2007 (9) TMI 288 - AT - Central Excise

Compounded Levy Scheme - applicability of Section 6 of the General Clauses Act, 1897 - repeal of an enactment and not to omission of a provision of the Act

Summary

Issues Involved:
1. Applicability of Section 38A of the Central Excise Act to actions taken under Rules 96ZO and 96ZP after their omission.
2. Whether the omission of Section 3A of the Central Excise Act can be considered a 'repeal' under Section 6 of the General Clauses Act, 1897.

Issue-wise Analysis:

1. Applicability of Section 38A of the Central Excise Act:
- The core controversy in the appeals revolves around the effect of the omission of Section 3A of the Central Excise Act, 1944, and Rules 96ZO and 96ZP of the Central Excise Rules, 1944.
- The assessees argued that the omission of Section 3A without a saving clause meant that obligations and liabilities incurred under Rules 96ZO and 96ZP did not survive beyond 11-5-2001.
- They contended that Section 6 of the General Clauses Act, 1897, could not be invoked as it applies to 'repeals' and not 'omissions'.
- The department argued that the liabilities incurred during the currency of Section 3A and Rules 96ZO and 96ZP were saved by Section 38A, introduced simultaneously by the Finance Act, 2001.
- Section 38A provides that amendments, repeals, or omissions do not affect previous operations, obligations, liabilities, penalties, or legal proceedings.
- The Tribunal concluded that Section 38A, a comprehensive saving clause, applies to the omission of Rules 96ZO and 96ZP, thus preserving the obligations and liabilities incurred under these rules.
- The liabilities incurred under these rules while Section 3A was in force can be enforced as per Section 38A, regardless of the subsequent omission of Section 3A.

2. Whether the Omission of Section 3A Constitutes a 'Repeal':
- The assessees argued that 'repeal' and 'omission' are distinct concepts, with 'omission' not being protected under Section 6 of the General Clauses Act.
- They cited Supreme Court decisions in Rayala Corporation (1969) and Kolhapur Canesugar Works (2000), which held that Section 6 only applies to repeals of Central Acts or Regulations, not rules.
- The department countered that there is no real distinction between 'repeal' and 'amendment', and that Section 6 should apply to omissions as well.
- The Tribunal noted that Section 38A specifically addresses amendments, repeals, supersessions, and rescindments, thus encompassing omissions.
- The Tribunal found it unnecessary to delve into the controversy regarding the meaning of 'repeal' under Section 6 of the General Clauses Act, as Section 38A sufficiently covers the scenario.

Conclusion:
- The Tribunal held that Section 38A of the Central Excise Act applies to obligations and liabilities incurred under Rules 96ZO and 96ZP before their omission.
- The question of whether the omission of Section 3A constitutes a 'repeal' under Section 6 of the General Clauses Act does not survive due to the applicability of Section 38A.
- The reference was answered accordingly, and the appeals were to be placed before the regular bench for final hearing.

(pronounced in open Court on 13-9-2007)