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M/s. Shree Bhagwati Steel Rolling Mills Versus Commissioner of Central Excise & Another

2015 (11) TMI 1172 - SUPREME COURT

Delayed payment of central excise duty under Section 3A of the Central Excise Act, 1944 - Demand of Interest and penalty - Rules 96ZO, 96 ZP and 96 ZQ of the Central Excise Rules, 1994 - violative of Articles 14 and 19(1)(g) of the Constitution - Held that:- When Section 6 speaks of the repeal of any enactment, it refers not merely to the enactment as a whole but also to any provision contained in any Act. Thus, it is clear that if a part of a statute is deleted, Section 6 would nonetheless appl .....

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foresaid three Rules is inflexible and mandatory in nature. The High Court is, therefore, correct in saying that an assessee who pays the delayed amount of duty after 100 days is to be on the same footing as an assessee who pays the duty only after one day’s delay and that therefore such rule treats unequals as equals and would, therefore, violate Article 14 of the Constitution of India. It is also correct in saying that there may be circumstances of force majeure which may prevent a bonafide as .....

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to levy a penalty higher than ₹ 10,000/- but not exceeding the duty leviable. In a given case, therefore, even where there is willful intent to evade duty and the duty amount comes to say a crore of rupees, the authorities can in the facts and circumstances of a given case, levy a penalty of say ₹ 25,00,000/- or ₹ 50,00,000/-. This being the position, it is clear that when contrasted with the provisions of the Central Excise Act itself, the penalty provisions contained in Rule .....

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all these cases and strike down rules 96ZO, 96 ZP and 96 ZQ 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. - Load capacity of an induction furnace unit is certainly relevant material referred to in Rule 3(2) to determine the capacity of the furnace installed. It is obvious that it is not necessary to state such load capacity in terms for it to be .....

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OF SLP (CIVIL) NO.22134 OF 2008) CIVIL APPEAL NO.4379 OF 2010 CIVIL APPEAL NO.13602 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.11030 OF 2010) CIVIL APPEAL NO.908 OF 2011 CIVIL APPEAL NO.5448 OF 2011 CIVIL APPEAL NO.5449 OF 2011 CIVIL APPEAL NO.5452 OF 2011 CIVIL APPEAL NO.5453 OF 2011 CIVIL APPEAL NO.13603 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.5532 OF 2011) CIVIL APPEAL NOS.8685-8686 OF 2011 CIVIL APPEAL NO.13605 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.19964 OF 2011) CIVIL APPEAL NO.13606 OF 2015 ( .....

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CIVIL APPEAL NO.13614 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.20667 OF 2011) CIVIL APPEAL NO.13615 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.21584 OF 2011) CIVIL APPEAL NO.13616 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.25881 OF 2011) CIVIL APPEAL NO.13617 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.1796 OF 2012) CIVIL APPEAL NO.13618 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.16249 OF 2012) CIVIL APPEAL NO.13619 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.21273 OF 2012) CIVIL APPEAL NO.13620 OF 2015 (ARISING OUT O .....

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CIVIL APPEAL NO.13628 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.4224 OF 2013) CIVIL APPEAL NO.13629 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.5877 OF 2013) CIVIL APPEAL NO.13630 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.7852 OF 2013) CIVIL APPEAL NO.13631 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.9796 OF 2013) CIVIL APPEAL NO.13632 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.11709 OF 2013) CIVIL APPEAL NO.13633 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.14097 OF 2013) CIVIL APPEAL NO.13634 OF 2015 (ARISING OUT OF SL .....

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OF SLP (CIVIL) NOS.4511-4512 OF 2014) CIVIL APPEAL NO.13643 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.20044 OF 2014) CIVIL APPEAL NO.13644 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.23009 OF 2014) CIVIL APPEAL NO.13645 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.26042 OF 2014) CIVIL APPEAL NO.13646 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.26036 OF 2014) CIVIL APPEAL NO.13647 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.30377 OF 2014) CIVIL APPEAL NO.13648 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.30378 OF 2014) CIVIL .....

