2018 (2) TMI 1442 - HC - Central Excise

Rate of duty - effective date of correction through corrigendum notification - Corrigenda issued by the Government of India dated 15th January 1997 and 21st September 2000 - original amendments were made through Budget in September 1996 by the Parliament, which eventually became the Finance Act of 1996. Held that - We do not have for a moment any doubt that all along what was presented before the Parliament, after the amendment in the Finance Bill and what was accepted by the Parliament was the prescription of basic rate of duty at 12% for unprocessed as well as processed fabric. The affidavits filed by the responsible officers of the Union of India need not be doubted. We have therefore no reason to believe that the budgetary proposals did not carry such amendment or that the Parliament did not accept such proposals; as is stated before us - Inevitable conclusion therefore one would reach is that the Finance Act, 1996 revised the rate of basic duty for unprocessed and processed fabric @ 12% ad valorem. Correspondingly, the structure of additional Nil rate of duty for unprocessed fabric was maintained and additional duty @ 8% for the processed fabric was prescribed. The contention that corrigendum dated 21st September 2000 must relate back to the original publication of rate of duty and that in any case the Parliament has power to make law with retrospective effect cannot be accepted. Firstly, the corrigendum is in the nature of a publication required since the original publication carried a wrong figure. The corrigendum is not a piece of legislation. The question of retrospective effect of such correction cannot be equated with exercise of the power of the Parliament to make a law with retrospective effect. In case of Union of India v. Ganesh Das Bhojraj 2000 (2) TMI 89 - SUPREME Court , it was observed that the exemption notification would take effect as soon as it is published in the Government Gazette. Publication in the Government Gazette is recognized as an established practice of bringing a rule or subordinate legislation to the notice of the persons concerned. It was observed that thereafter individual notices to members of public would not be necessary and the interested persons can acquaint himself with the contents of the notification published in the Gazette. Petition allowed.

Issues Involved:
1. Challenge to corrigenda issued by the Government of India.
2. Legality of show cause notices issued by the Deputy Commissioner of Central Excise.
3. Determination of the correct rate of duty for processed and unprocessed fabrics.
4. Retrospective application of corrigenda.
5. Compliance with publication requirements for notifications and corrigenda.

Issue-Wise Detailed Analysis:

1. Challenge to Corrigenda Issued by the Government of India:
The petitioners challenged the corrigenda dated 15th January 1997 and 21st September 2000, issued by the Government of India, which corrected printing errors in the Finance Act of 1996. The corrigenda aimed to specify that the basic rate of duty for both processed and unprocessed fabrics would be 12%, contrary to the 10% printed in the official Gazette. The petitioners argued that these corrigenda were not made available to the public and contained further errors, failing to clarify the correct duty rates.

2. Legality of Show Cause Notices Issued by the Deputy Commissioner of Central Excise:
The petitioners also contested a series of show cause notices issued between November 1996 and February 1999, demanding additional excise duty based on the corrected rates. The notices claimed a short levy of duty amounting to ?10,25,625 due to the petitioners paying 10% instead of 12%. The petitioners contended that they had collected and paid the duty as per the official Gazette, which stated a 10% rate, and the corrigenda were not properly communicated to them.

3. Determination of the Correct Rate of Duty for Processed and Unprocessed Fabrics:
The court examined the legislative process and found that the Parliament intended to revise the basic rate of duty to 12% for both types of fabrics. However, due to printing errors, the official Gazette incorrectly published the rate as 10%. The Government's affidavits confirmed that the correct rates were 12% for basic duty on both processed and unprocessed fabrics, with additional duty rates of 8% for processed fabrics and nil for unprocessed fabrics.

4. Retrospective Application of Corrigenda:
The court held that the corrigenda issued in 2000 could not be applied retrospectively to correct the errors from 1996. The petitioners had relied on the published rates and managed their affairs accordingly. The court emphasized that the public must be informed of tax rates through official publications, and retrospective corrections without proper notification would breach the principle of fair tax collection.

5. Compliance with Publication Requirements for Notifications and Corrigenda:
The court noted that the corrigendum dated 15th January 1997 was part of an unrelated ordinance and contained errors, failing to effectively communicate the correct duty rates. The subsequent corrigendum in 2000, which correctly identified the errors, came too late to be applied retrospectively. The court cited precedents emphasizing the importance of publishing notifications in the Official Gazette to ensure public awareness and compliance.

Conclusion:
The court set aside the show cause notices, ruling in favor of the petitioners. It concluded that the petitioners could not be held liable for the additional duty based on corrigenda that were not properly published or communicated. The judgment underscored the necessity of clear and timely publication of tax rates to ensure fair administration and compliance.

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