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of <h1>Challenge to Section 4(4)(ii) Dismissed, Proceedings Under Substituted Rule 10 Valid</h1> <h3>FALCON TYRES LTD. Versus UNION OF INDIA</h3> FALCON TYRES LTD. Versus UNION OF INDIA - 1992 (60) E.L.T. 116 (Kar.) Issues Involved:1. Challenge to the vires of Section 4(4)(ii) of the Central Excises and Salt Act, 1944.2. Validity of proceedings initiated under the old Rule 10 of the Central Excise Rules after its substitution on 6th August, 1977.Summary:1. Challenge to the vires of Section 4(4)(ii) of the Central Excises and Salt Act, 1944:The challenge to the vires of Section 4(4)(ii) of the Central Excises and Salt Act, 1944, was not pressed in this Court due to the precedent set by the Division Bench in Mangalore Chemicals and Fertilizers Ltd. and Others v. Assistant Collector of Central Excise, Mangalore and Others [1986 (23) E.L.T. 48] and the Full Bench decision in Union of India v. M/s. Alembic Glass Industries (I.L.R. 1991 Karnataka 1749).2. Validity of proceedings initiated under the old Rule 10 of the Central Excise Rules after its substitution on 6th August, 1977:The primary issue was whether proceedings initiated under the old Rule 10 could continue after its substitution on 6th August, 1977. The petitioners argued that since the proceedings commenced under the old Rule 10 were not completed by 6th August, 1977, they could not continue due to the absence of a saving clause.The Court examined the provisions of the old Rule 10, the substituted Rule 10, and Section 11A introduced on 17th November, 1980. The old Rule 10 allowed the proper officer to serve a notice within three months for recovery of short-levied duties. The substituted Rule 10 extended this period to six months and, in cases of fraud or collusion, to five years. Section 11A, introduced later, mirrored the substituted Rule 10.The Court considered judgments from various High Courts, including the Gujarat High Court in Amit Processors Private Ltd. v. Union of India & Others [1985 (21) E.L.T. 24], which held that proceedings under the old Rule 10 could not continue post-substitution. However, the Madhya Pradesh High Court in Gwalior Rayon Manufacturing (Weaving) Company v. Union of India and Others [1982 (10) E.L.T. 844] supported the continuation of such proceedings, distinguishing the Supreme Court's decision in Rayala Corporation (P) Ltd. v. The Director of Enforcement, New Delhi (AIR 1970 SC 494).The Court agreed with the Madhya Pradesh High Court's view, noting that the substantive provisions for the levy of excise duty remained unchanged despite the substitution of Rule 10. Therefore, the proceedings initiated under the old Rule 10 could validly continue under the substituted Rule 10 and Section 11A.Conclusion:The writ petitions were dismissed, and the Court held that the Assistant Collector of Central Excise could continue proceedings initiated under the old Rule 10 even after its substitution on 6th August, 1977. There was no order as to costs.
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