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TMI Blog2005 (11) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... y the provisions of the Hot Re-rolling Mills Induction Furnace Annual Capacity Determination Rules, 1997 during the period 20-3-1998 to 31-8-1998 and 1st April, 1998 to 30-11-1998 which has been denied on the ground that during the two different periods involved in 1997-98 and 1998-99, the assessees had discharged duty liability as per Rule 96ZO(3) and therefore could not switch over to payment of duty under sub-section (4) of Section 3A of the Central Excise Act, 1944 (Actual production basis). 2. Appeal No. E/2246/03 is against the confirmation of duty of Rs. 97,62,588/- (Rupees Ninety seven lakhs sixty two thousand five hundred eighty eight only) raised in five show cause notices consequent to determination of Actual Capacity of Produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided in Section 121 or any other section of the Finance Act, 2001. (iv) It has been settled by following two judgments of Constitution Bench of Supreme Court that Section 6 of the General Clauses Act, 1897 does not apply to a case of "omission". (a) Rayala Corporation (P) Ltd. v. Director of Enforcement, New Delhi 1969 (2) SCC 412 at Para 17 page 424 (b) Kolhapur Canesugar Works Ltd. v. Union of India 2000 (2) SCC 536 at Paras 32 34 pages 549 550 The above two judgments have been followed by Supreme Court in General Finance Co. Ltd. v. Asst. CIT - 2002 (7) SCC 1. (v) It is true that Section 6 of the General Clauses Act, 1897 applies to Central Acts only. The portion of the judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24/97-C.E.(N.T.), dt 25-7-1997. 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 sub-ordinate legislation is not material is 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings cannot survive and hence the impugned Order-in-Original with all consequent liabilities is liable to be set aside. (b) The plea on interest provision on a taxing statute to be a substantive provision, is a plea to be upheld in view of the Constitutional Bench of Supreme Court decision in case of VVS Sugars v. Govt. of A.P. 1999 (4) SCC 192 holding as - "6 This court in India Carbon Ltd v. State of Assam has held after analysing the Constitution Bench judgement in J.K. Synthetics Ltd v. CTD that interest can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax makes a substantive provision in this behalf." And after perusal of Section 37(1) Central Excise Act, 1944, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roviso of Rule 96ZO(3) providing for interest in ultra vires the delegated power of rule making granted under the Act. (c) 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 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, express or implied, in the Central Excise Act, enabling the rule making authority namely the Central Government to frame the rules to implant a Scheme under Section 3A of the Act as contained in Rule 96ZO(3) relating to levy of penalty, for delay in payments. (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 971 (28) STC 367 (Cal.) (c) Hurdatroy Jute Mills v. Superintendent of Commercial Taxes - 1972 (30) STC 151 (Pat.). (i) The power under Section 37(3) of the Central Excise Act, 1944 is already exhausted by the Central Government by enacting Central Excise Rules, 1944 and hence cannot be a source relevant for enacting penalty under Rule 96ZO(3). (ii) The provisions of Clause (b) and Clause (c) of sub-section 4 of Section 37 of Central Excise Act, 1944 are not relevant for sustaining the 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 37(4)(b) and Section 37(4)(c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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