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(CIVIL) NO.36413 OF 2014) CIVIL APPEAL NO.13656 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.3486 OF 2015) CIVIL APPEAL NO.13657 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.6147 OF 2015) CIVIL APPEAL NO.13658 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.7820 OF 2015) CIVIL APPEAL NO.13659 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.33041 OF 2013) CIVIL APPEAL NO.13660 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.8746 OF 2015) CIVIL APPEAL NO.13661 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.10577 OF 2015) CIVIL APPEAL NO.13662 .....

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2 OF 2015) CIVIL APPEAL NO.13669 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.27471 OF 2015) CIVIL APPEAL NO.13670 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.27997 OF 2015) CIVIL APPEAL NO.13671 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.28264 OF 2015) CIVIL APPEAL NO.13672 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.28935 OF 2015) CIVIL APPEAL NO.13673 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.29004 OF 2015) CIVIL APPEAL NO.13674 OF 2015 (ARISING OUT OF SLP (CIVIL) NO.19948 OF 2015) JUDGMENT R. F. Nariman, J. 1. Lea .....

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therefore, by the Union of India. However, before dealing with the said appeals, it is necessary to first segregate Civil Appeal No.4280 of 2007 which raises a slightly different question from the questions raised in the other appeals and decide it first. 3. The question which arises for decision in the said appeal is the demand, by means of a letter dated 19.8.2005, for payment of interest for delayed payment of central excise duty under Section 3A of the Central Excise Act, 1944. 4. The case o .....

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issued to the appellant demanding interest for delayed payment of duty for the period 1997 to 2000. 5. The High Court framed two questions which arose for its consideration: (1) whether omission of the compounded levy scheme in 2001 wipes out the liability of the assessee for the period during which the scheme was in operation, and (2) whether the letter of demand of interest for delayed payment was liable to be set aside on the ground of delay. 6. The High Court found, after distinguishing some .....

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er the matter before us being directly against the appellant s case. However, he submitted that for various reasons this judgment requires a relook and ought to be referred to a larger Bench of three Judges. Shri Aggarwal argued the matter with great ability and we listened to him with considerable interest. 8. First, it may be stated that the judgment of this Court in the Fibre Board s case has taken the view that an omission would amount to a repeal , after referring to several authorities of .....

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thin it omissions made by the legislature. 9. Shri Aggarwal, however, argued that there is a fundamental distinction between a repeal and an omission in that in the case of a repeal the statute is obliterated from the very beginning whereas in the case of an omission what gets omitted is only from the date of omission and not before. This being the case, it is clear that things already done in the case of an omission would be saved. However, a repeal without a savings clause like Section 6 of th .....

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d to the conclusion that omissions are included in repeals . He further argued that in any event, the true ratio decidendi of the Constitution Bench decision in Rayala Corporation (P) Ltd. & Ors. v. Director of Enforcement, New Delhi, 1969 (2) SCC 412, is that an omission cannot amount to a repeal inasmuch as the first reason given for distinguishing the Madhya Pradesh High Court s judgment in that case was that Section 6 cannot apply to the omission of a rule because an omission is not a re .....

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itself has understood that a repeal under Section 6 of the General Clauses Act would not apply to omissions. He has further argued that it may be true that the expression repeal is normally used when an entire statute is done away with, as opposed to an omission which is applied only when part of the statute is deleted, but said that this is not invariably the case, and referred to Section 1 of the Indian Contract Act in which enactments mentioned in the schedule are repealed not in their entire .....

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according to him the judgment in the Fibre Board s case is not correctly decided, we propose to deal with each of those submissions in some detail. 12. First and foremost, it is important to refer to the definition of enactment contained in Section 3(19) of the General Clauses Act. The said definition clause states that enactment shall mean the following:- enactment" shall include a Regulation (as hereinafter defined) and any Regulation of the Bengal, Madras or Bombay Code, and shall also .....

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ession omission is nothing but a particular form of words evincing an intention to abrogate an enactment or portion thereof. This is made further clear by the Legal Thesaurus (Deluxe Edition) by William C Burton, 1979 Edition. The expression delete is defined by the Thesaurus as follows: Delete: - Blot out, cancel, censor, cross off, cross out, cut, cut out, dele, discard, do away with, drop, edit out, efface, elide, eliminate, eradicate, erase, excise, expel, expunge, extirpate, get rid of, lea .....

