9911796707
TMI Blog1990 (12) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the petitioner has not disputed the fact that gunny bags were used as primary packing material for cement. However, it is sought to be contended that even though gunny bag is primary packing material, as it is of a durable nature and is returnable by 'the buyer to the assessee, its cost is required to be excluded while determining the value of excisable goods as provided under Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944, hereinafter referred to as the "Central Excise Act". 4. In this case, the Superintendent of Central Excise, Porbandar had issued a show cause notice dated 19-1-1976 (Annexure H) under Rule 10 of the Central Excise Rules, 1944, hereinafter referred to as the "Rules". By that notice the petitioner was called upon to show cause why it should not be required to pay the amount mentioned in the show cause notice, on the ground, that the petitioner has cleared the cement during the period from 1-10-1975 to 29-12-1975 at the rate of Rs. 211.00 P.M.T. (RC) and Rs. 201.00 P.M.T. (RC) excluding packing charges on cement as fixed, by Cement Controller. It has been further stated that price list submitted was Incorrect inasmuch as it was not inclusive of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal where the buyer is not a related person and the price is the sole consideration for the sale: Provided that - (i) xx xx xx (ii) where such goods are sold by the assessee in the course of wholesale trade for delivery at the time and place of removal at a price fixed under any law for the time being in force or at a price, being the maximum fixed under any such law, then, notwithstanding anything contained in Clause (iii) of this proviso, the price or the maximum price, as the case may be, so fixed, shall in relation to the goods so sold, be deemed to be the normal price thereof; (iii) xx xx xx (b) xx xx xx (2) xx xx xx xx. xx (3) xx. (4) for the purposes of this section, - (a) "assessee" means the person who is liable to pay the duty of excise under this Act and includes his agent; (b) xx xx xx (c) xx xx xx (d) "value", in relation to say excisable goods, (i) where the goods are delivered at the time of removal in a packed condition, includes the cost of such packing except the cost of the packing which is of a durable nature and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracting the applicability of the exclusion clause in Section 4(4)(d)(i) is that the packing must be returnable by the buyer to the assessee. The question, which has to be asked in each case is: Is the packing in this case returnable by the buyer to the assessee and obviously it cannot be said that the packing is returnable by the buyer to the assessee unless there is an arrangement between them that it shall be returned. The relevant observations are as under : "The only question which arises in this Special Leave Petition is as to what is true meaning and scope of the word "returnable" in Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944. If the packing is durable and returnable, then its cost is liable to be excluded in computation of the assessable value of the goods for the purpose of excise duty. So far as the question of durability is concerned, there cannot be such controversy about it, but a question has been raised as to what is the meaning and connotation of the word "returnable". Does it mean physically capable of being returned or does it postulate an arrangement under which the packing is returnable. While interpreting this word, we must bear in mind that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue for the purposes of determining ad valorem excise duty. It is nobody's case that the cost of the gunny bags which are used for packing the cement is entirely refundable by the manufacturer or the assessee. It is an admitted fact that as per the Cement Control Order the maximum price fixed for sale in the course of wholesale trade is fixed and it includes price of packing material. This would be clear from Annexure B to the petition. There is nothing on the record to the effect that second-hand unserviceable bags were returned to the petitioner and that he had refunded the cost of the said bags and what was the price of the second-hand serviceable bags which were returned. Merely from the fact that the cement bags could be returned by the buyer or that the assessee was required to re-purchase the said gunny bags at some fixed cost, which admittedly was less than the cost of the gunny bags, which was included in the price fixed by the authority, it cannot be said that the entire cost of packing was required to be excluded for determining the value. As there is no material on the record of this case or no material is produced by the petitioner before the Assistant Collector, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed by Andhra Pradesh High Court in the case of Kesoram Cements, Basantnagar v. Union of India & Ors., 1982 (9) E.L.T. 214 and by the Karnataka High Court in the case of Mysore Cement Ltd. v. Union of India, 1988 (37) E.L.T. 556. The Karnataka High Court has relied upon the material, which was produced on the record, and arrived at a conclusion that cement is a controlled commodity and the sale of cement was fully controlled by various orders and directions issued by the Cement Controller. The Cement Controller has fixed the packing charges separately and a specific provision was made in Annexure "A" to the effect that the manufacturers should purchase empty bags at the rates specified by the Cement Controller. There were further documents on the record to show arrangement that purchaser should return the empty bags to the petitioner. The Court, therefore, held that there was a statutory condition which constituted an arrangement between the seller and the purchaser of portland cement to the effect that the gunny bags were returnable. In the present case, there is no such material on record. 