equivalent to the amount of duty on the ground that these provisions are violative of Article 14, 19(1)(g) and are ultra vires the Central Excise Act.”

[raghunandhaanan rvi]

Dear Shri. Kasthuri Sir.

My views were based on the following case laws:

Powers are given by an Act to the Government or some other authority for issuing notifications or making rules for prescribing procedures and are published in the official gazette. If the rules or regulations are made or notification issued under the powers granted in the act, they have the same force as the main Act as held by Hon. Supreme Court in the case of Sukhdeo Singh vs Bhagatram Sardar Singh Raghuvanshi 1975 (2) TMI 111 - SUPREME COURT.

Further, Hon. Supreme Court also held in the case of Pune Municipal Corporation v Promoters and Builders Association published in 2004 (5) TMI 584 - SUPREME COURT as “ Rules framed under the statute form part of the statute. They have statutory force.

Hon. Supreme Court in the case of Shree Bhagavathi Steel Rolling Mills v CCE 2015 (11) TMI 1172 - SUPREME COURT held that penalty and interest cannot be levied by making rules, in absence of any specific provision in the Act.

Similarly, In General Officer Commanding-in-Chief v. Dr. Subhash Chandra Yadav 1988 (2) TMI 462 - SUPREME COURT, the Supreme Court explained the position thus: “It is well settled that rules framed under the provisions of a statute form part of the statute. In other words, rules have statutory force. But before a rule can have the effect of a statutory provision, two conditions must be fulfilled, namely, (1) it must conform to the provisions of the statute under which it is framed; and (2) it must also come within the scope and purview of the rulemaking power of the authority framing the rule. If either of these two conditions is not fulfilled, the rule so framed would be void.”

In Union of India v. S. Srinivasan - 2012 (7) TMI 710 - SUPREME COURT the above principles were reiterated in the following words :

At this stage, it is apposite to state about the rulemaking powers of delegating authority. If a rule goes beyond the rule-making power conferred by the statute, the same has to be declared ultra vires. If a rule supplants any provision for which power has not been conferred, it becomes ultra vires. The basic test is to determine and consider the source of power which is relatable to the rule. Similarly, a rule must be in accord with the parent statute as it cannot travel beyond it.”

The Hon. Supreme Court in the case of CCE vs Ashok Arc published in 2004 (12) TMI 94 - SUPREME COURT held that “it is worth noting that rules and notifications cannot override the provisions of the act and cannot be derogatory to the object of the Act. Thus, a rule cannot override or be contrary to a Section in the act

Lastly, The Rajasthan High Court, in Gopi Krishna v. the State of Rajasthan 1987 (2) TMI 531 - RAJASTHAN HIGH COURT succinctly stated: A distinction is to be drawn between administrative/executive order or circular and the rules framed in exercise of the powers given under some Act. Such rules have statutory force and can be made effective retrospectively or prospectively as the circumstances require.

[KASTURI SETHI]

Sh. Raghunandhaanan Rvi Ji,

Sir, You have echoed my views in toto. All these thoughts were brewing in my mind. Thanks a lot for your comprehensive, reasoned and logical reply/response. You have devoted your precious time for quenching my thirst for knowledge.

Regulations are directives only. Do you agree ?

Warm regards.

[raghunandhaanan rvi]

Sir

Under Section 157 of the Customs Act, Board (CBIC) has been empowered to make Regulations consistent with provisions of the act to carry out the purpose of the Act. Thus, Board has made various regulations framed under these powers. Few such regulations are Project import Regulations 1986 prescribes procedure of project imports, CHA Licensing Regulations, etc.

Further, the following case laws state that ‘Regulations have statutory force and cannot be treated as a directory.

In the case of Sukhdev Singh versus Bhagatram Sardar Singh - 1975 (2) TMI 111 - SUPREME COURT, the Hon. Supreme Court held that Regulations framed under statutory provisions would have the force of law.

Similarly, Madras High Court in the case of Commissioner of Customs Tuticorin vs MKS Shipping Agencies Private Limited - 2016 (11) TMI 135 - MADRAS HIGH COURT held that: Customs House Agent Licensing Regulations have statutory force and the time limit of 90 days prescribed under Regulation 22(1) is Mandatory and cannot be treated as a directory.

Thanks