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2007 (5) TMI 245 - SC - Central ExciseValidity to Rule 3 - whether the said Rule 3 was ultra vires Section 3A of the Central Excise Act, 1944 - Held that - said rule has been struck down by the Madras Hiqh Court in the M/s. Beauty Dyers v. Union of India 2001 (12) TMI 95 - HIGH COURT OF JUDICATURE AT MADRAS . However, when the Tax Appeal 2011 (7) TMI 1028 - GUJARAT HIGH COURT came before the Gujarat High Court in the present case, in our view, the above important question of law did arise for determination. The High Court ought to have answered that question. However, instead of answering that question, the High Court has marely stated that no question of law arose for determination in the Department's appeal and the appeal was accordingly dismissed - an important question of law/substantial question of law arose for determination and it was the duty of the High Court to have answered that question in the Department's appeal - Matter remitted back - Decided in favour of Revenue.
Issues:
1. Validity of Rule 3 under Section 3A of the Central Excise Act, 1944. Detailed Analysis: The Supreme Court addressed the issue of the validity of Rule 3 under Section 3A of the Central Excise Act, 1944. The Madras High Court had previously held Notification No. 42/98 to be ultra vires Section 3A. The Gujarat High Court was faced with the question of whether Rule 3, which deals with valuation and changes the basis of valuation from removal/clearance to annual production capacity, was also ultra vires Section 3A. Despite the Madras High Court's ruling on a similar matter, the Gujarat High Court failed to address the important legal question in Tax Appeal No. 519/2004. The Supreme Court emphasized that an important question of law did indeed arise for determination, and it was the duty of the High Court to provide an answer. As the High Court did not address the crucial legal question, the Supreme Court set aside the impugned order and remitted the matter back to the Gujarat High Court for a decision in accordance with the law under Section 35G of the Central Excise Act, 1944. The civil appeal was disposed of accordingly.
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