2003 (2) TMI 75 - SC - Central Excise

Supreme Court: Amendment to Central Excise Act 1944 doesn't change basis of prior judgment

The Supreme Court held that the amendment to Section 11A of the Central Excise Act, 1944, did not alter the basis of a previous judgment, differing from a ... Levy of excise duty on the basis of an approved classification list - approved classification list remains binding until correctness is challenged by issuance of a show cause notice - challenge to approval by issuance of show cause notice - retrospective amendment empowering correction of errors or mistakes in approval, acceptance or assessment - effect of amendment on existing precedentLevy of excise duty on the basis of an approved classification list - retrospective amendment empowering correction of errors or mistakes in approval, acceptance or assessment - effect of amendment on existing precedent - Whether the retrospective amendment to Section 11A altered the legal basis of this Court's decision in Collector of Central Excise, Baroda v. Cotspun Ltd. - HELD THAT: - The Court considered the view expressed in Easland Combines that the Finance Act, 2000 amendment to Section 11A, with retrospective effect, empowered Central Excise Officers to correct errors in approvals, acceptances or assessments and thereby displaced the rule in Cotspun that an approved classification list remains binding until its correctness is challenged by issuance of a show cause notice. After examination of Easland Combines, the Court rejected that construction of the amendment, holding that the amendment does not change the foundational principle in Cotspun that levy on the basis of an approved classification list is correct until its correctness is challenged. The Court therefore did not accept that the amendment effected the sweeping alteration of law as suggested in Easland Combines. [Paras 4]The amendment to Section 11A does not alter the basis of the Cotspun decision.Challenge to approval by issuance of a show cause notice - reference to larger bench - Appropriate course of adjudication in view of conflicting two-Judge decisions on the effect of the amendment. - HELD THAT: - Given the divergence between the earlier Cotspun precedent and the view taken in Easland Combines, and the Court's inability to concur with the latter, the matter was referred for authoritative determination. The Court directed that the appeal be placed before a bench of three Judges for resolution of the legal controversy concerning the effect of the amendment on the law laid down in Cotspun. [Paras 5]The appeal is referred to a bench of three Judges for determination.Final Conclusion: The Court disagreed with the contrary view in Easland Combines that the amendment retrospectively displaced the principle in Cotspun, held that the amendment does not alter that basis, and referred the appeal to a bench of three Judges for authoritative decision. The Supreme Court referred an appeal to a bench of three learned Judges regarding the interpretation of an amendment to Section 11A of the Central Excise Act, 1944. The Court disagreed with the view taken in a previous case and held that the said amendment did not change the basis of the earlier judgment.