1990 (8) TMI 154 - HC - Central Excise

Court quashes tax authority proceedings, ruling them without jurisdiction. Repealed rules halt proceedings under subordinate legislative nature.

NON FERROUS ROLLING MILLS Versus UNION OF INDIA

The court quashed the proceedings initiated by the tax authority after the omission of certain rules, ruling them to be without jurisdiction. Emphasizing ... Demand under an omitted Rule invalid Issues:Challenge to order rejecting appeal against duty demand and subsequent demand made by the tax authority.Detailed Analysis:1. Background and Facts:- Two writ petitions were filed challenging an order rejecting an appeal against a duty demand and a consequent demand made by the tax authority.- The petitioners operated a Rolling Mill converting Aluminum Ingots into Redraw Rods, licensed under Central Excise Rules, 1944.- A shortage of aluminum ingots was alleged during an inspection, leading to a duty demand.- After multiple notices and replies, the third respondent held the petitioners liable for duty on the alleged shortage.2. Legal Contention by Petitioners:- The petitioners argued that the proceedings and demand were without jurisdiction due to the omission of certain rules.- They contended that the time limit for proceedings had lapsed and the department failed to provide necessary averments in the show cause notice.3. Response by Central Government Standing Counsel:- The counsel for the respondents argued that the proceedings were in accordance with the law, citing violations of excise rules by the petitioners.- It was asserted that there was no time limit for the duty demand under the relevant rules.4. Judicial Analysis and Decision:- The judge considered various legal precedents and concluded that the proceedings initiated after the omission of rules were without jurisdiction.- Emphasized that the repeal of rules had drastic consequences, and no proceedings could be continued under the repealed provisions.- Rejected the argument that rules made under a statute could be treated as if enacted in the Act, stating that they do not lose their subordinate legislative nature.- Quashed the impugned proceedings and allowed the writ petitions, with no order as to costs.5. Conclusion:- The judgment focused on the jurisdictional aspect of the proceedings, highlighting the impact of the omission of rules on the legality of the demands made by the tax authority.- By analyzing legal principles and precedents, the court ruled in favor of the petitioners, setting aside the proceedings and demands due to lack of jurisdiction post the omission of relevant rules.