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1993 (4) TMI 66 - SC - Central ExciseValidity of the levy and collection of cess under Section 3 of the Vegetable Oils Cess Act, 1983 for the period commencing 1st March, 1986 and ending with 31st March, 198? Whether the power of exemption conferred by Rule 8 can be carried to the extent of nullifying the very Act itself? Held that - It is not brought to our notice that the budget proposals contained in the Finance Minister s speech were accepted by the Parliament. The cess having been imposed by a Parliamentary enactment could be rendered inoperative only by a Parliamentary enactment. Such repealing enactment came only in the year 1987 with effect from April 1,1987. Not only that. The repealing Act expressly provided in Section 13 that the cess due before the date of said repeal, but not collected, shall be collected according to law as if the Cess Act is not repealed. This provision amounts to a positive affirmation of the intention of the Parliament to keep the said imposition alive and effective till the date of the repeal of the Cess Act. In the face of the said statutory provisions, no rights can be founded nor can the levy of the cess be said to have been dispensed with by virtue of the alleged decision referred to in the Finance Minister s speech or on account of the letter dated August 11, 1986. The Finance Minister s speech is not law. The Parliament may or may not accept his proposal. Indeed, in this case, it did not accept the said proposal immediately but only a year later. It is only from the date of the repeal that the said levy becomes inoperative. Coming to the argument based upon Rule 8 of the Central Excise Rules read with Section 3(4) of the Cess Act it is totally unacceptable. No notification has been issued under Rule 8(1) by the Central Government - much less was any such notification published in the Gazette. No special order has also been made by the Central Board of Excise and Customs in this behalf under Rule 8(2). The cess imposed under Section 3(1) of the Cess Act, it may be remembered, is a duty of Excise as stated in Section 3 itself. To repeat, the power of exemption cannot be utilised to dispense with the very levy created under Section 3 of the Cess Act or for that matter under Section 3 of the Central Excise Act. Additional contention that the goods concerned therein cannot be called Vegetable Oil within the meaning of Section 3(1) of the Cess Act and, therefore, the levy of the cess thereon is incompetent disallowed to be raised in a petition under Article 32 of the Constitution. Appeal dismissed.
Issues Involved:
1. Validity of the levy and collection of cess under Section 3 of the Vegetable Oils Cess Act, 1983 for the period from March 1, 1986, to March 31, 1987. 2. Impact of the Finance Minister's Budget Speech on the enforceability of the cess. 3. Applicability of Rule 8 of the Central Excise Rules in relation to the cess. 4. Functionality of the Board under the National Oilseeds and Vegetable Oils Development Board Act, 1983. 5. Classification of goods as "Vegetable Oil" under Section 3(1) of the Cess Act. Issue-Wise Detailed Analysis: 1. Validity of the Levy and Collection of Cess: The petitioners questioned the validity of the cess levied under Section 3 of the Vegetable Oils Cess Act, 1983, specifically for the period from March 1, 1986, to March 31, 1987. The court noted that the Cess Act was repealed by the Cotton, Copra, and Vegetable Oils Cess (Abolition) Act, 1987, effective from March 31, 1987. However, Section 13 of the Repeal Act allowed for the collection of any cess levied before the repeal but not collected. Thus, the court found that the petitioners' dispute regarding their liability to pay the cess for the specified period was "of little avail." 2. Impact of the Finance Minister's Budget Speech: The petitioners argued that the Finance Minister's Budget Speech on February 28, 1986, which stated the decision to dispense with the cess on vegetable oils, constituted an enforceable decision. They also referenced a letter from the Directorate of Vanaspati, Vegetable Oils, and Fats, which indicated that the cess should not be collected and any collected amounts should be refunded. However, the court held that the Finance Minister's speech is not law and that the cess, imposed by a Parliamentary enactment, could only be rendered inoperative by another Parliamentary enactment. The court emphasized that the repealing enactment came into effect only on April 1, 1987, and until then, the levy remained operative. 3. Applicability of Rule 8 of the Central Excise Rules: The petitioners contended that by virtue of sub-section (4) of Section 3 of the Cess Act, Rule 8 of the Central Excise Rules, which empowers the Central Government and the Central Board of Excise and Customs to grant exemptions, applied to the cess. They argued that the budget proposals and the letter from the Directorate were equivalent to an exemption under Rule 8. The court rejected this argument, stating that no notification under Rule 8(1) was issued, nor was any special order made under Rule 8(2). The court further noted that the power of exemption cannot be used to nullify the very Act itself, drawing an analogy to the principle established in Kesavananda Bharti Sripadagalvaru and Others v. State of Kerala and Another, which held that the power of amendment cannot extend to scrapping the Constitution or altering its basic structure. 4. Functionality of the Board: The petitioners claimed that the Board under the National Oilseeds and Vegetable Oils Development Board Act, 1983, never actually started functioning, making the levy of cess impermissible. The court disagreed, stating that the levy was for the development of the Oilseeds Industry and Vegetable Oils Industry, with the Board being merely a medium. The court also noted that there was no evidence to support the claim that the Board did not become operational. 5. Classification of Goods as "Vegetable Oil": In Writ Petition 963 of 1987, an additional contention was raised that the goods concerned could not be classified as "Vegetable Oil" under Section 3(1) of the Cess Act, making the levy of cess incompetent. The court declined to address this contention under Article 32 of the Constitution, stating that it could be raised before the appropriate authority. Conclusion: The court dismissed the writ petitions, upholding the validity of the levy and collection of cess under Section 3 of the Vegetable Oils Cess Act, 1983, for the period from March 1, 1986, to March 31, 1987. The court ruled that the Finance Minister's Budget Speech and the subsequent letter from the Directorate did not constitute enforceable law, and the provisions of Rule 8 of the Central Excise Rules did not apply in a manner that could nullify the Cess Act. The court also found no merit in the contention regarding the functionality of the Board or the classification of goods as "Vegetable Oil." The petitions were dismissed without costs.
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