9911796707
TMI Blog1989 (10) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... pertaining to all these petitions are that the petitioners are manufacturers of one or other article which is subject to excise duty under the relevant provisions of the Central Excises Salt Act, 1944 (for short the Act ) and the Central Excise Rules, 1944 (for short the Rules ). The petitioners have taken benefit of MODVAT scheme contained in Rule 57A to 57P of the Rules believing that they were entitled to take credit for certain inputs . The petitioners utilised these inputs and manufactured their end product. The petitioners took credit for the inputs utilised by them for different periods. According to the Department, these manufacturers were not entitled to take credit and they had taken the credit wrongly. Hence different show cause notices were served upon different manufacturers calling upon them to show cause as to why they should not be asked to reverse the credit or if necessary to refund the amount of credit wrongly availed of. In some of the cases, the petitioners have replied to the show cause notices and the Assistant Collector concerned has passed order after hearing the petitioners. In some cases, the petitioners have rushed to this court on receipt of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. 3935/89 Detergent powder out of sulphuric acid other inputs 16-5-1988 Nov. 1986 to Feb. 1987 15-3-1989 13. 3936/89 - do - 27-6-1988 Jan. 1988 to May 1988 20-3-1989 14. 3937/89 - do - 16-5-1988 March 1986 to Feb. 1988 15-3-1989 15. 3887/89 - do - 24-3-1988 Nov. 1987 to Jan. 1988 15-3-1989 16. 3888/89 - do - 17-12-1987 July 1987 to Oct. 1987 15-3-1989 17. 3889/89 - do - 24-3-1988 Aug. 1987 to Jan. 1988 15-3-1989 18. 3890/89 - do - 17-12-1987 March 1986 to Oct. 1986 15-3-1989 19. 3891/89 - do - 24-3-1988 8-7-1988 Jan. 1988 Feb. 1988 to May 1988 15-3-1989 15-3-1989 20. 3892/89 - do - 21-3-1988 Nov. 1987 to Jan. 1988 15-3-1989 21-12-1987 Mar. 1986 to Oct. 1987 15-3-1989 8-7-1988 Feb. 1988 to May 1988 15-3-1989 21. 3893/89 - do - 24-12-1987 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nner. The petitioners have also challenged the legality and validity of the order passed by the Assistant Collector. One of the contentions of the petitioners is that since there is no saving clause and the amendment is of a rule, after the amendment of the Rules the show cause notice issued earlier would lapse and no proceedings pursuant thereto would survive. At this stage it would be proper to refer to the relevant provisions of law. (a) On June 6, 1978 Section 11-A of the Act has been inserted in the Act, by Customs, Central Excises and Salt and Central Boards of Revenue (Amendment) Act, 1978 (25 of 1978). The provisions of Section 11-A have been brought into force with effect from November 17, 1980. Section 11-A of the Act provides for recovery of duties not levied or not paid or short-levied or short paid or erroneously refunded. (b) Rules 57A to Rule 57-I were inserted in Chapter V of the Rules as Section AA vide Notification No. 176/86, dated March 1, 1986. These rules provided for MODVAT scheme. Rule 57-I as it came into force from March 1, 1986 remained in operation till October 6, 1988. Clause 1 of Rule 57-I was amended and substituted by new clause in the same rule. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determine the amount of such credit to be disallowed (not being in excess of the amount specified in the show cause notice) and thereupon such manufacturer or assessee shall pay the amount equivalent to the credit disallowed, if the credit has been utilised, or shall not utilise the credit thus disallowed". (2) If any inputs in respect of which credit has been taken are not fully accounted for as having been disposed of in the manner specified in this section the manufacturer shall upon a written demand being made by the Assistant Collector of Central Excise pay the duty leviable on such inputs within 10 days of the notice of demand. 6. It is contended that Rule 57-I of the Rules as it stood prior to the amendment is ultra vires the provisions of Articles 14 and 19(1)(g) of the Constitution of India. The contention is based on the ground that there is no guideline in the rule as regards the period during which the provisions of the rule can be invoked. It is submitted that unlimited power is conferred on the executive authority. In absence of period of limitation the provision may be invoked at any time. Such conferment of power and exercise of the same would be not only arb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence illegal and void. The contention cannot be accepted. The absence of specific provision containing principles of natural justice in the rule does not mean that the provisions of the rule excludes the observance of principles of natural justice. The principles of natural justice is nothing but fair play in action. No one needs direction from the parliament that he is required to act fairly. Any one, be it an executive officer, or a judicial officer, who has been conferred with discretionary powers and who is charged with a duty to act judicially or impartially, is bound to act fairly. Therefore, the provision as regards applicability of principles of natural justice has got to be read into the provisions of the rule, unless it is shown that the legislature has expressly or by necessary implication excluded the observance of principles of natural justice. There is nothing in the provision of Rule 57-I as it stood then, or in any of the provisions of the Rules to indicate that the observance of principles of natural justice have been excluded and the authority invoking the provisions of Rule 57-I can ignore the principles of natural justice. 