2000 (2) TMI 823 - SC - Central Excise

SC Rules Pending Central Excise Cases Non-Est Due to Omission in New Rule, Overturns Lower Court Decisions.

KOLHAPUR CANESUGAR WORKS LTD. Versus UNION OF INDIA

The SC held that the absence of a saving clause or provision in the new rule meant pending proceedings under the omitted Rules 10 and 10A of the Central ... Applicability of Rules 10 and 10A of the Central Excise Rules - Held that:- In the case in hand Rule 10 or Rule 10A is neither a “Central Act” nor a “Regulation” as defined in the Act. It may be a Rule under Section 3(15) of the Act. Section 6 is applicable where any Central Act or Regulation made after commencement of the General Clauses Act repeals any enactment. It is not applicable in the case of omission of a “Rule”. In the present case, as noted earlier, Section 6 of the General Clauses Act has no application. There is no saving provision in favour of pending proceeding. Therefore action for realisation of the amount refunded can only be taken under the new provision in accordance with the terms thereof. From the contents of the provisions in the Rules it is clear that it did not contain any saving clause for continuance of the proceeding initiated under the rule which was deleted/omitted. There is also no provision in Section 11A or in any other Section of the Act saving the proceedings initiated under the deleted/omitted provision. The consequential position that follows is that the proceeding lapsed after 6th August 1977 and any order passed in the proceeding thereafter is to be treated as non-est. In case the notice was issued after Section 11A was introduced in the Act, the proceeding will continue and will not be affected by this decision. Issues Involved:1. Applicability of Rules 10 and 10A of the Central Excise Rules.2. Validity of proceedings initiated under the old rules after their omission.3. Application of Section 6 of the General Clauses Act to the omission of rules.4. Continuance of pending proceedings after the omission of rules and introduction of new provisions.Issue-wise Detailed Analysis:1. Applicability of Rules 10 and 10A of the Central Excise Rules:The common question in all cases relates to the applicability of Rules 10 and 10A of the Central Excise Rules. The appellant, M/s Kolhapur Cane Sugar Works Ltd., applied for a rebate of excise duty on sugar for the 1973-74 season. They were initially denied the rebate by the Superintendent, Central Excise, Kolhapur, but later a sum of Rs. 61,14,930/- was sanctioned. Subsequently, a notice to show cause was issued questioning the rebate as the appellant was not considered a new factory.2. Validity of proceedings initiated under the old rules after their omission:The Assistant Collector of Central Excise confirmed the demand for recredit of the rebate amount after the deletion of Rules 10 and 10A and the introduction of a new Rule 10. The appellant's appeal and revision applications were dismissed by the Appellate Collector and the Central Government, respectively. The High Court also dismissed the writ petition, leading to this appeal.3. Application of Section 6 of the General Clauses Act to the omission of rules:The appellant argued that the omission of Rules 10 and 10A without a saving clause rendered further proceedings without jurisdiction, as Section 6 of the General Clauses Act does not apply to the repeal of statutory rules. The High Court rejected this contention, and the matter was referred to a Constitution Bench due to the importance of the questions involved.4. Continuance of pending proceedings after the omission of rules and introduction of new provisions:The Supreme Court examined whether the proceedings initiated by the notice dated 27-4-1977 could continue after the omission of the old rules. The Court noted that Section 6 of the General Clauses Act applies to the repeal of a Central Act or Regulation, not to the omission of a rule. The Court referred to the case of M/s Rayala Corporation P. Ltd., which held that Section 6 does not apply to the omission of rules. The Court found that the omission of Rules 10 and 10A without a saving clause meant that pending proceedings could not continue under the new Rule 10.Judgment:The Supreme Court held that the decisions of the Full Bench of the Gujarat High Court and the Division Bench of the Karnataka High Court, which took a different view, were not correctly decided. The Court concluded that in the absence of a saving clause or a provision in the new rule for continuing pending proceedings, such proceedings would lapse. Consequently, the order passed by the Assistant Collector of Central Excise after the omission of Rules 10 and 10A was non-est. The Court disposed of all the cases on these terms, with no costs.