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TMI Blog2006 (7) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... period from March, 1998 to March, 2000. Hence, 4 show cause notices were issued proposing recovery of the duty short paid together with interest at the rate of 18% per annum from the due date till the actual date of payment and proposing imposition of penalty. Details of the notices are as under: SCN date Period Amount (in Rs.) 1. 28.9.98 & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, he worked out the production on pro-rata basis as 153.424 M.T. and worked out duty liability to Rs. 1,15,068/- and since they had paid only Rs. 17,595/-, duty short paid was Rs. 97,473/- which he ordered to be recovered with interest. For the year 1998-99, their duty liability was determined as Rs. 84 lakhs, out of which the assessee had paid only Rs. 9,08,006/- and therefore, they were liable to pay the differential amount of Rs. 74,91,994/- together with interest. The duty liability for the year 1999-2000 was determined as Rs. 35, 00,004/- for the year April to September 1999 while they had paid only Rs. 7,33,331/- and therefore, Rs. 27,66,673/- short paid was directed to be recovered together with interest. For the period October, 1999 to March, 2000, in the absence of any evidence on record that the factory was closed during this period, they were liable to pay the full amount of Rs. 35, 00,004/- which amount was confirmed against them together with interest. He held that the assessee was liable to penalty equal to duty amount outstanding against them in respect of each of the 4 show cause notices. 3. The appellants who are manufacturers of ingot steel, purchased the factor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc., is really not relevant for the purpose of the present case. Only the portion of the judgment of the Supreme Court in Rayala Corporation which states that Section 6 does not apply to "omission" is rightly relied upon by the appellants in the present case to assist the plea. vi) Section 38A of the Central Excise Act, 1944 is also not applicable in this case, since it does not deal with"section".It deals only with "rules", "notification" or "order". vii) Hence, in absence of any saving clause in Section 121 or any other Section of the Finance Act, 2001 or in the Central Excise Act, 1944, the pending proceedings cannot be continued. All show cause notice issued under Section 3A which are pending for assessment after 11.5.2001 the date of omission could not be therefore be proceeded with much less adjudicated. Therefore, the Order-in-Original needs to be set aside in its entirety. viii) The substantive mother provision for Rule 96Z0 is undoubtedly Section 3A. Thus, Section 3A was omitted w.e.f. 11.5.2001 by Finance Act, 2001. Vide Notification No. 24/97-CE (NT) dated 25.7.1997, the Central Government framed Induction Furnace Annual Capacity Determination Rules, 1997 (hereafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings cannot survive and hence the impugned Order-in-Original with all consequent liabilities is liable to be set aside. e) The plea on interest provision on a taxing statute to be a substantive provision, is a plea to be upheld in view of the Constitutional Bench of Supreme Court decision in case of VVS Sugars Vs. Govt. of AP (1999) (4) SCC 192 holding as - "6...This Court in India Carbon Ltd. Vs. State of Assam has held after analyzing the Constitution Bench judgment in J.K. Synthetics Ltd. Vs. CTD that interest can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax makes a substantive provision in this behalf..." & after perusal of Section 37 (1) Central Excise Act, 1944, which is only a general rule making power conferred cannot be read and relied to upon uphold the delegated 'interest clause in Rule 96Z0 (3)' as pleaded by ld. DR. The decision of the Supreme Court in Kunj Behari Lal & Ors. Vs. state of H.P. - 2000 (3) SGC 40 wherein it was held as "14. We are also of the opinion that a delegated power to legislate by making rules "for carrying out the purpose of the Act is a general delegation without laying down any gui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of penalty because there was no provision in the Central Sales Tax Act, 1956 authorising such a rule to be made. Revenue relied upon Section 13 (3) of the Central Sales Tax Act, 1956 which conferred power on the State Government to make rules, no inconsistent with the provisions of this Act and the rules made under sub-section (1), to carry out the purposes of the Central Sales Tax Act, 1956. The High Court rejected the Revenue's contention and held that "unless the statute expressly authorizes the Rules to create a penal liability, the rule-making authority would have no jurisdiction to create a penal liability". The High Court relied upon following judgments for reaching to above conclusion: a) Guldas Narasappa Thimmiah Oil Mills Vs. CCE 1970 (25) STC 489 (Mys) b) Shri Mohan Lal Chokany Vs. CTO 1971 (28) SIC 367 (Cal) c) Hurdatroy Jute Mills Vs. Superintendent of Commercial Taxes - 1972 (30) SIC 151 (Pat.). v) The power under Section 37 (3) of the Central Excise Act 1944 is already exhausted by the Central Government by enacting Central Excise Rules, 1944 and hence cannot be a source relevant for enacting penalty under Rule 96ZO (3). vi) The provisions of clause (b) and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 536] and General Finance Co. Ltd. Vs. Asst. Commr. of Income Tax [2002 (7) SCC 1]; that the omission of Sec.3A is nothing but repeal of this provision and hence the provision is saved by Sec.6 of the General Clauses Act; and that the omission of Sec. 3A was automatically saved due to its merger with Sec. 3 which existed even after 11.5.01 when Sec.3A was omitted. He also contends that since Sec. 37 of the Central Excise Act provides for assessment and collection of central excise duties, procedure for collection of duty is governed by Sec. 37 and Rule 96Z0 is go by Sec.37 and not by Sec. 3A. He, further, contends that the ratio of the Supreme Court decision in General Finance Company in the context of Sec. 276 DD and 269 SS of the Income-tax Act is not applicable to the facts of the present case as Sec. 276 DD was an independent provision and not carved out from its parent provision while Sec.3A was carved out from Sec.3. However, we find that in the case of Mitra Steel & Alloys Pvt. Ltd. all these pleas have been considered and the judgments of the Supreme Court cited supra in Rayala Corporation, Kolhapur Canesugar Works Ltd. and General Finance Co. Ltd. have been interpreted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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