Customs, Excise and Gold Tribunal - Bangalore
M/S. Wipro And 50 Others vs Cce Bangalore - I & Others on 27 February, 2001
ORDER
Shri G.A. Brahma Deva
1. Appeals E/1289/96, E/1511-1515/96 filed by M/s.Wipro (P) Ltd., relate to credit of money scheme contained in Rules 57 K. Credit of money scheme contained in Rules 57 K to 57 P were omitted by MF (DR) Notfn.No.35/99-CE(NT) dt.18.5.99. Remaining appeals related to modvat credit on inputs either in terms of Rule 57 A to 57 JJ or on capital goods in terms of Rule 57 Q to 57 V of the CER respectively. Since these rules were omitted from the statute with effect from 1.4.2000, the parties/Authorised Representative were asked to address the arguments on maintainability of the appeals in view of the decision of the Supreme Court in the case of Kholapur Cane Sugar Works Ltd., Vs. UOI reported in 2000 (119) ELT 257 SC.
2. Shri.Ravindran appearing for the appellants M/s.Wipro Ltd., in appeals E/289/96, E/1511-1515/96 submitted that the proceedings were initiated in terms of Rule 57 K and since the relevant provisions were omitted from the statute, he has nothing to add further in view of the decision of the Supreme Court referred to above and leaves it to the Bench to pass an appropriate order.
3. Shri.B.V.Kumar, Learned Advocate appearing for the appellants M/s.Jindal Steel Ltd., (E/S/26/2K(B)-E/6/2K (B), Shri.S.Vijay Kumar, (E/S/27/2K(B)-E/41/2K(B), M/s.Loharu Steel Industries Ltd. and Shri.Anil Agarwal, (E/S/23-24/2001- E/40-41/2001) submitted that since the relevant rules were omitted from the statute, proceeding initiated under the respective rules are not sustainable but nevertheless appeals are maintainable to redress the grievances of the assessees. He said that in the similar facts and circumstances appeal was admitted by the Tribunal and un-conditional stay has been granted in the case of Dharpan Jain & Others Vs.CCE, New Delhi reported in 2000(42) RLT 7665.
4. Shri.Raghavan appearing for the appellants M/s.Wintech Ltd., (E/S/2000- E/3/2000) and M/s.Tractor & Farm Equipments Ltd., (E/S/652/2K- E/1343/2K) strengthening the arguments advanced by Mr.B.V.Kumar submitted that the appeals are maintainable in terms of Sec 35 B of the Act. Though sub-clause 'd' was inserted in Sec 35 B to take away purview of the jurisdiction of the Tribunal relating to modvat credit but in view of the clause that has to be inserted only from the date to be notified by Sec 109 of the Finance Act and as such no Notification was issued, appeal lies to the Tribunal in terms of Sec 35 B as it exists. He submitted that date of passing the order is also relevant to decide the issue of maintainability of the appeal. The relevant Rules were deleted from 1.4.2000 and in his case order was passed on 8.8.2000 and accordingly appeal is maintainable as impugned order was subsequent to the omission of Rules.
5. Shri.Parameswaran, appearing for the appellants M/s.Pearl Polymers Ltd., (E/1373/96), M/s. Amco Batteries (E/3256/98), (E/3216-3220/98) and M/s.Automotive Axels Ltd., (E/1345/98), (E/3047-3048/98) submitted that the issue involved herein has already been settled by the decision of the Supreme Court in the Case of Kholapur Cane Sugar Works Ltd., Vs. UOI reported in 2000 (119) ELT 257 SC. Since the judgement has rendered by the Apex Court and that too being a law of the land same is binding. In this connection he also drew out attention to the Departmental Instruction No.18/GL-18/2000 (SIC)GIMF(DR)'s F.No.275/126/2000-Cx.8A dt.18.10.2000 wherein it was stated that :-
"Attention of Departmental Officers is invited to the judgement of the five Judge Constitution Bench of the Hon'ble Supreme Court in the matter of Kholapur Cane Sugar Works Ltd., and Others Vs.UOI and others which has put at rest the dispute regarding continuance of the proceedings under the erstwhile Rule 10 and Rule 10A of the Central Excise Rules subsequent to its repeal/omission. In the said judgement the Hon'ble Supreme Court considered its earlier judgement in the case of Rayala Corporation Pvt. Ltd., 1969 (2) SCC.412 wherein it was held as under:-
"Section 6 of the General Clauses Act only applies to repeals and not omission and applies when the repeat is of a Central Act or Regulation and not of a Rule '(Para 17) and reaffirmed its views and held that the protection available under Section 6 of the General Clause Act, 1897 is not available, in cases where rules made by the Government are repeated/omitted. As a result when a rule is repeated or substituted or omitted, any investigation or legal proceedings including adjudication proceedings initiated by issuance of a Show Cause Notice during the time when the rule was enforced cannot continue on such repeal/substitution or omission".
