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TMI Blog1992 (8) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... e value be set aside. Packing charges on cement have been included in the assessable value for the purpose of Excise duty on the basis of Sec. 4(4)(d)(i) of the Central Excises and Salt Act, 1944 (hereinafter referred to as `the Act'). 2.At the time of filing the petition, the only question which was raised was whether packing charges were required to be included in the assessable value for the purpose of Excise duty. On merits, the Division Bench rejected the contention that under Sec. 4(4)(d)(i) of the Act for determining assessable value of the excisable goods the value of the gunny bags which are used as packing material was required to be excluded for various reasons. However, at the time of hearing of the petition, the learned Advocate for the petitioner filed Civil Application No. 1883 of 1990 for amending the petition by adding a ground that Rule 10 of the Rules was substituted with effect from 6th August, 1977 and as there is no saving clause the proceedings initiated under the substituted Rule 10 would come to an end. In support of this contention, he relied upon the decisions of this Court in the case of Amit Processors Pvt. Ltd. v. Union of India Ors., 1985 (21) E.L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication, the learned Advocate for the petitioner has raised the same contention that, in view of deletion of Rule 10 with effect from 6th August, 1977, the proceedings initiated under Rule 10 would come to an end and, therefore, the order passed by the Assistant Collector is illegal and void. The Division Bench referred the matter to the larger Bench for considering the question whether the notices issued or actions taken under substituted Rules 10 and 10A or omitted Rule 10 of the Rules would stand discharged or terminated upon `substitution' or `omission' of Rule, as the case may be. 7.In the referring judgment [1991 (55) E.L.T. 467], broadly the following reasons are given for arriving at the conclusion that the proceedings initiated under substituted Rules 10 and 10A or omitted Rule 10 of the Rules would continue even after substitution or omission. The two cases, namely(1), Amit Processors Pvt. Ltd. Mahendra Mills Ltd. (supra), are decided on the basis of the Supreme Court judgment in the case of Rayala Corporation Pvt. Ltd. wherein the Supreme Court was only required to deal with the effect of repeal of statute, i.e., the Defence of India Rules, 1962 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to that effect. Liability to pay duty of excise arises immediately when excisable goods are manufactured or produced (Reliance is placed on Indira Sohanlal v. Custodian of E.P., AIR 1956 SC 76; Jayantilal v. Union of India, AIR 1971 SC 1193; Joint Secretary, Union of India v. Khillu Ram, AIR 1975 SC 2275; M.S. Shivananda v. K.S.R.T. Corporation, AIR 1980 SC 77; I.T. Commissioner, U.P. v. M/s. Shah India Sons, AIR 1987 SC 1217; Bansidhar v. State of Rajasthan, AIR 1989 SC 1614). (2) Rules 10 and 10A or substituted Rule 10 were statutory rules and were for all the purposes law or part and parcel of the statute. (Reliance is placed on T.B. Ibrahim v. The Regional Transport Authority, Tanjore, AIR 1953 SC 79; State of Uttar Pradesh Ors. v. Babu Ram Upadhya, AIR 1961 SC 751.) 8.We may mention at this stage that besides the learned Advocate for the petitioner, learned Advocate Mr. K.M. Mehta appears as an Intervenor. On behalf of the petitioner, it was vehemently contended by the learned Advocate that as Rule 10 of the Rules was substituted with effect from 6th August, 1977 and, as there is no saving clause, proceedings initiated under the old Rule 10 would come to an end and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority will issue under Sec. 6 of the Act and the Rules framed thereunder. Section 37(1) of the Act empowers the Central Government to make Rules to carry into effect the purpose of the Act. Sub-section (2) of Sec. 37 inter alia provides for making rules for ascertaining equivalent of normal price for providing for assessment and collection of duties of excise or remission of duty of excise, for transit of excisable goods or for removal of excisable goods or for regulating the production or manufacture, or any process of the production or manufacture, the possession, the storage and sale of salt and such other things. Sub-section (3) of Sec. 37 of the Act also empowers the rule making authority to provide for penalty in cases where no other penalty is provided under the Act. Sub-section (5) of Sec. 37 of the Act also provides for making rules to provide for imposing penalty as stated therein. Under Sec. 38 all rules made and notifications issued under this Act are to be published in the Official Gazette. Every rule made under the Act is required to be laid before each House of the Parliament. Hence, Central Excise Rules, 1944 are framed in exercise of powers