1993 (4) TMI 78 - HC - Central Excise

Summary

Issues Involved
1. Constitutional validity of the Central Excise and Customs Laws Amendment Act, 1991.
2. Legislative competence of Parliament to enact Sections 11B, 11D, 12B, 12C, and 12D of the Central Excise Act and Sections 27, 28A, 28B, and 28D of the Customs Act.
3. Interpretation and application of the rule of limitation under Section 11B of the Central Excise Act.
4. Jurisdiction of the CEGAT to entertain transferred proceedings.
5. Right to claim refund under Article 226 of the Constitution.

Detailed Analysis

1. Constitutional Validity of the Amendment Act
The petitioners questioned the constitutional validity of Sections 11B and 11D of the Central Excise Act as amended by the Amendment Act, arguing that they were violative of Articles 265, 14, and 19(1)(g) of the Constitution. The Court held that the Amendment Act was valid legislation and not liable to be struck down on any of the grounds urged by the petitioners. The Court reasoned that the provisions were enacted to prevent the unjust enrichment of manufacturers and to ensure that the ultimate consumer, who bore the burden of the excise duty, could claim a refund. The creation of the Consumer Welfare Fund and the provisions directing the crediting of refundable excise duty to it were found to be within the legislative competence of Parliament.

2. Legislative Competence
The Court examined whether the Amendment Act, specifically Sections 11B, 11D, 12B, 12C, and 12D of the Central Excise Act and Sections 27, 28A, 28B, and 28D of the Customs Act, fell within the legislative competence of Parliament. The Court held that these provisions were ancillary and incidental to the main power in the taxing entries of the Seventh Schedule to the Constitution. Therefore, Sections 11B, 11C(2), 12B, 12C, and 12D of the Central Excise Act and Sections 27, 28A, and 28D of the Customs Act were not unconstitutional as being colourable legislation or lacking legislative competence.

3. Rule of Limitation under Section 11B
The petitioners contended that the rule of limitation under Section 11B was arbitrary and violative of Article 14. The Court held that the rule of limitation was not arbitrary or unconstitutional. The Court noted that the period of limitation prescribed in Section 11B did not apply to cases where the refund was claimed pursuant to an order passed by the appellate authority, appellate tribunal, revisional authority, or the Court holding that the levy and collection of duty were illegal or unauthorized. In such cases, the general rule of limitation under the Limitation Act would apply.

4. Jurisdiction of the CEGAT
The petitioners challenged the jurisdiction of the CEGAT to entertain transferred proceedings. The Court held that the transfer of the revision pending before the Government of India to the CEGAT was valid and within the jurisdiction of the CEGAT. The Court reasoned that under sub-section (2) of Section 131B of the Customs Act, every proceeding pending before the Central Government under Section 131 stood transferred to the CEGAT on the appointed day.

5. Right to Claim Refund under Article 226
The petitioners argued that the right to claim a refund was property and could not be taken away without compensation under Article 300A of the Constitution. The Court held that the right to claim a refund was not an absolute right but a right subject to the provisions of the Act. The Court further held that the provisions of the Amendment Act did not oust the jurisdiction of the High Court under Article 226 of the Constitution. The Court emphasized that the jurisdiction under Article 226 is discretionary and should not be exercised in a manner that makes the provisions of a valid Act nugatory.

Conclusion
The Court upheld the constitutional validity of the Central Excise and Customs Laws Amendment Act, 1991, and the relevant provisions of the Central Excise Act and the Customs Act. The Court also clarified the application of the rule of limitation under Section 11B and affirmed the jurisdiction of the CEGAT to entertain transferred proceedings. The right to claim a refund under Article 226 was found to be subject to the provisions of the Act, and the Court emphasized the discretionary nature of its jurisdiction under Article 226.