He submitted that proceedings shall include proceedings at the appellate stage, as it was held in the case of Kamakhya Steels (P) Ltd., 2000 (121) ELT 247 following the ration of the decision of the Supreme Court in the case of Mathew M.Thomas Vs.Commissioner of Income Tax exported in 1999 (111) ELT 4 SC. Accordingly since the relevant rules were omitted from the statute, starting from Show Cause Notice nothing survives including appeal before the Tribunal. He requested that Tribunal by exercising inherent jurisdiction may direct the Department to return the pre-deposit amount which has already been paid in terms of Section 35 F of the Act, in pursuance of the stay order.
6. Shri.Lakshminarayan appearing for the appellants M/s.Bellar Steels Ltd., and M/s.Mohan Aluminium (P) Ltd., in Appeals No.E/S/6/2000-E/17/2000 and E/S/2-5/2001- E/4-7/2001 submitted that the appeal is maintainable but the proceedings initiated under the old Rule would lapse on its omission as it was held in the case of M/s.Atlas Laminates reported in 2000 (73) ECC 526.
7. S/Shri. Monappa, Raghuraman, Chidabaram & Bheemaseena Rao and others representing the respective parties while adopting the arguments of Sri.Parameshwaran on this issue submitted that it makes no difference whether an impugned order was passed prior to or subseq-uent to repealing a provision, but the effect of repealing provisions is to bring an end to all the proceedings initiated under the repealed provisions, in view of the decision of the Supreme Court particularly in view of the observations in para 9 therein.
8. Smt.Radha Arun, Learned SDR representing the Department is also of the view that appeal is not maintainable in view of the verdict of the Supreme Court that pending proceedings and all actions must stop with reference to repealed Rules in the absence of Saving clause.
9. We have carefully considered the matter. Maintainability of the appeal in respect of Money credit/Modvat credit under the repealed provisions was not an issue in the earlier cases of the Tribunal referred to above. Neither that point was raised nor considered. As we have noted earlier the rules relating to money credit Scheme were omitted from the statute as early as on 18.5.99 by Notfn.No.35/99 without saving clause. Similarly the Rules relating to Modvat credit were replace by Cenvat Rules as per Notfn.No.11/2000 dt.11.3.2000. In that Notification it was specified that for Rules 57 A to 57 U of the said rules (old rules) the following rules shall be substituted with effect from 1st day of April 2000. In effect the old Rules were omitted and old rules were replaced by new Cenvat Rules. In the new Rules transitional provision provided under Rule 57 Has under:-
"57 H. Transitional provision-Any amount of credit earned by a manufacturer under Rules 57A, 57B or 57Q, as they existed prior to 1st day of April, 2000 and remaining un-utilised on that day shall be allowable as CENVAT credit to such manufacturer".
10. Further the said CENVAT Rules, were amended by Notfn. No.27/2000 dt.31.3.2000 by renumbering transitional provision under 57 H as 57 AG, to facilitate the assessee to take un-utilised credit subject to conditions specified therein. Barring this transitional provision, there is no saving clause with reference to any old rule pertaining to modvat credit existed prior to the amendment. Till 31.3.2000, all wrongly availed credit on modvat inputs could be demanded by the Department under rule 57 I of the CER, 1944. Similarly wrongly availed credit on capital goods could be recovered under Rule 57U. The Modvat scheme was replaced by the new scheme with Cenvat credit from 1.4.2000 by substituting Rules 57 A to 57 U with new Rules 57 AA to 57 AK.
