Customs, Excise and Gold Tribunal - Tamil Nadu
Mcdowell And Co. Ltd. vs Collector Of Central Excise on 17 September, 1992
Equivalent citations: 1993(45)ECR283(TRI.-CHENNAI)
ORDER
S. Kalyanam, Member
1. This appeal is directed against the order of the Collector of Central Excise (Appeals), Madras, dated 29.9.1988 confirming the order of the Assistant Collector, Visakhapatnam dated 12.10.1987, confirming a demand of differential duty of Rs. 4,86,253.31 for the period 11.12.1971 to 28.2.1979 and 1.3.1979 to 31.3.1979. Proceedings were instituted against the appellant by issue of two show cause notices dated 7.6.1979 and 4.7.1979 under Rule 10 of the Central Excise Rules, 1944 as it stood at the relevant time calling upon the appellant to pay differential duty aforesaid on the ground that the appellant would not be entitled to the benefit of Notification 198/76 dated 10.6.1976 inasmuch as the benefit of the Notification had not been passed on to the consumers and the proceedings resulted in the impugned order appealed against.
2. Shri Sarcar, the learned Counsel for the appellant at the outset submitted that he is not questioning the leviability of the differential duty by the Department as alleged in the show cause notices, but would only urge the technical point i.e. the Department would not be legally entitled to initiate proceedings calling upon the appellant to pay differential duty under Rule 10 of the Central Excise Rules after it had been omitted without a saving clause. Shri Sarcar, further submitted that before the order was passed by the original authority, Rule 10 under which the show cause notices had been issued, was omitted by the Government without a saving clause. Even though simultaneously provisions of the Rule 10 as it then existed were incorporated under Section 11A, that would not clothe the Department with the right to continue the proceedings under the erstwhile omitted Rule 10 without an express saving clause. The learned Counsel in support of his contention made elaborate submissions for a considerable length of time and cited a number of rulings about the effect of omission of a Rule and its significance in law. The learned Counsel also brought to our notice that there was a recent Division Bench ruling of the Karnataka High Court, which is against the appellant, in the case of Falcon Tyres Ltd. v. Union of India, .
3. Shri JM Jeyaseelan, the learned D.R. for the Department contended that in the present case even though Rule 10 was omitted Section 11A was simultaneously incorporated and therefore there was continuity of the same in the statute book without any interregnum. The learned D.R. further submitted that Section 6 of the General Clauses Act would squarely apply to the facts of the case, as not only the investigation had been completed but also the show cause notices had been issued and the proceedings were pending. The learned DR further submitted that it is only by reason of the fact that the appellant informed the adjudicating authority of the pendency of the Writ petition in WP No. 4547/79 in the Andhra Pradesh High Court on an identical issue and requested the adjudicating authority not to proceed with the adjudication the adjudicating authority did not pass any order in adjudication. Therefore, having invited the adjudicating authority not to proceed with the adjudication by reason of the pendency of Writ proceedings on an identical issue in the High Court of Andhra Pradesh, it would not be open to the appellant to take advantage of this and contend that inasmuch as the proceedings had not been commenced by the adjudicating authority, the show cause notices would abate.
4. We have carefully considered the submissions, made before us. The Karnataka High Court in dealing with the relevant case has given authoritative pronouncements and has observed as under:
There is a judgment delivered by the Madhya Pradesh High Court in the case of Gwalior Rayon Manufacturing (Weaving) Co. v. Union of India and Ors. that fully supports the stand of the excise authorities. The Madhya Pradesh High Court noted the judgment of the Allahabad High Court in the case of Ajanta Paper Products and of the Supreme Court in the case of Rayala Corporation, In its view, the decision in the case of Rayala Corporation did not conclude the point. That was a case, it said, relating to an offence under Rule 132A of the Defence of India Rules, which was made punishable under Sub-rule (4) thereof. Rule 132A as a whole ceased to be in existence from a specified date and the question was whether proceedings could be validly taken for that offence after its omission. The Supreme Court had held that Section 6 of the General Clauses Act applied to repeals of Central Acts and Regulations but not of Rules and for this reason, Section 6 of the General Clauses Act was held to be inapplicable to save a prosecution under Rule 132A after its omission. The Supreme Court had also held that the amended Rules, by which Rule 132A had been omitted, did not save a prosecution under the omitted Rule 132A. In the Madhya Pradesh High Court's opinion, the Supreme Court decision did not apply to the case before it. The rule in respect of which the Supreme Court had to decide was a rule which provided for the offence itself and did not deal with an ancillary matter. In the case before the Madhya Pradesh High Court the liability of the petitioner was based on the short levy of excise duty and the provisions for the levy of excise duty contained in the Act and the Rules framed thereunder remained unaffected by the change of Rule 10, so also the provision for penalty. In the Madhya Pradesh High Court's opinion, the distinction on facts was sufficient to distinguish the decision in Rayala Corporation's case and to indicate that the result reached in the Allahabad decision in Ajanta Paper Products case did not automatically flow therefrom. It followed that, with the introduction of Section 11A in the Act on 17th November, 1980 when Rule 10 ceased to exist, there Was a maintenance of continuity. There was neither any repeal nor omission of an enactment but the continuance of the same throughout the only difference being that prior to 17th November, 1980 the provisions was in one part of the Act, that is to say, in the Rules which were framed under the Act, and subsequent to that date it was in the Act itself. In the circumstances, it was found difficult to appreciate how the principles relating to repeal or omission of an enactment could apply or to hold that a saving clause was heeded to continue proceedings initiated prior to the change being brought about.
5. Rulings of the Madras High Court relied upon by the learned Counsel are dearly distinguishable on facts. Therefore, following the ratio of the ruling of the Division Bench of the Karnataka High Court cited supra, we uphold the impugned order appealed against and dismiss the appeal.
(Pronounced in the open-Court).