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ransire. And the expression repeal is defined as follows:- Repeal:- Abolish, abrogare, abrogate, annul, avoid, cancel, countermand, declare null and void, delete, eliminate, formally withdraw, invalidate, make void, negate, nullify, obliterate, officially withdraw, override, overrule, quash, recall, render invalid, rescind, rescindere, retract, reverse, revoke, set aside, vacate, void, withdraw. 14. On a conjoint reading of the three expressions delete , omit , and repeal , it becomes clear that .....

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egal Thesaurus cited hereinabove both lead to the same result, namely that an omission being tantamount to a deletion is a form of repeal. 15. Learned counsel s second argument that Section 6A when it speaks of an omission only speaks of an amendment which omits and, therefore does not refer to a repeal is equally fallacious. In Bhagat Ram Sharma v. Union of India, 1988 Supp SCC 30, this Court held that there is no real distinction between a repeal and an amendment and that amendment is in fact .....

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utherland's Statutory Construction, 3rd Edn., Vol. 1 at p. 477, the learned author makes the following statement of law: The distinction between repeal and amendment as these terms are used by the Courts is arbitrary. Naturally the use of these terms by the Court is based largely on how the Legislature have developed and applied these terms in labelling their enactments. When a section is being added to an Act or a provision added to a section, the Legislatures commonly entitled the Act as a .....

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sed to abrogation of a whole section or Act; or more commonly, in both kind and degree - addition of a provision to a section to replace a provision being abrogated as opposed by abrogation of a whole section of an Act. This arbitrary distinction has been followed by the Courts, and they have developed separate rules of construction for each. However, they have recognised that frequently an Act purporting to be an amendment has the same qualitative effect as a repeal - the abrogation of an exist .....

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' implication inferred. (at para 17 & 18) 16. It is clear, therefore, that when this Court referred to Section 6A in Fibre Board s case and held that Section 6A shows that a repeal can be by way of an express omission, obviously what was meant was that an amendment which repealed a provision could do so by way of an express omission. This being the case, it is clear that Section 6A undisputedly leads to the conclusion that a repeal would include a repeal by way of an express omission. 17 .....

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the ratio decidendi for the said decision and both reasons would be binding upon us. But we find that once it is held that Section 6 of the General Clauses Act would itself not apply to a rule which is subordinate legislation as it applies only to a Central Act or Regulation, it would be wholly unnecessary to state that on a construction of the word repeal in Section 6 of the General Clauses Act, omissions made by the legislature would not be included. Assume, on the other hand, that the Constit .....

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n Rayala Corporation (P) Ltd. cannot be said to be a ratio decidendi at all and is really in the nature of obiter dicta. (at para 27) 18. Merely because the Constitution Bench referred to a repeal not amounting to an omission as the first reason given for distinguishing the Madhya Pradesh High Court s judgment would not undo the effect of paragraph 27 of Fibre Board s case which, as has already been stated, clearly makes the distinction between Section 6 not applying at all and Section 6 being c .....

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gs in foreign exchange) shall be omitted except as respects things done or omitted to be done under that rule. 20. A cursory reading of clause 2 shows that after omitting Rule 132A of the Defence of India Rules, 1962, the provision contains its own saving clause. This being the case, Section 6 can in any case have no application as Section 6 only applies to a Central Act or regulation unless a different intention appears . A different intention clearly appears on a reading of clause 2 as only a .....

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ead to the conclusion that Parliament itself is cognizant of the fact that an omission cannot amount to a repeal. Section 31 of the Prevention of Corruption Act, 1988, states as follows:- Section 31 - Omission of certain sections of Act 45 of 1860 Sections 161 to 165A (both inclusive) of the Indian Penal Code, 1860 (45 of 1860) shall be omitted, and section 6 of the General Clauses Act, 1897 (10 of 1897), shall apply to such omission as if the said sections had been repealed by a Central Act. 22 .....

