Compounded levy demands fail after omission of the enabling provision without a saving clause, leaving no statutory basis for confirmation.

Demands under the compounded levy scheme could not be sustained after omission of Section 3A of the Central Excise Act, 1944 without any saving clause, because the statutory foundation for the levy had disappeared. Although the assessee had not challenged the annual capacity determination and related compounded levy rules, that did not preserve the demands once the enabling provision was removed from the statute. The Tribunal followed its earlier view that such omission deprived the demands of legal basis, and the demands were set aside in favour of the assessee.

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Issues: Whether demands raised under the compounded levy scheme could be sustained after omission of Section 3A of the Central Excise Act, 1944 without a saving clause.

Analysis: The appeals arose from demands confirmed on the footing that the assessee had not challenged the annual capacity determination made under Section 3A of the Central Excise Act, 1944 and the relevant compounded levy rules. Although the objection to the unchallenged assessment was noted, the decisive circumstance was that Section 3A had been omitted by Parliament without any saving clause. In similar matters, the Tribunal had already held that such omission deprived the impugned demands of their foundation, and the same approach was followed here.

Conclusion: The demands were held unsustainable and were set aside. The appeals were allowed in favour of the assessee.

Final Conclusion: Once the statutory provision creating the compounded levy basis stood omitted without a saving clause, the consequent demands could not be confirmed and were liable to be annulled.

Ratio Decidendi: A demand founded on a statutory scheme cannot survive after the enabling provision is omitted without a saving clause.

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