9. Here reference may be made to S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act by which the Government is empowered to make rules to carry into effect the purpose of the Act. Rules 57A to 57P relating to MODVAT scheme are framed to streamline the process of levy and collection of excise duty. By no stretch of reasoning it can be said that the rule is enacted for extraneous purpose. It does subserve the purpose of the Act, i.e. the levy and collection of excise duty on goods manufactured or produced in the country. Rule makes a different and specific provisions with regard to MODVAT credit wrongfully availed of or wrongfully utilised. Provisions of Section 11A do not provide that the legislature shall not make specific provisions with regard to particular types of credit availed of by the assessee. There is nothing inconsistent in Rule 57-I which cannot be-enacted by the legislature when the provisions of Section 11A of the Act is in operation. Section 11A of the Act occupies the general field while Rule 57-I deals with specific field of wrongful availment of MODVAT credit. Rule 57-I is enacted by the legislature in exercise of powers conferred upon it under Section 37 of the Act and not under Section 11A of the Act. The provisions of Rule 57-I is to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf shows that input may be anything used in addition to or relating to the end product. Thus input may be even packing of the end product. Input may be something other than the raw material or component part of it. In this view of the matter, duty wise and commodity wise, scope of MODVAT scheme is far wider than that of set-off contained in Rule 56A of the Rules. The type of cases covered by MODVAT are required to be specifically dealt with as provided by the legislature, and they are not to be dealt with as per the provisions of Section 11A of the Act and Rule 56A of the Rules. (b) As far as the procedure of MODVAT scheme is concerned, it is also different. While taking MODVAT credit the assessee is not required to wait for permission of the Department. He has just to make declaration and obtain acknowledgement of the declaration. After having obtained acknowledgement of the declaration, he can straightaway start taking credit in respect of the inputs utilised by him for the purpose of manufacture of end product. (c) Basis of MODVAT - mutual trust and confidence. While enacting MODVAT provision, legislature has reposed a sort of trust or confidence on the assessee. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of construction is applicable to resolve the conflict between the general provision in one Act and the special provision in another Act, the rule cannot apply in resolving a conflict between general and special provisions in the same legislative instrument. This suggestion does not find support in either principle or authority. The rule that general provisions should yield to specific provisions is not an arbitrary principle made by lawyers and judges but springs from the common understanding of men and women that when the same person gives two directions one covering a large number of matters in general and another to only some of them his intention is that these latter directions should prevail as regards these while as regards all the rest the earlier direction should have effect." 12A. Similar view is taken by the Supreme Court in the case of State of Gujarat v. Patel Ramjibhai Danabhai reported in (1979) 3 Supreme Court Cases 347. In that case, the legality and validity of provisions of Section 33(6) of the Bombay Sales Tax Act, 1959 [corresponding to Section 14(6) of Bombay Sales Tax Act, 1953] came up for consideration before the Supreme Court. It was contended that no ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also of no help to the petitioners because the provisions of the Act and the Rules which came up for consideration before the High Courts and the Tribunal were general provisions and not special or specific provisions as contained in the MODVAT scheme. For these reasons all these decisions are not required to be dealt with in further details. 