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2006 (10) TMI 17 - HC - Central ExciseCentral Excise Demand of interest Assessee undertook to pay amount with interest and upto 31.3.2003, last payment was made Demand raised by Deptt. on 19.8.2005, in this view demand could not be held to be beyond reasonable time Omission of Sec 3A does not wipe out liability of assessee for the period during which scheme was in operation
Issues Involved:
1. Whether omission of compounded levy scheme wipes out the liability of the assessee for the period during which the scheme was in operation? 2. Whether letter of demand of interest for delayed payment was liable to be set aside on the ground of delay? Issue-wise Detailed Analysis: Re: Q. No. i 13. The petitioner argued that the omission of Section 3A of the Central Excise Act, 1944, nullified their liability for interest on excise duty payable under the said provision. They relied on the Supreme Court judgments in Messrs Rayala Corporation and Kolhapur Canesugar Works, which held that omission of a provision does not attract Section 6 of the General Clauses Act, 1897, and therefore, liabilities under the omitted provision do not survive. 14. The court noted that the present case does not involve the omission of a rule or a temporary statute. In Messrs Rayala Corporation, the issue was about the omission of Rule 132A of the Defence of India Rules, where it was held that Section 6 of the General Clauses Act does not apply to omissions but only to repeals. 15. The principles laid down in Messrs Rayala Corporation include: (i) Section 6 applies to repeals, not omissions. (ii) Section 6 applies to the repeal of a Central Act or Regulation, not a rule. 16. In Kolhapur Canesugar, it was held that Section 6 of the General Clauses Act does not apply to the omission of a rule. The court clarified that the present case does not concern a temporary statute or the omission of a rule. 17. The court examined the definition of a "temporary statute" in District Mining Officer v. Tata Iron and Steel Co. and noted that a temporary statute expires on a specified date unless repealed earlier, and Section 6 does not apply to temporary statutes. 18. The Supreme Court in M/s. General Finance Co. suggested that omission should be treated similarly to repeal, but this matter could be referred to a larger bench in an appropriate case. 19. The court referred to several Supreme Court judgments that examined the effect of omission or repeal, including Punjab v. Harnek Singh, M.S. Shivananda v. Karnataka State Road Transport Corporation, and M/s. Ambalal Sarabhai Enterprises Limited v. M/s Amrit Lal & Co. 20. The court noted that Section 131 of the Finance Act 2001 added Section 38A to the Central Excise Act, 1944, which ensures that the amendment, repeal, or rescinding of a rule, notification, or order does not affect liabilities incurred under the previous provisions. 21. Therefore, the court concluded that the omission of Section 3A did not wipe out the liability of the assessee. 22. The question was answered against the petitioner. Re: Q. No. ii 23. The petitioner argued that the demand for interest was barred by limitation as it was made after an unreasonable delay. They relied on the Supreme Court judgments in Citedal Fine Pharmaceuticals and Kanhai Ram Thekedar, which held that even in the absence of a specified time limit, demands must be made within a reasonable period. 24. In Citedal Fine Pharmaceuticals, the court held that the power of recovery must be exercised within a reasonable period, and what constitutes a reasonable period depends on the facts and circumstances of each case. 25. In Kanhai Ram Thekedar, the court held that a demand for interest made after four years was not within a reasonable time, given that no demand for interest was raised in the original assessment order. 26. In the present case, the petitioner undertook to pay the amount with interest, and the last payment was made on 31-3-2003. The department raised the demand on 19-8-2005, which the court found to be within a reasonable time. 27. The question was answered against the petitioner. Conclusion: The writ petition was dismissed.
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