14. However, at this stage, after the lapse of 12 years, Mr. Nanavati, learned advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st of packing is required to be included if the goods are delivered at the time of removal in packed condition. By exception the cost of packing would not be included if it is required to be refunded to the buyer if the packing material is of a durable nature and is returnable by the buyer to the assessee. 16. At the time of hearing of this matter, the learned advocate for the petitioner has also filed Civil Application No. 1883 of 1990 for amending the petition by adding the ground that as Rule 10 of the Central Excise Rules, 1944 was amended with effect from 6-8-1977 and as there is no saving clause, the proceedings initiated under the old Rule 10 would come to an end. For this submission reliance is placed on the judgments rendered by this Court in the case of Mahendra Mills Ltd. v. Union of India — 1988 (36) E.L.T. 563, and in the case of Amit Processors Pvt. Ltd. v. Union of India & Ors. -1985 (21) E.L.T. 24. As this Civil Application is based only to add the ground of law, we grant this Civil Application. 17. With regard to this contention, learned advocate Mr. Naik appearing on behalf of the respondents, vehemently submitted that the decisions rendered by this Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s substituted and as there was no saving clause of Rule 10 or 10A, the authorities were not competent to adjudicate upon the show cause notice issued under Rule 10 prior to 6-8-1977. The Court arrived at the conclusion that the decision of the Delhi High Court in the case of Kolhapur Cane Sugar Works Ltd. v. Union of India, 1986 (24) E.L.T. 205, ran counter to the ratio of the decision of the Division Bench of this Court in the case to Amit Processors Pvt. Ltd. (supra). It further held that even otherwise the view taken by the Delhi High Court on the applicability of Section 6 of the General Clauses Act ran counter to the view taken by the Constitution Bench of the Supreme Court in the case to M/s. Rayala Corporation (P) Ltd. v. The Director of Enforcement, A.I.R. 1970 S.C. 494. 20. In the case of M/s. Torrent Laboratories Pvt. Ltd. v. Union of India, 1990 (2) G.L.R. 1017, the Division Bench of this Court considered the decisions in the case of Amit Processors Pvt. Ltd. (supra) and the decision in the case of Mahendra Mills (supra) and observed as under: "These two decisions are of no help to the petitioners for the following reasons: (1) Both the aforesaid decisions, in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epeal can never be the same. (5) As indicated hereinabove, the goal of inquiry is to find out the intention of the legislature in bringing about the change in the law. The goal of the inquiry is not to find out as to whether a particular provision of General Clauses Act, 1897 would be applicable or not. The course we are adopting is in conformity with the. principles laid down in the decisions of the Supreme Court in the case of State of Punjab v. Moharsingh, reported in 1955 (1) SCR 893, and reiterated in the case of State of Orissa v. M.A. Tulloch & Co., reported in AIR 1964 SC 1284, and again in the case of M.S. Shivananda v. K.S.R. T. Corporation reported in AIR 1980 SC 77. For the aforesaid reasons, the decisions rendered by this High Court in the case of Mahendra Mills (supra) and Amit Processors (supra) are of no help to the petitioners and they are not required to be gone into in further details. In fairness to the learned Counsels appearing for the petitioners it must be stated that during the course of dictation of the judgment Mr. Paresh M. Dave who was present on behalf of Mr. Kamal P. Trivedi for M/s. Trivedi, Gupta & Dave fairly stated that we need not go into the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le", so that, after that rule has been omitted, no prosecution in respect of that contravention can be instituted. He conceded the possibility that, if a prosecution had already been started while Rule 132A was in force, that prosecution might have been competently continued. Once the Rule was omitted altogether, no new proceeding by way of prosecution could be initiated even though it might be in respect of an offence committed earlier during the period that the rule was in force. We are inclined to agree with the submission of Mr. Sen that the language contained in Clause 2 of the Defence of India (Amendment) Rules, 1965 can only afford protection to action already taken while the rule was in force, but cannot justify initiation of a new proceeding which will not be a thing done or omitted to be done under the rule but a new act of initiating a proceeding after the rule had ceased to exist." (d) Even with regard to the temporary statute, rights and liabilities created under the repealed statute are not ipso facto terminated. The accrued rights and liabilities are saved unless they are expressly extinguished or the Amending Act specifically provides to that effect. Liability to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or regulating the production or manufacturing, or any process of the production or manufacture, the possession, storage and sale of salt and such other things. Sub-section (3) of Section 37 of the Act also empowers the rule-making authority to provide for penalty in cases where no other penalty is provided under the Act. Sub-section (5) of Section 37 of the Act also provides for making rules for imposing penalty as stated in the said sub-section. Under Section 38 all rules made and notifications issued under the Act are required to be published in the Official Gazette. Every rule made under the Act is required to be laid before each House of Parliament. For carrying out the aforesaid purposes rules are framed. The rules inter alia provide for assessment and collection of duties of excise and the manner of collection of duties of excise, its refund, procedure for removal of excisable goods, licence and the powers of the concerned officers. These rules are part and parcel of the statutes. Further, the Central Excise Act and Rules are of permanent nature. 