1986 (11) TMI 49 - HC - Central Excise

Issues Involved:
1. Validity of retrospective application of the Explanation to Rule 9 of the Central Excise Rules, 1944.
2. Conflict between the definition of 'place of removal' in Section 4(4)(b) of the Central Excises and Salt Act, 1944 and the Explanation to Rule 9.

Issue-wise Detailed Analysis:

1. Validity of Retrospective Application of the Explanation to Rule 9 of the Central Excise Rules, 1944:

The petitioner challenged the retrospective application of the Explanation to Rule 9, introduced by Notification No. 20/82-CE, dated 20.2.1982, and validated by Section 51 of the Finance Act, 1982. The petitioner argued that the rule-making power under Section 37 of the Central Excises and Salt Act, 1944 did not confer the power to make rules with retrospective effect. However, it was noted that the legislative power conferred on the appropriate Legislature to enact laws can be exercised both prospectively and retrospectively. The court highlighted that the retrospective operation of a law, especially to remove an ambiguity or cure an infirmity, is permissible and does not automatically render the law unreasonable or arbitrary.

The court referenced several judgments from other High Courts which upheld the validity of the retrospective application of the Explanation to Rule 9:
- J.K. Cotton Spinning and Weaving Mills v. Union of India: The Delhi High Court upheld the validity of the retrospective operation of the Explanation to Rule 9.
- Tata Export Ltd. v. Union of India: The Madhya Pradesh High Court held the amendment as intra vires the Constitution.
- Kathiwar Jute Mills Ltd. v. Inspector of Central Excise: The Patna High Court opined that Parliament has plenary power to legislate both prospectively and retrospectively within the parameters laid out by the Constitution.

Additionally, the Karnataka High Court in Devangere Cotton Mills Ltd. v. Union of India upheld the validity of the retrospective amendment, noting that Parliament was competent to legislate retrospectively to address the ambiguity or infirmity in the original provision.

The court also referenced a similar case from the Madras High Court (Bharat Match Works v. Union of India), which upheld the validity of a retrospective amendment to the Central Excise Rules, emphasizing that Parliament has the power to make laws retrospectively, especially in the field of taxation.

2. Conflict between the Definition of 'Place of Removal' in Section 4(4)(b) of the Central Excises and Salt Act, 1944 and the Explanation to Rule 9:

The petitioner contended that the definition of 'place of removal' in Section 4(4)(b) of the Act conflicted with the Explanation to Rule 9, leading to ambiguity. However, the court clarified that there was no conflict or ambiguity between the two provisions. Section 4(4)(b) defines 'place of removal,' while Rule 9 and its Explanation pertain to the removal of excisable goods. The Explanation introduced in 1982 specified that the consumption or utilization of excisable goods produced or manufactured in the same place would amount to removal.

The court, agreeing with the respondents' counsel, concluded that the two provisions addressed different aspects and did not conflict with each other.

Conclusion:

The court dismissed both writ petitions, upholding the validity of the retrospective application of the Explanation to Rule 9 and finding no conflict between the definition of 'place of removal' in Section 4(4)(b) of the Act and the Explanation to Rule 9. The petitions were dismissed with no costs.

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