Division Bench rules on exclusion of packing charges for excise duty assessment. Excise duty liability persists despite rule changes.

The Division Bench rejected the exclusion of packing charges on cement for excise duty assessment. The larger Bench determined that proceedings under substituted or omitted Rules 10 and 10A of the Central Excise Rules, 1944 would not be discharged or terminated. The liability to pay excise duty remains unaffected by changes in rules, and recovery proceedings would persist despite substitutions or omissions.

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Issues Involved:
1. Inclusion of packing charges in the assessable value for excise duty.
2. Validity of proceedings under substituted or omitted Rule 10 of the Central Excise Rules, 1944.

Summary:

Issue 1: Inclusion of Packing Charges in Assessable Value
- The petitioner challenged the inclusion of packing charges on cement in the assessable value for excise duty u/s 4(4)(d)(i) of the Central Excises and Salt Act, 1944.
- The Division Bench rejected the contention that the value of gunny bags used as packing material should be excluded when determining the assessable value of excisable goods.

Issue 2: Validity of Proceedings under Substituted or Omitted Rule 10
- The petitioner argued that proceedings initiated under Rule 10 of the Central Excise Rules, 1944 should end due to the rule's substitution and omission, relying on the decisions in Amit Processors Pvt. Ltd. v. Union of India and Mahendra Mills Ltd. v. Union of India.
- The Division Bench referred the matter to a larger Bench to determine if actions taken under substituted or omitted rules would stand discharged or terminated.

Analysis and Judgment:
- The larger Bench considered the decisions in Amit Processors and Mahendra Mills, which were based on the Supreme Court judgment in Rayala Corporation Pvt. Ltd. v. Director of Enforcement.
- The Court noted that the Central Excises & Salt Act and the Rules made thereunder are not temporary statutes, and the liability to pay duty of excise arises immediately upon the manufacture or production of goods.
- It was held that the substitution or omission of Rules 10 and 10A by new Rule 10, and later by Section 11A of the Act, did not affect the authority's power to recover duties short-levied or erroneously refunded.
- The Court emphasized that statutory rules are part and parcel of the statute itself and that accrued rights and liabilities under the repealed statute are generally saved unless expressly extinguished.
- The Bench concluded that the proceedings initiated under Rule 10 or 10A would not lapse upon their substitution or omission. The liability to pay the duty of excise remains unaffected by changes in the method of collection.

Conclusion:
- The notices issued or actions taken under substituted Rules 10 and 10A or omitted Rule 10 of the Central Excise Rules, 1944 would not stand discharged or terminated upon substitution or omission. The proceedings for recovery of duty of excise initiated under these rules would continue despite the changes.

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