TaxTMI 
TaxTMI 
2015 (10) TMI 2671
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....stence of the prosecution for violation of Rule 56­A subsequent to such omission was not sustainable in law. 2.1 Admissibility of the confessional statements and/or other statements also fall for consideration in this revision application. 3. Brief facts giving rise to the case against the petitioner are that a complaint came to be lodged by the competent Officer under the Act alleging the offences under Section 9 of the Act r/w Section 173Q of the Rules for violation of Rules 52­A, 56­A, 173­G and 9(2) r/w Section 11A of the Act r/w Section 120­B of the Indian Penal Code in the Court of learned Metropolitan Magistrate against 09 persons amongst whom accused No.1 was the petitioner­company and other 08 were its employees. The employees have been discharged by the trial Court and thus the case remained only against the petitioner­company. 3.1 Under Rule­56A, a notification came to be issued delegating certain powers to the Collector of Central Excise in the situation emerging in such notification. Notification referred to certain specified goods/material components in the schedule, which may be required by the manufacturer for manufacture and....
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....on. 7. To complete the facts, it is required to be mentioned that earlier by an order dated 20/03/2013, the application for discharge came to be rejected and this Court by an order dated 04/12/2013 passed in CR.RA No.338 of 2013 did not sustain the said order as it was bereft of reasons and the learned Metropolitan Magistrate was directed to decide the discharge application afresh after considering all the contentions. In such circumstances, the impugned order is passed. 8. Having regard to the rival contentions, this Court is required to consider the effect of omission of Rule 56A on pending a complaint before the trial Court. In other words, the question that has been raised is whether the prosecution can subsist after omission of Rule 56A without a saving clause? The Court is also required to consider as to whether Sections and 3 and 38A of the Act or Section 6 of the General Clauses Act would be able to save the situation. 8.1 It is also required to be considered whether Krishna Processors Vs. Union of India [2012 (280) E.L.T. 186 (Guj.)] is distinguishable on the ground that it was concerned with a different situation i.e. adjudication proceedings as emerging from Sec....
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....ourt has indicated the scope of relevant part of Rule­56A. However, for ready reference, it can be quoted thus: "Rule 56A. Special procedure for movement of duty paid materials or component parts for use in manufacture of finished excisable goods.­­(1) Notwithstanding anything contained in these rules, the Central Government may, by notification in the Official Gazette, specify the [finished excisable goods, falling under heading No. or sub­heading No. of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and the material or component parts falling under the heading No. or sub­heading No. of the Schedule required for the manufacture or move convenient distribution of such goods] in respect of which the procedure laid down in subrule (2) shall apply. (2) The Collector may, on application made in this behalf and subject to the conditions mentioned in sub­rule (3) and such other conditions as may, from time to time, be prescribed by the Central Government, permit a manufacturer of any excisable goods specified under sub­rule (1) to receive material or component parts or finished products (like Asbestos Cement), on which ....
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....xcisable goods irrespective of the fact that such waste, refuse or by­product is exempt from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty or is not notified under sub­rule (1):] 1[Provided also that no credit of duty shall be allowed in respect of any material or component parts produced or manufactured, - (i)in a free trade zone and used in the manufacture of finished excisable goods in any other place in India; or (ii) by a hundred per cent export­oriented undertaking and used in the manufacture of finished excisable goods in any place in India, if such material or component parts fall under Item No.68 of the First Schedule to the Act : Provided also that credit of duty shall be restricted in respect of any material or component parts produced or manufactured,­ (i) in a free trade zone and used in the manufacture of finished excisable goods in any other place in India; or (ii) by a hundred per cent export­oriented undertaking and used in the manufacture of finished excisable goods in any place in India, to the extent of duty which is equal to the additional duty leviabl....
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....shall be an amount equal to the aggregate of the duties of customs which would be leviable under section 12 of the Customs Act, 1962 (52 of 1962) on like goods produced or manufactured outside India if imported into India, and where the said duties of customs are chargeable by reference to their value, the value of such excisable goods shall, notwithstanding anything contained in any other provision of this Act, be determined in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975 . (51 of 1975) Explanation 1.­ Where in respect of any such like goods, any duty of customs leviable under the said section 12 is leviable at different rates, then, such duty shall, for the purposes of this proviso, be deemed to be leviable under the said section 12 at the highest of those rates.^ 6 Explanation 2.­ In this proviso,­ (i) " free trade zone" means the Kandla Free Trade Zone and the Santa Cruz Electronics Export Processing Zone and includes any other free trade zone which the Central Government may, by notification in the Official Gazette, specify in this behalf; (ii) " hundred per cent. export­ oriented undertaking" means ....
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....oduction or manufacture of excisable goods, there cannot be any question of levy of duty. 14. Bearing in mind the afore­stated purport of Section 3 as was applicable at the relevant time, the purport of Rule­ 56A is required to be addressed at this stage. As indicated above, its main purport is to allow a credit, with the permission of the Central Excise Collector, on the use of duty paid goods as indicated in Rule 56A. 15. Rule 56A does not deal with the levy of the duty and consequence of its avoidance. Availing of the credit of duty in excess of limits permissible under Rule 56A is not the same as avoidance of duty, though ultimate result may be the undue benefit to the manufacturer. It is therefore misconceived for the respondent No.1 to argue that it can fall­back on Section 3 in absence of Rule 56A. Both the provisions operate in different field. Rule 56A is complete code in itself as it operates only on the notification issued by the Government making available certain rights in the nature of credit to the manufacturer. The right is thus independent of the liability under Section 3 of the Act. Section 3 applies when the incidence of the excise duty occurs i....