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This again does not take us further as this statement of the law in Rayala Corporation is no longer the law declared by the Supreme Court after the decision in the Fibre Board s case. This reason therefore again cannot avail the appellant. 23. The reference to the savings provision in Section 1 of the Indian Contract Act again does not take us very much further as the expression repeal as has been pointed out above can be of part of an enactment also. This being the case, when the legislature u .....

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the case of Keshav Mills Co. Ltd. v. CIT, Bombay North, 1965 (2) SCR 908, as follows.- In dealing with the question as to whether the earlier decisions of this Court in the New Jehangir Mills [1959]37ITR11(SC) case and the Petlad Co. Ltd. [1963] S.C.R. 871 case should be reconsidered and revised by us, we ought to be clear as to the approach which should be adopted in such cases. Mr. Palkhivala has not disputed the fact that, in proper case, this Court has inherent jurisdiction to reconsider an .....

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uestion of constructing statutory or constitutional provisions, two views are often reasonably possible and when judicial approach has to make a choice between the two reasonably possible views, the process of decisionmaking is often very difficult and delicate. When this Court hears appeals against decisions of the High Courts and is required to consider the propriety or correctness of the view taken by the High Courts on any point of law, it would be open to this Court to hold that though the .....

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ise where a previous decision of this Court has taken a particular view as to the construction of a statutory provision as, for instance, section 66(4) of the Act. When it is urged that the view already taken by this Court should be reviewed and revised, it may not necessarily be an adequate reason for such review and revision to hold that though the earlier view is a reasonably possible view, the alternative view which is pressed on the subsequent occasion is more reasonable. In reviewing and r .....

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w in the country. Frequent exercise by this Court of its power to review its earlier decisions on the ground that the view pressed before it later appears to the Court to be more reasonable, may incidentally tend to make law uncertain and introduce confusion which must be consistently avoided. That is not to say that if on a subsequent occasion, the Court is satisfied that its earlier decision was clearly erroneous, it should hesitate to correct the error; but before a previous decision is prono .....

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a plea for review and revision of the earlier view is based? On the earlier occasion, did some patent aspects of the question remain unnoticed, or was the attention of the Court not drawn to any relevant and material statutory provision, or was any previous decision of this Court bearing on the point not noticed? Is the Court hearing such plea fairly unanimous that there is such an error in the earlier view? What would be the impact of the error on the general administration of law or on public .....

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rgued by Shri Radhakrishnan, learned senior counsel on behalf of the revenue, clarifies the law in holding that an omission would amount to a repeal. The converse view of the law has led to an omitted provision being treated as if it never existed, as Section 6 of the General Clauses Act would not then apply to allow the previous operation of the provision so omitted or anything duly done or suffered thereunder. Nor may a legal proceeding in respect of any right or liability be instituted, conti .....

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in Fibre Board s case. This being the case, it is clear that on point one the present appeal would have to be dismissed as being concluded by the decision in the Fibre Board s case. 25. Even on the point of limitation, we find that the High Court noticed that the assessee undertook to pay the amount with interest upto 31.3.2003, on which date a last part payment was made. As the demand was raised by the Department on 19.8.2005 i.e. within a period of three years from 31.3.2003, it is clear that .....

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rt not only as it is a pure question of law but also because, according to him, this Court has held that rules which are ultra vires ought to be ignored by the courts even if there is no substantive challenge to them. 27. Shri Radhakrishnan, learned senior advocate appearing for the revenue, strongly contradicts this position and has vehemently argued that since this issue was never raised before the authorities below, this Court should not allow the appellant to raise it at this belated stage. .....

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hat where a manufacturer fails to pay the whole of the amount payable for any month by the 15th day or the last day of such month, as the case may be, he shall be liable to,- (i) Pay the outstanding amount of duty along with interest thereon at the rate of eighteen per cent. per annum, calculated for the period from the 16th day of such month or the 1st day of next month, as the case may be, till the date of actual payment of the outstanding amount; and (ii) A penalty equal to such outstanding a .....