conferred by Secs. 3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there is no material change with regard to power of the authority to recover duties short-levied or not paid or not paid in full or erroneously refunded. The same power continues with some amendment in the wordings. The only material change is with regard to time-limit. Under substituted Rule 10 and 11, the time-limit prescribed is three months while Rule 10(1) provides period of six months and proviso to that Rule provides the period of five years in the cases where duty has been short-levied or has not been paid in full by reasons of fraud, collusion, any wilful mis-statement or suppression of facts. Again on 17th November, 1980, Rule 10 was omitted and on the(2) same day Sec. 11A was added in the Central Excises Salt Act, 1944 by Act No. 25 of 1978. Section 11A of the Act is virtually similar to Rule 10. It is, therefore, apparent that the power of the Customs Department to recover duties short-levied or not paid in full or erroneously refunded remains as it was, except with regard to change in time-limit and some other change which has no material bearing on the power of the authority to recover the duty of excise. The authority to issue show cause notice remains with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect it should be noted that the Court has not considered the vital aspects that - neither the Central Excises(i) Salt Act nor the Rules made thereunder are temporary or for a limited period; the taxable event for the duty of excise is manufacture or(ii) production of the goods within the country as provided in Sec. 3 of the Act. With regard to levy of duty of excise, there is no change by substitution or deletion of the rules. The liability to pay the duty of excise remains as it was. the Ce(iii)ntral Excise Rules framed under the provisions of the Central Excises Salt Act are statutory rules. They are law for all purposes and are part and parcel of the statute itself; even with regard to temporary statute or rules, rights and(iv) liabilities accrued under the repealed statute are not ipso facto terminated. Rights and liabilities are saved unless they are expressly extinguished or an amending Act specifically provides to that effect. even with regard to substitution or omission or amending of(v) an Act for ascertaining whether the rights and liabilities under the repealed Act have been put an end to by the Act, the line of enquiry would not be whether the new Act e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point of collection is located where the statute declares it will be. The relevant observations are as under : "This Court had occasion to consider a similar question in R.C. Jall v. Union of India, 1962 Supple. (3) SCR 436. In that case, the Central Government was authorised by an ordinance to levy and collect as a cess on coal coke and coke despatched from collieries in British India a duty of excise at a specified rate. Rule 3 made under the Ordinance empowered the Government to impose a duty of excise on coal and coke when such coal and coke was despatched by rail from the collieries of the coke plants, and the duty was to be collected by the Railway Administration by means of a surcharge on freight either from the consignor or consignee. It was contended by the assessee that the excise duty could not legally be levied on the consignee who had nothing to do with the manufacture or production of coal. The Court remarked : `The argument confuses the incidence of taxation with the machinery provided for the collection thereof' and reference was made to In re : The Central Provinces and Berar Act, No. XIV of 1938 (supra). The Province of Madras v. Boddu Paidanna and Sons (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the act committed by him when the Defence of India Rules, 1962 were in force after omission of Rule 132A relating to prohibition of dealings in foreign exchange. The Court held that the act of contravention cannot be held to be a `thing done or omitted to be done under that rule', as prescribed in saving clause (2) of Amendment Rules, so that after that rule has been omitted, prosecution in respect of that contravention cannot be instituted. This decision would have no bearing in the present case because there is no deletion or omission in Sec. 3 of the Act with regard to liability to pay duty of excise. The substitution or omission is only in the procedure prescribed for recovery of duty of excise not levied or not paid or short-levied or not paid in full or erroneously refunded. Therefore, it cannot be held that the proceedings for recovery of duty of excise require to be dropped or stand lapsed. 