1981 (12) TMI 39 - HC - Central Excise

Summary

Issues involved:
The issues involved in this case are the validity of a show-cause notice issued u/r 10 of the Central Excise Rules, the effect of the omission of Rule 10, the time limitation for demanding excise duty, and the exemption of dyed tissue paper from tax u/s 68/76.

Validity of Show-Cause Notice u/r 10:
The petitioner challenged a show-cause notice dated 8th August, 1980, issued u/r 10 of the Central Excise Rules. The petitioner contended that Rule 10 had been omitted by Notification No. 177/80-C.E. dated 12th November, 1980, and therefore, no further proceedings could be taken based on the notice. The petitioner also argued that the notice demanding excise duty for a period exceeding six months from its issue was time-barred. Additionally, the petitioner claimed that dyed tissue paper was exempt from tax u/s 68/76. The Court held that with the omission of Rule 10, the notice issued under that Rule lapsed, and no further proceedings could be pursued. The Court cited a Supreme Court decision to support this conclusion, stating that proceedings under a repealed rule cannot be continued once the rule ceases to exist on the statute book.

Effect of Omission of Rule 10:
The Court noted that Rule 10 of the Central Excise Rules was omitted by a notification dated 12th November, 1980, which came into effect from 17th November, 1980. The Court considered whether proceedings under the notice dated 8th August, 1980, issued u/r 10 could be continued after the omission of the rule. It was held that the omission of Rule 10 meant that proceedings under that rule could not be sustained, as there was no provision for their continuation after the rule was omitted. The Court emphasized that the legal device of deeming proceedings under Rule 10 to be under a new section introduced by an amending Act was not adopted, leading to the conclusion that such proceedings could not be continued.

Time Limitation for Demanding Excise Duty:
The petitioner argued that the notice demanding excise duty for a period exceeding six months from its issue was barred by time. However, the Court did not delve into this issue as it found in favor of the petitioner on the grounds related to the omission of Rule 10, rendering it unnecessary to address the time limitation aspect.

Exemption of Dyed Tissue Paper from Tax u/s 68/76:
The petitioner claimed that dyed tissue paper was exempt from tax u/s 68/76. While this contention was raised, the Court did not provide a specific ruling on this issue as it found in favor of the petitioner based on the omission of Rule 10. Therefore, the Court did not express a view on the exemption claim regarding dyed tissue paper.

Separate Judgment by Judges:
The judgment was delivered by C.S.P. Singh, J., and R.R. Rastogi, J. The Court allowed the petition, quashed the notice dated 8th August, 1980, and directed the respondents not to take any action based on the said notice. A corrigendum of the show-cause notice dated 8th August, 1980, issued on 25th December, 1980, was also quashed. The Court discharged the security furnished under the interim order without any order as to costs.