9911796707
TMI Blog2006 (7) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... communicated to the assessee vide letter dated 4-8-1998 and the assessees were required to pay excise duty accordingly. However, they paid only part amount resulting in short payment of Rs. 1,38,58,739/- during the period from March, 1998 to March, 2000. Hence, 4 show cause notices were issued proposing recovery of the duty short paid together with interest at the rate of 18% per annum from the due date till the actual date of payment and proposing imposition of penalty. Detail of the notices are as under :- SCN. Date Period Amount (in Rs.) 1. 28-9-1998 March 1998 1,00,068 2. 29-4-1999 4/1998 to 3/1999 74,91,994 3. 1-11-1999 4/1999 to 9/1999 27,66,673 4. 1-5-2000 10/1999 to 3/2000 35,00,004. 2. The notices were adjudicated by the Commissioner who held that the ACP as worked out and communicated to the assessee did not require to be revised as although the goods were allowed to be cleared provisionally even after determination of ACP, for the reason that the assessee had claimed the capacity of their induction furnace as 3 M.T., the furnace manufacturers M/s. Ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stwhile Rule 230(2) of the Central Excise Rules, 1944. 4. We have heard both sides. We find force in the submission of the appellant that since Section 3A of the Central Excise Act, which is the parent provision for Rule 96ZO has been omitted by Section 121 of the Finance Act, 2001 without any saving clause, pending proceedings cannot be continued, as held by the Tribunal in the case of Mitra Steel Alloys Pvt. Ltd. (Order Nos. A/1444- 1446/WZB/2005/C.II dated 29-6-2005 in Appeal Nos. E/3461/03 and E/252/05 Mum.) the relevant extracts from that order are re-produced below : - (d) The appellants have contested the initiation continuation of proceedings, under Rule 96ZO(3), as arrived on ground of omission of Section 3A Rule 96ZO. Considering the submissions, it is to be held - (i) The common law rule is that if an Act expired or was repealed it was regarded, in absence of provision to the contrary, as having never existed, except as to matters and transactions past and closed. Refer Craies on Statute Law - pages 351-354 Maxwell on The Interpretation of Statutes (ii) With a view to avoid such an effect, savings clause to be enacted is necessary. (iii) Section 3A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97. Vide Notification No. 6/2001-C.E.(N.T.) dated 1-3-2001, the Central Government made the Central Excise (Third Amendment) Rules, 2001. Rule 7 of these Rules, inter alia, omitted Rule 96ZO. In other words, the 1997 Rules and Rule 96ZO were abrogated even before Section 3A was omitted . However, such prior abrogation of subordinate legislation is not material is a plea, to be upheld. Suppose the 1997 Rules and Rule 96ZO were never abrogated i.e. they continued to be present in the law books. Now the question to be asked is whether the present proceedings can be continued and demand is maintainable under Rule 96ZO, after the omission of Section 3A. The answer would be on omission of parent provision (Section 3A), the subordinate legislation (Rule 96ZO and the 1997 Rules) relatable to the parent provision, cease to have any legal validity because the source of power (namely Section 3A) is itself obliterated. (ix) The above view finding is fully supported by the decision of Supreme Court in Air India v. UOI - 1995 (4) SCC 734, wherein the Supreme Court held that once a parent statute is repealed, the subordinate legislation no longer survives. The Supreme Court held that - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, 1944 was specifically amended to bring in penalty interest provisions on Modvat credits when Clause XVIC was inserted in Section 37(2) vide amendment by Finance Act, 1995 Notification No. 25/95-C.E.(N.T.) dated 31-5-1995 then issued or clause 1(bb) added vide Finance Act, 1999 to bring in interest under Rule 9B. Therefore, amendment of Section 37(2) was imperative to empower delegated legislation on interest levy under Rule 96ZO(3). It has to be held that there is no provision for delegated legislation on power to levy interest rules to be framed under the Central Excise Act, 1944 to enact in the Rules, to be framed to implement a scheme of levy under Section 3A. Thus for delay in payment and levy/charge of interest on period of such delay, as enacted in the Rule 96ZO is not found to be supported by or could be shown to be derived from any power under the Act. The proviso of Rule 96ZO(3) providing for interest in ultra vires the delegated power of rule making granted under the Act. (f) Similarly, examining the plea on penalty provisions, under Rule 96ZO(3) it is found - (i) It is axiomatic that penalty is a substantive and fiscal liability and can be legislated only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penal provisions contained in Rule 96ZO(3). This is because condition precedent for applying penal provisions contained in Rule 96ZO(3) has nothing to do with the two circumstances mentioned in Section 34(4)(b) and Section 37(4)(c) of Central Excise Act, 1944. (vii) The power under Section 37(5) of Central Excise Act, 1944 has been exercised by enacting Rule 209A of the Central Excise Rules, 1944. In any event, this Section 37(5) cannot be relied to sustain the penal provisions contained in Rule 96ZO(3). A plain reading of the Section 37(5) establishes this. Firstly, this Section 37(5) would apply to persons, other than the manufacturers. Secondly, Rule 96ZO(3) does not provide for confiscation, if monthly payment as required under Rule 96ZO(3), is not made. Therefore, this Section 37(5) is not relevant at all for judging the source legislation of penal provisions contained in Rule 96ZO(3). Therefore, we find no delegation of powers, to make a provision of penalty in Rule 96ZO(3) the same as notified is to be held as ultra vires the power delegated to frame rules under the Central Excise Act, 1944. (g) Once we find that the provision of Rule 96ZO(3) as regard interest penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterpreted and followed in the Tribunal s order. We are also unable to agree with the ld. Jt. CDR that duty can be assessed and collected in terms of Section 37 for the reason that Section 3A providing for levy and collection is the parent provision and once the provision for levy itself has been omitted without saving clause, collection is not saved. Once Section 3A has been omitted nothing survives. The Hon ble Supreme Court has held in the case of B. Shama Rao - 1967 2 S.C.C. 650 that core of taxing statute is in the charging Section and the provisions levying such a tax and defining persons who are liable to pay such tax. If that core disappears, the remaining provisions have no efficacy. Once Section 3A has been omitted, the subordinate legislation in the form of Rule 96ZO and the 1997 Rules relatable to the parent provision cease to have any legal validity because the source of power viz. Section 3A itself has been obliterated, in the light of the ratio of the Supreme Court in AIR 1995 4 SCC 734 and ACCE v. Ramakrishna Kulwant Rai - 1989 (41) E.L.T. 3 (S.C.). The inbuilt saving clause present in Notification No. 6/2001-C.E., dated 1-3-2001, does not come to the rescue of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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