2000 (4) TMI 37 - SC - Central Excise

Whether there is any conflict between the provisions of sub-section (4) of Section 3A of the Act and sub-rule (3) of Rule 96ZO of the Central Excise Rules? Whether a manufacturer who has exercised the option to make payment of amount based on total furnace capacity installed in his factory under sub-rule (3) of Rule 96ZO and not on the basis of annual capacity of production can make an application for determining the actual production during the period his aforesaid option is in operation ? Held that - What can be seen is that the charge under the Section is clearly on production of the goods but the measure of tax is dependent on either actual production of goods or on some other basis. The incidence of tax is, therefore, on the production of goods. It cannot be said that collection of tax based on the annual furnace capacity is not relatable to the production of goods and does not carry the purpose of the Act. In holding whether a relevant rule to be ultra vires it becomes necessary to take into consideration the purpose of the enactment as a whole, starting from the preamble to the last provision thereto. If the entire enactment is read as a whole indicates the purpose and that purpose is carried out by the rules, the same cannot be stated to be ultra vires of the provisions of the enactment. Therefore, it is made clear that the manufacturers, if they have availed of the procedure under Rule 96ZO(3) at their option, cannot claim the benefit of determination of production capacity under Section 3A(4) of the Act which is specifically excluded. .On the reasoning adopted by us and bearing in mind that in taxation measures composition schemes are not unknown and when such scheme is availed of by the assessee it is not at all permissible for him to turn around and ask for regular assessment, we think, there is no substance in the contention urged on behalf of the respondents. Appeal allowed.

Summary

Issues Involved:
1. Conflict between Section 3A(4) of the Central Excise Act and Rule 96ZO(3) of the Central Excise Rules.
2. Eligibility of manufacturers opting for payment under Rule 96ZO(3) to apply for determination of actual production under Section 3A(4).
3. Procedural aspects regarding appeals and special leave petitions.
4. Validity and interpretation of Rule 96ZO(3) in relation to Section 3A(4).

Detailed Analysis:

1. Conflict between Section 3A(4) of the Central Excise Act and Rule 96ZO(3) of the Central Excise Rules:
The court examined whether there is any conflict between the provisions of sub-section (4) of Section 3A of the Act and sub-rule (3) of Rule 96ZO of the Central Excise Rules. It was concluded that the schemes contained in Section 3A(4) and Rule 96ZO(3) are two alternative procedures available to the assessee. The two procedures do not clash as they are separate and distinct options for tax payment.

2. Eligibility of manufacturers opting for payment under Rule 96ZO(3) to apply for determination of actual production under Section 3A(4):
The court held that manufacturers who have opted for the procedure under Rule 96ZO(3) cannot claim the benefit of Section 3A(4) for determination of actual production and re-determination of duty payable. The court emphasized that once an assessee opts for the lumpsum payment method under Rule 96ZO(3), they forgo the benefits under Section 3A(4). This was supported by the Andhra Pradesh High Court and the Allahabad High Court in their respective judgments.

3. Procedural aspects regarding appeals and special leave petitions:
An objection was raised regarding the maintainability of the appeals under Section 35L(b) of the Act. The court noted that the learned Attorney General sought to convert these appeals into petitions for special leave under Article 136 of the Constitution of India. The court decided to grant leave and proceed to deal with the appeals, emphasizing the need to settle the legal position due to differing views among various High Courts.

4. Validity and interpretation of Rule 96ZO(3) in relation to Section 3A(4):
The court examined the validity and interpretation of Rule 96ZO(3) and its relation to Section 3A(4). The court concluded that Rule 96ZO(3) is not ultra vires of Section 3A(4) as the rule provides an alternative method of tax payment that is within the legislative intent of the Act. The court noted that the charge under Section 3A is on the production of goods, and the measure of tax can be based on either actual production or some other basis, such as furnace capacity.

Conclusion:
The court allowed the appeals, setting aside the orders made by the Tribunal and directing the Tribunal to conform to the view expressed by the court. The court affirmed that manufacturers who opt for the lumpsum payment method under Rule 96ZO(3) cannot subsequently claim benefits under Section 3A(4). The judgment emphasized the importance of maintaining the integrity of the alternative procedures provided under the Act and the Rules.