TMI Blog2005 (9) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... sugar which is a excisable goods under item no. 1 of the First Schedule to the Central Excise and Salt Act, 1944 (here-in-after referred to as the Act) where, at the relevant time, duty was payable at 37.5% ad valorem together with additional duty at 7.5% ad valorem. In order to spur sugar producing units to increase sugar production during the lean period, the Central Government issued Notification No. 108 of 1978 on 28-4-1978 granting exemption from excise duty on so much of sugar produced in excess of the average of last three years for the period 1-5-1978 to 15-8-1978 to the extent of Rs. 54/- per quintal for free sale sugar and Rs. 9.60 per quintal for levy sugar. The petitioner allegedly produced 47314.98 quintal of excess sugar and thus claimed exemption to the extent of Rs. 25,55,008.90 and was permitted to credit it to its Personal Ledger Account as proforma credit in pursuance of the aforesaid exemption Notification. However, vide show cause notice dated 5-10-1979 issued under Rule 10(1) of the Rules framed under the Act, the Assistant Collector required the petitioner to show cause why refund of Rs. 11,09,012/- be not ordered as it was entitled to exemption of only Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... questions to be answered by the Full Beach. 7.Before we proceed further, it would be convenient to note Rule 10 which provided for recovery of duties as follows:- "Recovery of duties not levied or not paid, or short-levied or not paid in full or erroneously refunded. - (1) Where any duty has not been levied or paid or has been short-levied or erroneously refunded or any duty assessed has not been paid in full, the proper officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid, or which has been short-levied, or to whom the refund has erroneously been made, or which has not been paid in full, requiring him to show cause why he should not pay the amount specified in the notice : Provided that :- (a) Where any duty has not been levied or paid, has been short-levied or has not been paid in full, by reason of fraud, collusion or any wilful mis-statement or suppression of facts by such person or his agent, or (b) Where any person or his agent, contravenes any of the provisions of these rules with intent to evade payment of duty and has not paid the duty in full, or (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y he should not pay the amount specified in the notice : Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect, as if for the words "six months", the words "five years" were substituted. Explanation - Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of six months or five years, as the case may be. The Assistant Collector of Central Excise shall, after considering the representation, if any, made by the person on whom notice is served under sub-section (1), determine the amount of duty of excise due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined. For the purposes of this section,- (i) "refund" includes rebate of duty of excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the said provision was omitted the court is not to look for a provision in the newly added rule for continuing the pending proceedings. It is also not correct to say that the test is whether there is any provision in the rules to the effect that pending proceedings will lapse on omission of the rule under which the notice was issued. It is our considered view that in such a case the court is to look to the provision in the rule which has been introduced after omission of the previous rule to determine whether pending proceedings will continue or lapse. If there is a provision therein that pending proceedings shall continue and be disposed off under the old rule as if the rule has not been deleted or omitted then such proceedings will continue. If the case is covered by Section 6 of the General Clauses Act, or there is a pari materia provision in the Statute under which the rule has been framed, in that case also the pending proceedings will not be affected by omission of the rule. In the absence of any such provision in the Statute or in the rule the pending proceedings would lapse on the rule under which the notice was issued or proceedings were initiated being deleted omitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le, notification or order so amended, repealed, superseded or rescinded; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed under or in violation of any rule, notification or order so amended, repealed, superseded or rescinded; or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if the rule, notification or order, as the case may be, had not been amended, repealed, superseded or rescinded." 17.Section 131 of the Finance Act, 2001 declares that Section 38A shall be deemed to have been inserted on and from 28-2-1944. For the purposes of the present case it is apparent that Section 38A postulates that where any order is made or any investigation or legal proceedings are pending or liability created, they shall continue even if the rule or notification is amended, repealed, superseded or rescinded. The only order provided is that the proceedings or liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offence which would not have been so punishable if this section had not come into force." 