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ate of actual payment of the outstanding amount; and (ii) A penalty equal to the amount of duty outstanding from him at the end of such month or five thousand rupees, whichever is greater. Rule 96ZQ Procedure to be followed by the independent processor of textile fabrics. (5) If an independent processor fails to pay the amount of duty or any part thereof by the date specified in sub-rule (3), he shall be liable to,- (i) Pay the outstanding amount of duty along with interest at the rate of thirty .....

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in particular paragraph 14 thereof which reads as follow:- The fact that the Regulations may have the force of law or when made have to be laid down before the legislature concerned do not confer any more sanctity or immunity as though they are statutory provisions themselves. Consequently, when the power to make Regulations are confined to certain limits and made to flow in a well defined canal within stipulated banks, those actually made or shown and found to be not made within its confines bu .....

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ave "Constitutional" and legal status, even unmindful of the fact that anyone or more of them are found to be not consistent with specific provisions of the Act itself. Thus, the Regulations in question, which the AICTE could not have made so as to bind universities/UGC within the confines of the powers conferred upon it, cannot be enforced against or bind an University in the matter of any necessity to seek prior approval to commence a new department or course and programme in technic .....

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ourt s way of not enforcing them. We also feel that since this is a question of the very jurisdiction to levy interest and is otherwise covered by a Constitution Bench decision of this Court, it would be a travesty of justice if we would not to allow Shri Aggarwal to make this submission. 30. On merits, the matter is no longer res integra. A Constitution Bench decision of this Court in VVS Sugars v. Government of A.P., 1999 (4) SCC 192, has held, following two earlier judgments of this Court, as .....

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the date of commencement of the amending Act, no interest thereon could be so levied, based on the application of the said Rule 45 or otherwise. 31. Applying the Constitution Bench decision stated above, it will have to be declared that since Section 3A which provides for a separate scheme for availing facilities under a compound levy scheme does not itself provide for the levying of interest, Rules 96 ZO, 96 ZP and 96 ZQ cannot do so and therefore on this ground the appellant in Shree Bhagwati .....

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larations furnishing details about the annual capacity of production and duty payable on such capacity of production. It has to be taken into consideration that the compounded levy scheme for collection of duty based on annual capacity of production under Section 3 of the Act and the 1997 Rules is a separate scheme from the normal scheme for collection of Central excise duty on goods manufactured in the country. Under the same, Rule 96-ZP of the Central Excise Rules stipulate the method of payme .....

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led judgment by a Division Bench of the Gujarat High Court reported in Krishna Processors v. Union of India, 2012 (280) ELT 186 (Guj.) and followed by other High Courts, we will refer only to this decision. 33. On the facts before the Gujarat High Court, there were three civil applications each of which challenged the constitutional validity of the aforesaid rules insofar as they prescribed the imposition of a penalty equal to the amount of duty outstanding without any discretion to reduce the s .....

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hen it further held that after omission of the aforesaid Rules with effect from 1.3.2001 no proceedings could have been initiated thereunder. In this submission he is correct for the simple reason that the Gujarat High Court followed Rayala Corporation in holding that omissions would not amount to repeals , which this Court has now clarified is not the correct legal position. 35. However, insofar the reasoning of the High Court is concerned on the aspects stated hereinabove, we find that on all .....

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pays the duty only after one day s delay and that therefore such rule treats unequals as equals and would, therefore, violate Article 14 of the Constitution of India. It is also correct in saying that there may be circumstances of force majeure which may prevent a bonafide assessee from paying the duty in time, and on certain given factual circumstances, despite there being no fault on the part of the assessee in making the deposit of duty in time, a mandatory penalty of an equivalent amount of .....

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day s delay, which may be beyond the control of the assessee, would be arbitrary and excessive. In such circumstances, this Court has held in Md. Faruk v. State of M.P., 1970(1) SCR 156: The Court must in considering the validity of the impugned law imposing a prohibition on the carrying on of a business or profession, attempt an evaluation of its direct and immediate impact upon the fundamental rights of the citizens affected thereby and the larger public interest sought to be ensured in the l .....

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gerous, the existence of a machinery to satisfy the administrative authority that no case for imposing the restriction is made out or that a less drastic restriction may ensure the object intended to be achieved. (at page 161) 36. The direct and immediate impact upon the fundamental right of the citizen is that he is exposed to a huge liability by way of penalty for reasons which may in given circumstances be beyond his control and/or for delay which may be minimal. The possibility of achieving .....

