TaxTMI 
TaxTMI 
2009 (11) TMI 486
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....The undisputed facts are that : the respondents were required to follow the provisions of Rule 97-ZO of the erstwhile Central Excise Rules, 1944 for the purpose of payment of duty. As per the provisions of law, they were required to pay Central Excise Duty either on their annual capacity of production approved by the Commissioner at 12800 M.T. per annum on which the duty liability being fixed @ Rs. 6,66,667/- per month under the Induction Furnace Annual Capacity Determination Rules, 1997 and the intimation to the respondents dated 30th March, 1998 in that regard or on the actual capacity of production. The capacity of their induction furnace was 4 M.T. as per their declaration and they had opted for paying the duty in terms of Rule 96ZO(3) of the said Rules and, therefore, were required to pay the duty @ Rs. 6,66,667/- per month in terms of Notification No. 33/97 dated 1-8-1997. 5. On account of short payment of duty amounting to Rs. 11,39,784/- for the period from 1st July, 1999 to 30th September, 1999, a show cause notice dated 8th December, 1999 came to be issued demanding the said short paid duty along with interest and proposal for imposition of penalty. The said demand was....
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....m Being so, on this count itself there was no justification for imposing any penalty at all. 8. The learned advocate further submitted that, taking into consideration the provisions of the Finance Act, 2001 and the law iaid down by the Tribunal in the matter of Karnataka Ginning & Pressing Factory v. Commissioner of Central Excise, Thane-II reported in 2008 (231) E.L.T. 257 and Asean Aromatics Pvt. Ltd. v. Commissioner of Central Excise, Chennai reported in 2008 (232) E.L.T. 514 as well as by the Supreme Court in the matter of Star India Pvt. Ltd. v. Commissioner of Central Excise, Mumbai & Goa reported in 2006 (1) S.T.R. 73 (S.C.), the authority lacked jurisdiction to impose penalty in relation to the proceedings prior to the enforcement of the said Finance Act. Drawing our attention to explanation clause to Section 132 of the Finance Act, 2001, the learned advocate submitted that, it clearly provides that, no act or omission on the part of any person would be punishable as an offence which would not have been so punishable if the said section had not come into force, and, according to the learned advocate, the expressions 'offence' and 'punishable' in the said explanation woul....
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....equently refers to "then pre-payment of duty for the closure period is not to be insisted upon", which means that the benefit under the said clause can be availed in case the abatement claim is pending in relation to the period for which the Department alleges non-payment of duty and not otherwise. That is not the case in the matter in hand as the abatement claim related to the period prior to 14th September, 1999 and the short payment of duty was in relation to the period from 14th September, 1999. 13. As regards the contention that in view of the Finance Act, 2001 and particularly considering the explanation clause to Section 132 of the said Act, the authorities could not have imposed the penalty, it is sought to be contended that, in view of omission of Section 3A of the Central Excise Act under Section 121 of the said Finance Act, the action which was not sought to be initiated on the basis of the said provision of law would lapse pursuant to the omission of the said statutory prevision. He further submitted that, though Section 132 of the Finance Act validates the pending actions, the proceedings as far as imposition of penalty is concerned, are kept out of such protection ....
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....ce in relation to an act omission under the said Act. In other words, in case of any default by the assessee in relation to the duty liability under the Excise Act or the Finance Act, prior to enforcement of Finance Act, 2001, by virtue of Section 132, the pending proceedings would not be validated in relation to the jurisdiction of the authority to impose the punishment for such offence but the same Rule cannot be applied to the liability to pay the duty or the obligation to pay penalty on account of default in payment of duty Failure to comply with the obligation to pay the duty in time is not mere a civil wrong but also a criminal offence. The explanation clause only relates to such criminal offences and not to the civil wrongs. Penal liability i.e. criminal liability cannot be checked with retrospective effect, which is the mandate of Article 20(1) of the Constitution and the said rule is found incorporated in the explanation clause. 14. It is true that in Karnataka Ginning & Pressing Factory's case (supra), the Tribunal had observed that, "the provisions of Section 3A having been omitted and not in existence, the Commissioner has no power or authority to pass the order and ....
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....as if the rule has not been deleted or omitted then such a proceeding will continue. If the case is covered by Section 6 of the General Clauses Act or there is a pari material provision in the statute under which the rule has been framed in that case also the pending proceeding will not be affected by omission of the rule. In the absence of any such provision in the statute or in the rule the pending proceedings would lapse on the rule under which the notice was issued or proceeding was initiated being deleted omitted. It is relevant to note here that in the present case the question of divesting the Revenue of a vested right does not arise since no order directing refund of the amount had been passed on the date when Rule 10 was omitted." It is thus clear that in the absence of any saving clause in the repealing act and in case of non-applicability of the provisions of Section 6 of the General Clauses Act, the proceedings initiated under the repealed provision would not survive after it is repealed. But that is not the case in "the matter in hand. Indeed, the fact that the proceedings were initiated by the show cause notice dated 8th December, 1999 in the case in hand, are not ....
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....his is also clear from the Explanation to the Validation Section which says that no act or acts on the part of any person shall be punishable as an offence which would have been so punishable if the Section had not come into force. 8. The liability to pay interest would only arise on default and is really in the nature of a quasi-punishment. Such liability although created retrospectively could not entail the punishment of payment of interest with retrospective effect." 18. Obviously, the Apex Court has reiterated the well settled principle of law that while it is permissible for the legislature to retrospectively legislate, such retrospectivity is normally not permissible to create an offence retrospectively. Same principle would apply in case of liability is concerned. If at the relevant time the omission to pay the duty was not subjected to the liability of payment of interest, obviously it would mean that such liability cannot be created retrospectively. In the case in hand, undisputedly, the provisions regarding the power to impose penalty were in force during the relevant period. The power to impose the penalty is not sought to be applied retrospectively. 19. The Pun....
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.... of any decree or order relating to such action taken or anything done or omitted to be done as if the amendment made by Section 131 of the Finance Act, 2001 had been in force at all material times; (c) recovery shall be made of all such amounts of duty or interest or penalty or fine or credit of duty in respect of inputs or capital goods or other charges which have not been collected or, as the case may be, which have been refunded, as if the amendment made by Section 131 of the Finance Act, 2001 had been in force at all material times. Explanation. - For the removal of doubts, it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable if this section had not come into force." 21. Perusal of Section 132 would clearly disclose that, it invariably refers to Section 131 of the Finance Act. It essentially being saving clause, which is sought to be introduced on account of amendment carried out to Section 38-A read with the deletion of Section 3A, Section 132 cannot be read independently of Section 131 and Section 121 of the Finance Act. Having so read, one can easily understand the import o....