19.The section validates any action taken under any such rule at any time between 28-2-1944 and 11-5-2001, when it received the assent of the President and Section 38A was for all purposes to be deemed to be on the Statute book, notwithstanding anything contained in any judgment or order of any court. It legalizes any action taken under any rule under the Act in spite of its amendment, supersession repeal or rescission. A joint reading of Sections 131 and 132 leads to the only conclusion that any proceedings initiated under Rule 10 would continue irrespective of the fact that it was omitted without any saving clause in either Rule 10 or Section 11A and also irrespective of the judgment of the Courts, as they are saved by Section 38A. 20.However, learned counsel for the petitioner contends that the legislature was conscious of the fact that there was appreciable difference between 'repeal' and 'omission' of a rule, therefore it purposely did not apply Section 38A to 'omission' and thus it would not affect the ratio in Kolhapur Sugarcane (supra). 21.Before we consider the applicability of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on - 2005 (187) E.L.T. 162 (S.C.) (Civil Appeal No. 5196 of 2005 decided on 23-8-2005). Where words of comprehensive import are used, courts cannot restrict the meaning to defeat the avowed object of the legislature. Where words of both comprehensive and restrictive import are used, the courts do apply "abundant caution" principle. In such situation the courts do resort to 'mischief rule' or "purposive construction" which enables it to consider the four criteria, (a) what was the law before making the Act, (b) what was the defect or mischief for which the law did not provide, (c) what is the remedy that this Act has provided, and (d) what is the reason of the remedy. Once that is done, none can take recourse to 'equity' and 'fair play, to contend arbitrariness. In interpreting a provision inserted to remove defects in the Principle Act, a construction which will defeat its purpose should, normally, be avoided and a construction which preserve its workability and efficacy should be preferred. The courts, normally, propound or declare the law as inked by the legislature and it is not their wont to legislate. 22.Let us examine, in brief, the background in which the amendment was int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... introduced. 24.Section 38A uses the words 'amendment', 'repealed', 'superseded'' and 'rescinded' with regard to such rule. 'Amendment' has come up for consideration before various courts, its implication was also considered by the Apex Court in the case of Bhagat Ram v. Union of India (AIR 1988 S.C. 740), after noting with approval the statement of law made in Sutherland's Statutory Construction, (3rd Edition Vol. 1 at page 477) while considering the distinction between 'repeal' and 'amendment', speaking through Sen J, it held in para 18 thus "Amendment is, in fact a wider term and it includes abrogation or deletion of a provision in an existing Statute. If the amendment of an existing law is small, the Act profeses to amend; if it is extensive, it repeals a law and re-enacts it...."Black's Law Dictionary (6th Ed.) defines amendment to mean to change or modify for the better, by removing defects, or to correct or revise. The Random House Dictionary defines it as - to alter, modify, rephrase for the better. A three Judge Bench in State of Orissa v. Titaghur Paper Mills Co. Ltd. (AIR 1985 S.C. 1293). while examining the implication of the word 'supersede' and 'supersession' occurri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remove the defect as pointed out in Kolhapur Sugarcane case. The Apex Court in the case of Welfare Association A.R.P. Maharashtra and another v. Ranjit P Gonil and others - 2003 (9) S.C.C. 358, when confronted with similar facts and argument, after considering several Constitutional Bench decisions has held in paragraph 46 that "Thus, it is permissible for the Legislature, subject to its legislative competence otherwise, to enact a law which will withdraw or fundamentally alter the very basis on which judicial pronouncement has proceeded and create a situation which if it had existed earlier, the Court would not have made the pronouncement". 27.Let us examine the issue from another angle, and consider the effect of Section 38A at the time when the Rule 10 was omitted. It would be worthy of note that Rule 10 was omitted with effect from 17-11-1980 and Section 11A was introduced on the same day and both the provisions are in pari materia providing the same power and procedure for recovery. The clarification provided in Section 38A comes into play as the intention of legislature cannot be said to be different while enacting Section 11A, and such repeal or rescission would not affec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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