Section 38A preserves excise liabilities and pending proceedings despite omission of Rule 96ZQ and Section 3A.

Section 38A of the Central Excise Act, 1944 was held to preserve obligations, liabilities and pending proceedings arising under Rule 96ZQ of the Central Excise Rules, 1944 and Section 3A despite their omission. The Court followed its earlier Division Bench view that omission of the charging or rule-making provisions did not extinguish pre-existing liabilities where the dispute and proceedings related to the period before omission. The Tribunal's contrary view, that the omission defeated the proceedings, was rejected and the legal question was answered in favour of the revenue and against the assessee.

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Issues: Whether Section 38A of the Central Excise Act, 1944 applied to save obligations and liabilities incurred under Rule 96ZQ of the Central Excise Rules, 1944 and proceedings under Section 3A of the Central Excise Act, 1944 despite their omission.

Analysis: The period in dispute and the proceedings arose before the omission of the relevant provisions. The Tribunal had relied on a contrary view that the omission of Rule 96ZQ and Section 3A defeated the proceedings. The Court followed its earlier Division Bench view that Section 38A preserved pending proceedings and liabilities notwithstanding omission, and therefore the legal objection accepted by the Tribunal could not stand.

Conclusion: The question of law was answered in favour of the appellant and against the assessee.

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