25. In the case of R.C. Jail v. Union of India, A.I.R. 1962 Supreme Court 1281, a similar contention was dealt with by the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction Fund Ordinance 1944 (39 of 1944) to constitute a fund for the financing of activities for the improvement of production, marketing and distribution of coal and coke. This Court in Hansraj Moolji v. State of Bombay, 1957 SCR 634: (S) AIR 1957 SC 497 held that the decision of the words for the space of not more than six months from its promulgation from Section 72 of the 9th Schedule of the Government of India Act, 1935, by Section 1(3) of the India and Burma (Emergency Provisions) Act, 1940 had the effect of equating Ordinance which were promulgated between June 27,1940, and April 1, 1946 with Acts passed by the Indian Legislature without any limitation of time as regards their duration and therefore continuing in force until they were repealed. It follows from this decision that the Ordinance promulgated on August 26,1944, was a permanent one and would continue to be in force till it was repealed. The second Ordinance, that is, the repealing Ordinance, was promulgated on April 26,1947, and the repeal took effect from May 1, 1947. But in express terms it declared that the provisions of S. 6 of the General Clauses Act, 1897 (X of 1897) shall apply in respect of the repeal. With ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the manufacture or production, is not lost. The method of collection does not affect the essence of the duty, but only relates to the machinery of collection for administrative convenience...." 26. With regard to interpretation of Section 6 of the General Clauses Act, it has been laid down that in cases where there is a repeal of enactment followed by a fresh legislation, the line of inquiry would be not whether the new Act expressly keeps alive old rights and liabilities, but whether it manifests an intention to destroy them. Section 6 would be applicable in such cases also, unless the new legislation manifests an intention incompatible with or contrary to the provisions of the section. Such incompatibility would have to be ascertained from consideration of all the relevant provisions of the new law. In the case of Jayantilal v. Union of India A.I.R. 1971 Supreme Court 1193, the Supreme Court has observed as under ; "In order to see whether the rights and liabilities under the repealed law have been put an end to by the new enactment, the proper approach is not to enquire if the new enactment has by its new provisions kept alive the rights and liabilities under the repealed la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. In order to ascertain whether the rights and liabilities under the repealed Ordinance have been put an end to by the Act, 'the line of enquiry would be not whether', in the words of Mukherjee J. in State of Punjab v. Mohar Singh, (1955) 1 SCR 893, 'the new Act expressly keeps alive old rights and liabilities under the repealed Ordinance but whether it manifests an intention to destroy them'. Another line of approach may be to see as to how far the new Act is retrospective in operation." 29. In the case of I.T. Commissioner, U.P. v. M/s. Shah Sadiq & Sons, A.I.R. 1987 Supreme Court 1217, the Supreme Court dealt with the provisions of Section 34(2) of the Income Tax Act, 1922 and held that rights accrued could have been taken away expressly or by necessary implication by the new Act. Under that provision, the assessee was entitled to carry forward to be set off such losses against the profits made from that business in future. It also held that the rights which are not saved by the savings provision are not extinguished or ipso facto terminated by the mere fact that a new statute repealing the old statute is enacted. Rights which have accrued are saved, unless they are taken away ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er some right should be or should not be given. On a repeal the former is preserved by the Interpretation Act. The latter is not." 31. As stated above, it cannot be said that the rules framed under the Central Excise Act are temporary. Rules 10 and 10A were substituted by Rule 10 by amendment dated 6-8-1977. Rule 10 was repealed with effect from 17-11-1980 and on the same day Section 11A having similar wording was introduced in the Central Excise Act. No provision is made while substituting Rules 10 and 10A by Rule 10 or by substituting Rule 10 by Section 11A to the effect that pending proceedings would come to an end or accrued liability to pay excise duty would not remain in force. Nor is there any indication or intention of the Legislature that accrued right to recover excise duty is wiped out or that the pending investigation would be required to. be dropped. 32. In the case of Gwalior Rayon Mfg.(Wvg.) Co. v. Union of India and others, 1982 (10) E.L.T. 844, the Madhya Pradesh High Court has taken the view that even though Rule 10 was omitted from 17-11-1980, Section 11A having similar wording came into force simultaneously maintaining its continuity. Therefore, there was neit ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
