Incorporation by reference and repeal effect supported waiver of penalty pre-deposit under the excise exemption notification.

Interpretation of an excise exemption notification continued to turn on whether a reference to the Drug Price (Control) Order, 1987 ceased to operate after that Order was repealed. The goods were bulk drugs covered by Notification No. 6/94, and the dispute concerned only a short intervening period before the reference was deleted. The text applies the principle that an instrument incorporated by reference is not automatically affected by repeal of the incorporated instrument. On that prima facie basis, the appellant was entitled to waiver of pre-deposit of the penalty pending appeal.

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Issues: Whether the appellant was entitled to waiver of pre-deposit of penalty pending appeal in view of the prima facie applicability of Notification No. 6/94 despite the repeal of the Drug Price (Control) Order, 1987.

Analysis: The dispute turned on whether the reference in the excise notification to the Drug Price (Control) Order, 1987 ceased to operate after that Order was repealed, even though the relevant goods were admittedly bulk drugs covered by the notification and the controversy related only to a short intervening period before the reference was deleted. The appellant relied on the principle that where one instrument incorporates another by reference, repeal of the incorporated instrument does not, by itself, affect the incorporating instrument. On a prima facie view, that submission had substantial force and the issue raised was one of interpretation of the notification and the legal effect of repeal.

Conclusion: The appellant was entitled to waiver of pre-deposit of the penalty.

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