15. The learned counsels for the petitioners contended that Rule 57-I was amended with effect from October 6, 1988. Sub-rule (1) of Rule 57-I was substituted by introducing fresh sub-rule (1). Sub-rule (2) of Rule 57-I has not been touched by the amendment and there is no saving clause in the amendment of the Rules. In view of this change in law, it is submitted that the proceedings initiated under the provisions of Rule 57-I of the Rules as it stood prior to the amendment would lapse. In support of this contention, the learned counsels appearing for the petitioners have relied upon a decision of the Supreme Court in the case of Royala Corporation Pvt. Ltd. v. The Director of Enforcement Ors., reported in AIR 1970 SC 494. In that case the Supreme Court was concerned with the effect of a repeal (by efflux of time) of the provisions of temp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1985 (21) E.L.T. 24 (Guj.). In the aforesaid two decisions, the effect of repeal of Rules 10 and 10A of the Rules has been considered. These two decisions are of no help to the petitioners for the following reasons : (1) Both the aforesaid decisions, in the case of Mahendra Mills Ltd. and Amit Processors Pvt. Ltd., rendered by two different Division Benches of this High Court, have followed the decision of the Supreme Court in the case of Royala Corporation Pvt. Ltd. (supra). For the reasons stated hereinabove the decision of the Supreme Court in the case of Royala Corporation (supra) is not applicable to the facts and circumstances of the cases on hand. For the same reasons, these two decisions of this High Court are also not relevant and not applicable to the facts and circumstances of the cases on hand. These decisions cannot be treated as precedent for deciding the question as to what is the effect of partial amendment of Rule 57-I of the Rules. (2) In the instant case, the Court is concerned with the amendment of the Rules and not with the repeal of the Rules. These two rules (Rules 10 and 10A) were repealed entirely with effect from November 16, 1980 and it was not the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned counsels appearing for the petitioners it must be stated that during the course of dictation of the judgment Mr. Paresh N. Dave who was present on behalf of Mr. Kamal B. Trivedi for M/s. Trivedi, Dupta Dave fairly stated that we need not go into the correctness or otherwise of the decisions of this High Court in the case of Mahendra Mills (supra) and in the case of Amit Processors (supra). In view of this concession we do not elaborate our reasons for not following the aforesaid two decisions. However, we may make it clear that we have reservations about the correctness of these two decisions, and we prima facie feel that the relevant decisions of the Supreme Court on the point were not brought to the notice of this Court. However, since these two decisions are not on the point at issue and since the learned counsel appearing for the petitioners made concession as stated above, we are not making elaborate discussion on this point. 17. Here it would not be out of place to refer to a decision of the Supreme Court in the case of State of Orissa v. H.A. Tulloch Co., reported in AIR 1964 SC 1284. Five Judges Bench of the Supreme Court has, in that case, considered this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge in a subsequent Act of the legislature to revive or re-create an expired right. If, however, the right created by the statute is of an enduring character and has vested in the person, that right cannot be taken away because the statute by which it was created has expired. 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 . In view of the aforesaid decisions of the Supreme Court, what is required is to ascertain the intention of the legislature in bringing about the amendment in Rule 57-I of the Rules. The question to be posited, examined and answered is:- Did the legislature manifest an intention to destroy all that was done under the unamended provision of Rule 57-I? Did the legislature intend to grant general amnesty to all those who were alleged to have taken MODVAT credit wrongfully or had utilised the same in wrongful manner? 18A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the Act itself would be undermined. Such a construction cannot be adopted and such cannot be the intention of the legislature. 20. In above view of the matter, there is no substance in any of the contentions raised by the learned counsels appearing for the petitioners. Hence the challenge to the legality and validity of the Rules fails. 21. In view of the aforesaid position, how is it necessary for us to go into the details of factual aspects in each and every case? There is no dispute with regard to the fact that the Assistant Collector can and he is bound to decide the disputes with regard to the show cause notices issued against each one of the assessee. Similarly, appeal is provided against the order of the Assistant Collector. Therefore, it would not be proper for us to go into individual facts of the case of each assessee and decide as to whether the petitioner had rightly availed of the credit or wrongly availed of the same as alleged by the Department. For the reasons stated by us in the case of Gujarat Heavy Chemicals Ltd. (Special Civil Application No. 6149 of 1989, decided on September 12, 1989) wherever there is an alternative remedy available under the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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