2012 (10) TMI 695 - AT - Central Excise

Abatement under Rule 96ZQ (7) of Central Excise Rules, 1944 - Held that - Rule 96ZQ(5)(ii) of the Central Excise Rules, 1944 is held to be ultra vires Articles 14, 19(1) (g) and 265 of the Constitution of India. It is further held that after the omission of Rules 96ZQ, 96ZP and 96ZO of the Rules with effect from 1st March, 2001 no proceedings could have been initiated thereunder and after the omission of Section 3A of the Act with effect from 11th May, 2001, without any saving clause, no pending proceeding under the said rules which had not been concluded before the omission came into effect, could be concluded thereafter. The proceedings culminating into the impugned orders in the present case having been initiated/concluded after the omission of Rules 96ZQ, 96ZP and 96ZO of the Rules and Section 3A of the Act are, therefore, without any authority of law and as such, cannot be sustained.

Summary

Issues:
Claim of abatement under Rule 96ZQ (7) of Central Excise Rules, 1944.

Analysis:
The appeal was against the rejection of the abatement claim by the Commissioner, Central Excise, Ahmedabad-I. The appellant claimed abatement of compounded levy for a specific period due to the sealing of a machine. The High Court entertained the challenge to the rejection of the claim. A Show Cause Notice was issued to the appellant, leading to the rejection of the abatement claim by the adjudicating authority. The main issue was whether the claim of abatement should have been entertained by the adjudicating authority.

The Hon'ble High Court of Gujarat in the case of Krishna Processors framed several questions of law, including the effect of the omission of Rule 96ZQ and other related rules from the statute book. The High Court held that after the omission of these rules, no action could be initiated under them. The court further ruled that no proceedings under the omitted rules could be concluded after the omission of Section 3A of the Act. The High Court declared Rule 96ZQ(5)(ii) of the Central Excise Rules, 1944 as ultra vires the Constitution and held that proceedings initiated under the omitted rules were without authority of law.

The judgment of the High Court clarified that after the omission of Rule 96ZQ and related rules, proceedings arising from those rules automatically abated. The appeal was dismissed as abated following the precedent set by the High Court in the case of Krishna Processors. The decision emphasized that proceedings initiated under the omitted rules were invalid and could not be sustained.