21.For the third proposition that the Act and the Rules are statutory rules and they are law for all purposes and are part and parcel of the statute itself, reliance can be placed on the decision in the case of T.B. Ibrahim v. Regional Transport Authority, AIR 1953 SC 79, wherein the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the person whose gross compensation is the highest. The Court held that the said Rule deals with a substantive right conferred by the Act on displaced persons. The Court therefore, negatived the contention that the pending proceedings are required to be dealt with by the amended Rules. The Court also approved the Full Bench decision of the Punjab and Haryana High Court in the case of Devraj v. Union of India, AIR 1974 Punj. Har. 65. The relevant observations of the Supreme Court are as under : "Rule 30 prescribes that where the property is in the occupation of more persons than one, it shall be offered to the person whose gross compensation is the highest. Clearly Rule 30 deals not with the form of procedure, but with a substantive right conferred by the Act on displaced persons. Mr. Sanghi described this Rule as only a mode or manner of payment of compensation. This may be so, but the form and manner in which compensation is payable is also part of the right to get compensation. Rule 30 is not an instrument or machinery for asserting the right conferred by the Act; it does not regulate the procedure for settlement of disputes concerning that right. Therefore, the deletio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to an Act or a provision added to a Section, the Legislatures commonly entitled the Act as an amendment..... When a provision is withdrawn from a section, the Legislatures call the Act an amendment particularly when a provision is added to replace the one withdrawn. However, when an entire Act or section is abrogated and no new section is added to replace it, Legislatures label the Act accomplishing this result a repeal. Thus as used by the Legislatures, amendment and repeal may differ in kind - addition as opposed to withdrawal or only in degree - abrogation of part of a section as opposed to abrogation of a whole section or Act; or more commonly, in both kind and degree - addition of a provision to a section to replace a provision being abrogated as opposed by abrogation of a whole section of an Act. This arbitrary distinction has been followed by the Court and they have developed separate rules of construction for each. However, they have recognised that frequently an Act purporting to be an amendment has the same qualitative effect as a repeal - the abrogation of an existing statutory provision - and have therefore applied the term implied repeal and the rules of constructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporating Sec. 11A in the Act in similar wording. Therefore, applying the aforesaid principles of Statutory Construction, it would be clear that the provisions of original Rules 10, 10A and 11 which are omitted by Rule 10 which prescribes similar procedure, are to be considered as continuation of the original Rules. Further, after omission of Rule 10 by enacting Sec. 11A, the legislature has continued the provisions of the original rule with some modification. The provisions of the original rules or the re-enacted rules by substitution or omission of the rules are required to be held to be the law since they were first enacted and the provisions introduced by the amendment would have the same effect from the time when the amendment took effect. From the discussion of the aforecited judgments, it would be clear that for the purpose of construction or obligation the rules made under a statute must be treated as if they were part and parcel of the Act. By substitution or omission of rules, crystallised rights are not at all adversely affected. There is no provision in the re-enacted Sec. 11A or substituted Rule 10 adversely affecting or taking away the right of the department to recov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year 1961-62 under Sec. 24(2) of 1922 Act was an accrued right and a vested right. It could have been taken away expressly or by necessary implication. It has not been so done. No contrary intention is expressed by the legislature by enacting an Act. Therefore, the said right continues. The Court further observed that whatever rights are expressly saved by the `savings' provision stand saved. But, that does not mean that rights which are not saved by the `savings' provision are extinguished or stand ipso facto terminated by the mere fact that a new statute repealing the old statute is enacted. Rights which have accrued are saved unless they [are] taken away expressly. The right to carry forward losses which had accrued under the repealed Income-tax Act, 1922 is not saved expressly by Sec. 297 of the Income-tax Act, 1961. But it is not necessary to save a right expressly in order to keep it alive after the repeal of the old Act of 1922. Section 6(c) of the General Clauses Act saves accrued rights unless they are taken away by the repealing statute. 