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TMI Blog2006 (7) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 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. Details of the notices are as under: SCN date Period Amount (in Rs.) 1. 28.9.98 March 1998 1, 00,068 2. 29.4.99 04/98 to 03/99 74, 91,994 3. 01.11.99 04/99to09/99 27, 66,673 4. 01.05.2000 10/99 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. Electrotherm (India) Ltd. Mehsana had confirmed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 1944. 4. We have heard both sides. We find force in the submission of the appellant that since Sec. 3A of the Central Excise Act, which is the parent provision for Rule 96Z0 has been omitted by Sec. 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/l 444- 1446/WZB/2005/C.II dated 29.6 .05 in Appeal No. 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, tinder Rule 96Z0 (3), as arrived on ground of omission of Section 3A Rule 96Z0. Considering the submissions, it is to be held- i) The common law rule is that if an Act expired or was repealed it was regarded, in absence of provision to the contrary, as having never existed, except as to matters and transactions past and closed.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 of the Central Excise Act, 1944 has been omitted vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise (Third Amendment) Rules, 2001. Rule 7 of these Rules, inter alia, omitted Rule 96Z0. In other words, the 1997 Rules and Rule 96Z0 were abrogated even before Section 3A was 'omitted'. However, such prior abrogation of sub-ordinate legislation is not material is a plea, to be upheld. Suppose the 1997 Rules and Rule 96Z0 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 96Z0 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 Vs.UOI-1995 (4) SCC 734, wherein the Supreme Court held that once a parent statute is repealed, the sub-ordinate legislation no longer survives. The Supreme Court held that - "if sub-ordinate legislation is to survive the repeal of its parent statute, the repealing stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 37 (2) vide amendment by Finance Act, 1995 Notification 25/95 CE (NT) dt.31.5 .95 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 delegated legislation on interest levy under Rule 96ZO (3).It b 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 96Z0 is not found to be supported by or could be shown to be derived from any power under the Act. The proviso of Rule 96Z0 (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 96Z0 (3) it is found - i) It is axiomatic that penalty is a substantive and fiscal liability and can be legislated only by plenary legislation, namely by Parliament or State Legislature, as the case may be. ii) In addition, in the present case, there is no provision, expr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances 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 96Z0 (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 96Z0 (3) does not provide for confiscation if monthly payment as required under Rule 96Z0 (3), is not made. Therefore, this Section 37 (5) is not relevant at all for judging the source legislation of penal provisions ' in Rule 96Z0 (3). Therefore, we find no delegation of powers, to make a provision of penalty in Rule 96Z0 (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 are ultra-vires, the delegated powers conferred under the Act, the same are required to be struck down by denying the powers to do so. The powers to be held ultra vire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en omitted without saving clause, collection is not saved. Once Sec. 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 Sec. 3A has been omitted, the subordinate legislation in the form of Rule 96ZP and the 1997 Rules relatable to the parent provision cease to have any legal validity because the source of power viz. Sec. 3A itself has been obliterated, in the light of the ratio of the Supreme Court in 1995 (4) SCC 734 and ACCE Vs. Ramakrishna Kulwant Rai 1989 (41) ELT 3 SC. The inbuilt saving clause present in Notification No. 6/2001-CE dated 1.3.01, does not come to the rescue of the Revenue for the reason, that saving clause would be relevant only when the parent provision of Sec. 3A was in force. Further, Sec. 38A of the Central Excise Act, 1944 will save proceedings only where a rule has been amended, repealed, superseded or rescinded and not where a parent provision has been omitted. 6. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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