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of <h1>Validity of Rule 57-I Upheld Pre & Post Amendment: No Limitation Period & Natural Justice Principles</h1> <h3>TORRENT LABORATORIES PVT. LTD. Versus UOI.</h3> TORRENT LABORATORIES PVT. LTD. Versus UOI. - 1991 (55) E.L.T. 25 (Guj.) Issues Involved:1. Legality and validity of Rule 57-I of the Central Excise Rules, 1944 before and after the amendment.2. Whether the amendment to Rule 57-I grants amnesty to manufacturers who wrongfully availed MODVAT credit.3. Applicability of principles of natural justice to Rule 57-I.4. Whether Rule 57-I should be read in conjunction with Section 11A of the Central Excises & Salt Act, 1944.5. Effect of amendment on ongoing proceedings initiated under the unamended Rule 57-I.Summary:1. Legality and Validity of Rule 57-I:The petitioners challenged the vires of Rule 57-I as it stood prior to the amendment effective from October 6, 1988, arguing it was ultra vires Articles 14 and 19(1)(g) of the Constitution of India due to the absence of a limitation period and lack of provision for issuing show cause notices and affording an opportunity of being heard. The court, referring to the Supreme Court decision in Government of India v. Citadel Fine Pharmaceuticals, held that the absence of a specific limitation period does not render the rule ultra vires, as a reasonable period of limitation should be read into it. Similarly, the principles of natural justice are implicit in the rule, and the absence of explicit provisions does not exclude their observance.2. Effect of Amendment on Rule 57-I:The petitioners contended that the amendment to Rule 57-I implied a grant of amnesty to those who had wrongfully availed MODVAT credit. The court rejected this contention, stating that the amendment merely made explicit what was already implicit in the rule, such as the period of limitation and the requirement for show cause notices. The amendment did not indicate any legislative intention to grant amnesty or destroy actions taken under the unamended rule.3. Applicability of Principles of Natural Justice:The court emphasized that the principles of natural justice, which include fair play in action, are inherent in any discretionary power conferred upon an executive or judicial officer. Therefore, the absence of explicit provisions for issuing show cause notices and affording an opportunity of being heard in Rule 57-I does not mean these principles are excluded.4. Rule 57-I and Section 11A of the Act:The petitioners argued that Rule 57-I should be read in conjunction with Section 11A of the Act, which provides for the recovery of duties not levied or short-paid, and includes a limitation period. The court disagreed, stating that Rule 57-I, dealing specifically with wrongful availment of MODVAT credit, is a special provision enacted under Section 37 of the Act, whereas Section 11A is a general provision. The special provisions of Rule 57-I prevail over the general provisions of Section 11A.5. Effect of Amendment on Ongoing Proceedings:The court held that the amendment to Rule 57-I does not affect the validity of actions initiated under the unamended rule. The amendment did not manifest any legislative intention to grant amnesty or invalidate ongoing proceedings. Therefore, proceedings initiated under the unamended rule continue to be valid.Conclusion:The court rejected the petitions, upheld the validity of Rule 57-I both before and after the amendment, and directed the petitioners to pursue their remedies through the appropriate departmental authorities. The interim relief granted earlier was extended until March 22, 1990, to allow the petitioners to file replies or appeals as necessary.
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