Omission of excise rules and Section 3A without a saving clause defeated pending demand and penalty proceedings.

Proceedings under the annual production capacity scheme for re-rolling mills could not be sustained after omission of Rules 96ZQ, 96ZP and 96ZO of the Central Excise Rules, 1944 and omission of Section 3A of the Central Excise Act, 1944 without any saving clause. The Tribunal relied on the Gujarat High Court's view that pending proceedings not concluded before the omission could not be continued thereafter. Because the order-in-original was passed only after the relevant omission, the foundation for the demand and penalty no longer survived, and the impugned order was set aside with consequential relief.

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Issues: Whether the demand and penalty could survive when proceedings were continued after omission of the governing rules and Section 3A without any saving clause.

Analysis: The dispute arose from the annual production capacity scheme for re-rolling mills under the excise regime. The Tribunal noted that the Gujarat High Court had held that after omission of Rules 96ZQ, 96ZP and 96ZO of the Central Excise Rules, 1944 and omission of Section 3A of the Central Excise Act, 1944 without a saving clause, no pending proceedings not concluded before the omission could be pursued thereafter. Since the order-in-original had been passed after the relevant omission, the basis for sustaining the demand and penalty no longer survived.

Conclusion: The impugned order was set aside and consequential relief was granted to the appellant.

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