Customs, Excise and Gold Tribunal - Delhi
Kisan Sahkari Chini Mill vs Cce, Kanpur on 29 March, 2001
Equivalent citations: 2001(131)ELT651(TRI-DEL)
ORDER
1. This appeal is against the order passed on 12.5.97 by the Commissioner of Central Excise (Appeals). By the impugned order, the lower appellate authority had rejected the assessee's appeal and upheld the Order-in-Original dated 11.9.96 of the Assistant Commissioner. The Assistant Commissioner's order was in confirmation of a demand of duty raised in show-cause-notice dated 19.5.95. That was a demand under Rule 57U of the Central Excise Rules 1944 read with Section 11A of the Central Excises and Salt Act, 1944. The demand was based on the allegation that modvat credit taken by the assessee to the extent of Rs.1,54,346.71 on certain capital goods was not admissible.
2. Examined the records and heard both sides.
3. Ld. Advocate, Sh. Bipin Garg for the appellants has, at the outset, drawn my attention to a decision of the Bangalore Regional Bench of this Tribunal (in the case of Wipro Ltd. & Ors. Vs. CCE, Bangalore) reported in 2001 (43) RLT 317. That decision was rendered in a batch of appeals [filed in 1996, 1997, 1998, 2000 and 2001] mostly involving issues pertaining to modvat credits availed under Rule 57A or 57Q [of the Central Excise Rules, 1944] on inputs or capital goods, as the case may be. The Bench took note of the substitution of new Rules 57A to 57I [referred to as the CENVAT Rules] for the old Rules 57A to 57U of the Central Excise Rules 1944, effected on 1.4.2000 under Notification No. 11/2000-CE(NT) dated 1.3.2000 and also noted the subsequent amendment of the CENVAT Rules by Notification No. 27/2000-CE(NT) dated 31.3.2000 and found that neither of the Notifications introduced any provision for saving the proceedings relating to modvat credits which were pending as on 31.3.2000. The Bench then considered the decision of the Supreme Court in the case of Kolhapur Cane Sugar Works Ltd. Vs. UOI [2000 (119) ELT 257 (S.C.)] and, relying on that decision,held as under:-
"in all these cases the proceedings were initiated with reference to the repealed/provisions/rules. When once the Rules were deleted from the statute they were non-est in the eye of law. It is as if it had never been passed in the statute when once that rule is considered to be void abinitio nothing survives with reference to such rule. Accordingly no action can be initiated with reference to such repealed provisions and all actions must stop and not even appeal can be entertained in such a situation. In the absence of a saving clause all the proceedings initiated under the old repealed rules would simply lapse. In these circumstances we are not inclined to grant any relief as prayed for by the respective parties. Accordingly all these appeals are dismissed as not maintainable."
4. Ld. Counsel relies on Wipro (supra) and submits that the present appeal proceedings should be considered to have lapsed. His argument is that the issues involved in the appeal relate to a demand of duty raised in 1995 under the old Rule 57U. Since that rule was repealed with effect from 1.4.2000 without any saving clause to protect proceedings already initiated under that rule, the appeal proceedings should be held to have lapsed on 1.4.2000, submits Counsel.
5. Ld. JDR, Sh. Swatantra Kumar, on the other hand, argues that the demand in the instant case was not raised under Rule 57U simpliciter but under that rule read with Section 11A of the Act. Since Section 11A is still in force, there is no question of the appeal proceedings lapsing. Even otherwise, according to ld. DR, Rule 57U was relevant only for the purpose of the initial demand of duty as raised in the show-cause notice. Thereafter, that rule is not relevant. The dispute which originated from the show-cause notice was adjudicated upon by the Assistant Commissioner under Section 33 of Act. The appeal filed against the order of the Assistant Commissioner was decided upon by the Commissioner (Appeals) under Section 35 of the Act. The present appeal before the Tribunal against the order of the lower appellate authority is under Section 35B of the Act. Only these provisions of the Act are relevant for the present. Therefore, ld. DR submits, this appeal cannot lapse on account of repeal of the old Rule 57U.
6 . I have examined the arguments. I find that Rules 57A to 57U of the erstwhile Modvat Rules were repealed on 1.4.2000 without any saving provision as noted by the Bangalore Bench of this Tribunal. Neither in the CENVAT Rules nor in any Section of the parent Act or Section 6 of the General Clauses Act is there anything which could save any proceedings taken under any of the Modvat Rules and pending prior to 1.4.2000. Therefore, following the apex Court's ruling in Kolhapur Cansugar Works case, the Bangalore Bench held that the appeal proceedings before it had lapsed on 1.4.2000, the date on which the old Rules 57I and 57U were repealed. The apex Court's ruling so followed by the Tribunal Bench is contained in para 35 of the judgement of the Court :-
""If there is a provision therein that pending proceedings shall continue and be disposed of under the old rule as if the rule has not been deleted or omitted then such a proceeding will continue. If the case is covered by Section 6 of the General Clauses Act or there is a pari materia provision in the statute under which the rule has been framed in that case also the pending proceeding will not be affected by omission of the rule. In the absence of any such provision in the statute or in the rule the pending proceedings would lapse on the rule under which the notice was issued or proceeding was initiated being deleted/omitted."
7 . At present, the Central Excise Act under which the erstwhile Modvat Rules had been made does not contain any provision saving any actions initiated under Rule 57U of the said Rules. Though Section 125 of the Finance Bill, 2001 seeks to introduce such a provision in the Central Excise Act and Section 126 seeks to introduce in the Act provisions for revalidating, inter alia, actions taken under the said Rule 57U after 31.3.2000, neither of the two Sections has become law hitherto. Contextually, I also note that the above provisions of the Finance Bill, 2001 were not before the SRB when it passed order in Wipro (supra).
8. In the instant case, the demand was under the erstwhile Rule 57U read with Section 11-A of the Act. Section 11-A was not affected by the repeal of MODVAT Rules and has remained in force throughout. In such a situation,could it be said that the proceedings lapsed on 1.4.2000? The SRB has not addressed this question.
9. It is one thing to say that an action initiated under a rule lapses with the repeal of that rule without saving provision. However, in my view, it is another thing to say that an appeal [filed under Section 35B of the Central Excise Act] challenging such action is not maintainable. Therefore, with great respect, I doubt the correctness of the SRB's decision in Wipro case.
10. In the above view of the matter, I direct the Registry to place the papers urgently before the Hon'ble President for constitution of a Larger Bench to examine the effect of repeal of MODVAT Rules on the present appeal.
(Dictated and pronounced in open Court).