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....he circumstances indicated therein and the penal consequence for contravention were spelt out in sub­rule (4). Said rule came to be omitted by the notification issued by the Ministry of Home Affairs on 30/03/1965 while bringing in the Defence of India (Amendment) Rules, 1965. Clause 2 of Amendment Rules read as under :­ "In the Defence of India Rules, 1962, Rule 132A (relating to prohibition of dealings in foreign exchange) shall be omitted except as respects things done or omitted to be done under that rule". (emphasis supplied) 19. The act of contravention was held not to be "thing done or omitted to be done under that rule". It was held that on omission of the rule, new proceedings for contravention of the rule during its subsistence were not sustainable. Having regard to the tenor of the amending rule, it was held that action already instituted may be saved, but initiation of fresh proceedings for contravention of the rule when it subsisted was not permissible. 20. Pertinently, as can be noticed from the above discussion, upon omission of the rule, things done or omitted to be done were saved by amending rule, whereas in the instant case, the thi....
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....y;A was brought in picture by virtue of Notification issued under the Finance Act, 2001. It was inserted and made effective by Section 131 of the Finance Act, 2001 from 28/02/1944, which runs thus: "131. Insertion of new Section 38A. After section 38 of the Central Excise Act, the following section shall be inserted and shall be deemed to have been inserted on and form the 28th day of February, 2944, namely:­ 38A. Effect of amendments, etc., of rules, notifications or orders. Where any rule, notification or order made or issued under this Act or any notification or order issued under such rule, is amended, repealed, superseded or rescinded, then, unless a different intention appears, such amendment, repeal, supersession or rescinding shall not­ (a) revive anything not in force or existing at the time at which the amendment, repeal, supersession or rescinding takes effect; or (b) affect the previous operation of any rule, notification or order so amended, repealed, superseded or rescinded or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation or liability acquired, accrued or incurred....
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.... extent and immunity favouring the continuation of the proceedings in the Court or tribunal or other authority, proceedings in relation to excisable goods and the enforcement of the judgments etc., were saved and immunized. The explanation to Section 132 provided for removal of doubts. It was declared by the said explanation that, no act or omission on the part of any person shall be punishable as an offence which would not have been punishable, if that Section had not come into force. 23. The material relevant aspects emerging from Sections 131 and 132 of the Finance Act, 2001 are that the savings was to be effective only in the eventuality of amendment, repealed, supersession or rescission of rule, notification or order made under the Act or rules and not in the eventuality of omission of the provision of the Rules. It also emerges that the act or omission on the part of a person would not be punishable by virtue of such saving, if in absence of such savings i.e. Section 38A it would not be punishable. 24. If one looks at Section 6 of the General Clauses Act, it saves the situation enumerated in its clause (a), (b), (c), (d) and (e) in the event of the repeal of any enactme....
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....er rule 96ZQ(5)(ii) of the Rules which does not provide for any inbuilt discretion in respect of the penalty to be imposed thereunder is ultra vires the provisions of the Constitution and the Act? and vi. Whether the decision of the Supreme Court in the case of Union of India vs. Supreme Steels and General Mills Ltd. (supra) concludes the controversy involved in the present case?" 26. Except, point No.v, all the points raised in paragraph No.15 are relevant in the context of omission of Rule 56A for resolution of the dispute in this revision application. The Court noticed certain rights, liabilities, obligations and penal consequence in the eventualities contemplated in Rule 96ZQ which came to be omitted and Section 3A of the Act was also omitted later as noticed herein above. In that context, initiation and continuation of the proceedings, though in the nature of adjudicatory proceedings, fell for the consideration of the Court. Twin contentions were raised for sustaining the initiation and continuation of the proceedings being (01) the notification dated 01/03/2001 contained a saving clause except as respects things done or omitted to be done before such amendment and....
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....e same make any provision that liability under rule 96ZQ would continue under the regular provisions after its omission....." (emphasis supplied) 28. The Court after referring to M/s. Rayala Corporation (P) Ltd., & Anr., (supra) again made following pertinent observations in paragraph No.16.3: "In M/s. Rayala Corporation (supra), it was held by the Supreme Court that section 6 of the General Clauses Act cannot obviously apply on omission of rule 132­A of the Defence of India rules for two obvious reasons: (i) section 6 applies only to repeals and not to omissions and (ii) section 6 applies when the repeal is of a Central Act or Regulation and not of a rule. In the facts of the present case, section 6 of the General Clauses Act would not be applicable to rule 96ZQ of the Rules as the said section applies only in case of repeal of a Central Act and Regulation and not of a rule....." 29. After referring to Kolhapur Canesugar Works Ltd. vs. Union of India (supra), the Court noticed the law that to save the situation like present one, a specific provision must exist in the statute rules, notifications, etc. Following pertinent observations were made in paragr....
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....the proceedings under Section 138­A of the Act in question would not be saved. 31. Similar is the fact situation in the present case. As indicated earlier, the relevant notification in this case also does not make any provision akin to Section 6 of the General Clauses Act. It also does not make any provision continuing the liabilities incurred under Rule 56­A. The observations in Krishna Processors (supra) are therefore clearly applicable to the facts of the present case. 32. As is evident from the notification inserting Section 38­A, a very crucial explanation in the form of declaration to remove the doubt came to be introduced by Section 132 of the Finance Act, 2001. It reads thus: "132. Validation of certain action taken.­­ (a) xxx (b) xxx (c) xxx 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." 33. As held above and as noticed from the plethora of decisions that repeal, rescission, etc., would entail into consequences as if ....