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r penalty is provided by this Act, be liable to a penalty not exceeding five thousand rupees. (4) Notwithstanding anything contained in subsection (3), and without prejudice to the provisions of section 9, in making rules under this section, the Central Government may provide that if any anufacturer, producer or licensee of a warehouse - (a) removes any excisable goods in contravention of the provisions of any such rule, or (b) does not account for all such goods manufactured, produced or stored .....

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provides in all cases where no other penalty is provided by the Act that a penalty not exceeding ₹ 5,000/- alone can be levied. Sub- Section(4) is even more telling. Even in cases where there is a clandestine removal of excisable goods, and cases where the assessee intends to evade payment of duty, the assessee is liable to a penalty not exceeding the duty leviable on such goods or ₹ 10,000/- whichever is greater. It will be noticed that the Act is very circumspect in laying down pen .....

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rcumstances of a given case, levy a penalty of say ₹ 25,00,000/- or ₹ 50,00,000/-. This being the position, it is clear that when contrasted with the provisions of the Central Excise Act itself, the penalty provisions contained in Rules 96ZO, 96 ZP and 96 ZQ are both arbitrary and excessive. 39. A penalty can only be levied by authority of statutory law, and Section 37 of the Act, as has been extracted above does not expressly authorize the Government to levy penalty higher than S .....

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t. 40. It now remains to deal with SLP(civil) No.22134 of 2000, (APS Associates v. Commissioner of Central Excise). In this SLP, the Punjab and Haryana High Court has passed a judgment on 20.5.2008 in which it construed Rule 3(2) of the Induction Furnace Annual Capacity Determination Rules, 1997. The said Rule is set out hereinbelow:- 3. The annual capacity of production referred to in Rule 2 shall be determined in the following manner, namely :- The Commissioner of Central Excise (hereinafter r .....

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s installed in the induction furnace unit on the basis of the capacity of comparable furnaces installed in any other factory in respect of which the manufacturer s invoice or other document indicating the capacity of the furnace is available or, if not so possible, on the basis of any other material as may be relevant for this purpose. The Commissioner may, if he so desires, consult any technical authority for this purpose; 41. On the facts in this case, the assessee made a declaration dated 9.9 .....

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ION FURNACE and assessing the capacity thereof. The party has ONE FURNACE of following specifications:- MAKE GEC CAPACITY 3200 KG/1600 KW/1200 V. While assessing the capacity of a FURNACE for a particular heat. It may please be noted that besides crucible size, other factors affecting the capacity are as follows: Incoming Power to the crucible from the Power Pack System of the FURNACE and its quality. Power fed to the crucible from the Power Pack System of the FURNACE and its quality. Quality/Mi .....

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, the unit shall not be able to utilize the full capacity of the furnace i.e. 1600 KW. 42. The said declaration and Chartered Engineer Certificate have not been accepted by the authorities below, and the High Court rejected it on the footing that Rule 3(2) of the aforesaid Rules did not, in terms, refer to the sanctioned load of electrical units, and therefore this could not be taken into account for the purpose of ascertaining the capacity of the furnaces installed in the induction furnace unit .....

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e matter of determination of the annual capacity. It specifically provides for taking into consideration such factor or factors relevant for annual capacity of production of the factory in which goods are produced. Therefore, relevant factor like power factor is not alien for determination of annual production capacity in terms of Section 3-A of the Act. At this stage it is to be noticed that the formula provided in Rule 3 of the Induction Furnace Annual Capacity Determination Rules provides for .....

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nnual capacity of production of ingots by formula. The formula is ACP = TCF × 3200. ACP is nothing but the annual capacity of production of the factory. TCF is also again referred to the total capacity. Therefore, capacity plays a vital role in terms of levy of excess duty. 12. In the case on hand, the petitioner has sought for an option that the annual capacity is to be determined on pro rata basis in terms of Rule 96- ZO(3) of the Rules. Petitioner has produced sufficient material with r .....

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