29.Further dealing with the similar contention in the case of Bansidhar v. State of Rajasthan, AIR 1989 SC 1614, the Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n considering the effect of an expiration of a temporary Act, it would be unsafe to lay down any inflexible rule. It certainly requires very clear and unmistakable language in a subsequent Act of the legislature to revive or re-create an expired right. If, however, the right created by the statute is of an enduring character and has vested in the person, that right cannot be taken away because the statute by which it was created has expired. In order to ascertain whether the rights and liabilities under the repealed Ordinance have been put an end to by the Act, `the line of enquiry would be not whether', in the words of Mukherjee, J. in State of Punjab v. Mohar Singh, 1955 (1) S.C.R. 893, `the new Act expressly keeps alive old rights and liabilities under the repealed Ordinance but whether it manifests an intention to destroy them'. Another line of approach may be to see as to how far new Act is retrospective in operation." 32.In the case of Keshavan v. State of Bombay, AIR 1951 S.C. 128, the Court dealt with the provisions of Art. 13(1) of the Constitution of India and held that Art. 13(1) cannot be read as obliterating the entire operation of the inconsistent laws, or to wipe t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exercise of any of the fundamental rights, the inconsistent law is not wiped out so far as the past act is concerned, for to say that it is, will be to give the law retrospective effect. There is no fundamental right that a person shall not be prosecuted and punished for an offence committed before the Constitution came into force. So far as the past acts are concerned, the law exists notwithstanding that it does not exist with respect to the future exercise of fundamental rights." 33.Further, even in the case of M/s. Rayala Corporation (supra), AIR 1970 S.C. 494, the Supreme Court has not held that with regard to temporary statute or rules, the rights and liabilities accrued under the repealed statute are ipso facto terminated. In that case, the Court considered the contention whether the proceedings validly continued on the complaint instituted on 17-3-1968 in respect of a charge under Rule 132A(4) of the Defence of India Rules when that Rule was omitted by Notification dated 30-3-1965. By Notification dated 30-3-1965 Defence of India (Amendment) Rules, 1965 were promulgated. Clause 2 of these Amendment Rules reads as under : "In the Defence of India Rules, 1962, Rule 132A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fence of India Rules for the two reasons that Section 6 applies to repeals and not to omissions, and applies when the repeal is of a Central Act or Regulation and not of a Rule. 34.In view of the aforesaid discussion, we are not applying the provisions of Section 6 of the General Clauses Act; but that would not mean that when the Statutory Rules are omitted or substituted, the Rules of Interpretation would not be applicable. The aforesaid aspect is considered by the Supreme Court in the case of D.K. Trivedi Sons v. State of Gujarat, AIR 1986 S.C. 1323 : [1986 (2) GLR 1250 (S.C.)]. While dealing with the provisions of the General Clauses Act and the Rules framed under Mines and Minerals (Regulation and Development) Act by the Gujarat Government known as Gujarat Minor Mineral Rules, 1965, the Court held that, though Section 8(1) of the General Clauses Act does not in express terms refer to rules made under an Act, the same principle of construction would apply in the case of rules made under an Act. The relevant observation in paragraph 63 is as under : "We are unable to accept either the above conclusions reached by the Gujarat High Court or the reasoning upon which these conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with effect from 6th August, 1977. The same would be the result with regard to omission of Rule 10 with effect from 17th November, 1980. In case of M/s. Rayala Corporation (supra), rule relating to prohibition of dealings in foreign exchange which was punishable under sub-rule (4) of Rule 132A of the Defence of India Rules, was itself deleted. By substitution of Rule 10 or by its omission, there is no amendment or deletion in the charging Section. 3 of the Act. Therefore, the aforesaid decision would have no bearing at the conclusion that the proceedings initiated under Rule 10 or Rule 10A which are substituted by Rule 10 with effect from 6th August, 1977 would not come to an end. 36.In this connection, it is necessary to state that, in the case of Gwalior Rayon Mfg. (Wvg.) Co. v. Union of India Ors., 1982 (10) E.L.T. 844 (M.P.) the Madhya Pradesh High Court has taken a view that by omission of Rule 10 and by introducing Section 11A with effect from 17th November, 1980, the principles relating to repeal or omission of an enactment would not apply and that a saving clause is not needed to continue the proceedings initiated prior to such a change being brought about by shifting t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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