The new Rules 57 AB states that:
"manufacturer or producer of final products shall be allowed to take credit (herein referred to as Cenvat credit of) of duty excise...... paid on any inputs or capital goods received in the factory on or after the first day of April 2000.
57 AH reads: "where the CENVAT credit has been taken or utilised wrongly, the same alongwith interest shall be recovered from the manufacturer and the provisions of Sections 11A, 11AA and 11AB of the Act shall apply mutatis mutandis for effecting such recoveries".
Rules are provided for recoveries of wrong CENVAT credit in the new rule, but nothing was provided for recovery of the modvat credit taken prior to 1.4.2000. There is no saving clause for the recovery of the modvat credit which were taken prior to 1.4.2000. In the absence of saving clause whether Section 6 of the General clause Act is applicable to such a situation is an issue to be considered herein.
11. In the case of Malati Devi Vs.CCE reported in 1991 (56) ELT 374, the Tribunal has taken a view that pending proceedings are saved by Section 6 of the General Clauses Act and the Tribunal is competent to hear the appeals arising out of pre-existing gold Control Act even after its repeal in the absence of the saving clause. This position was clarified by the Supreme Court in the case of Kholapur Cane Sugar (supra) observing that proceeding pending under a rule lapses on repeal of that rule without saving clause. It was held that :-
"Repeal of Rules-Effect of Section 6 of General Clauses Act applies only in respect of a Central Act or Regulation and not to repeal of a Rule-when the Legislature by clear and un-ambiguous language has extended the provision of Section 6 to cases of repeal of a 'Central Act' or 'Regulation' it is not possible to apply the provision to a case of repeal of a 'Rule'. The position will not be different even if the rule has been framed by virtue of the power vested under an enactment; it remains a 'rule' has and takes its colour from the definition of the term in the General Clauses Act".
Further the observations made by the Apex Court in Para 35 & 38 of the said decision are relevant in this context and they are reproduced as under:-
Para 35:-
'For the reasons set forth above we do not accept the view taken in Saurashtra Cement and Chemical Industries Ltd., (supra), in Falcon Tyres Ltd., (Supra) and the other decisions taking similar view. It is not correct to say that in considering the question of maintainability of pending proceedings initiated under a particular provision of the rule after the said provision was omitted the Court is not to look for a provision in the newly added rule for continuing the pending proceedings. It is also not correct to say that the test is whether there is any provision in the rules to the effect that pending proceedings will lapse on omission of the rule under which the notice was issued. It is our considered view that in such a case the Court is to look to the provisions in the rule which has been introduced after omission of the previous rule to determine whether a pending proceeding will continue or lapse. If there is a provision therein that pending proceedings shall continue and be disposed of under the old Rules as if the rule 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 material 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 proceedings was initiated/being deleted/omitted. It is relevant to note here that in the present case the question of divesting the Revenue of a vested right does not arise since no order directing refund of the amount had been passed on the date when Rule 10 was omitted.' Para 38:-
'The position is well known that at common law, the normal effect of repealing a statute or deleting a provision is to obliterate if from the statute book as completely as if it had never been passed, and the statute must be considered as a law that never existed. To this rule, an exception is engrafted by the provisions of Section 6(1). If a provision of a statute is unconditionally omitted without a saving clause in favour of pending proceedings all actions must stop where the omission finds them, and if final relief has not been granted before the omission goes into effect, it cannot be granted afterwards. Savings of the nature contained in Section 6 or in special Acts may modify the position. Thus the operation of repeal or deletion as to the future and the past largely depends on the savings applicable. In a case where a particular provision in a statute is omitted and in is place another provision dealing with the same contingency is introduced without a saving clause in favour of pending proceedings then it can be reasonably inferred that the intention of the legislature is that the pending proceedings shall not continue but a fresh proceeding for the same purpose may be initiated under the new provision.'
12. 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 (SIC) 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.
(Pronounced on 27.2.2001)