TaxTMI 
TaxTMI 
1989 (4) TMI 79
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.... of Steel from scraps and was advised to take out a licence for which it applied on 30-11-1962. Though the respondent firm had ultimately sold away the Rolling Mill on 8-4-1963, the Superintendent of Central Excise, by his letter dated 13-10-1965 demanded a sum of Rs. 31,018.20p as excise duty. On information furnished by the firm about its manufacture of only 775.455 metric tonnes of Steel, the Deputy Superintendent of Central Excise reduced the demand to a sum of Rs. 6,419.38p only, and the demand was reiterated by notice dated 13-4-1967, pursuant whereto the respondent firm showed cause on 15th May, 1967 but the Assistant Collector of Customs, by his order dated 14th June, 1967, confirmed the demand. 3. The respondent firm challenged the demand by moving writ petition No. 1864 of 1967 in the High Court of Judicature at Madras contending, inter alia, that it was manufacturing steel products prior to 13-6-1962, only suspending manufacture during the period of lease and resuming thereafter, and as such, was entitled to exemption from payment of duty; that the demand for payment of duty was time barred; that Rules 10 & 10A invoked in support of the demand were ultra vires inasmuch ....
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....swers that the learned standing counsel thereby cannot be said to have conceded that Rule 10A was invalid. He had only said that in view of the decision in 18 STC 370, he would not be able to sustain the demands under Rule 10A; and that even if it could be taken as a concession, the appellant could not be estopped from showing that the rule is valid so that Central Excise revenue is not allowed to escape. We agree with the learned counsel for the appellant and proceed to examine the validity of Rule 10A as it stood at the relevant time. Rule 10A of the Rules read as under : "10A. Residuary powers for recovery of sums due to Government - Where these Rules do not make any specific provision for the collection of any duty or any deficiency in duty if the duty has for any reason been short levied, or of any other sum of any kind payable to the Central Government under the Act or these Rules, such duty, deficiency in duty or sum shall, on a written demand made by the proper officer, be paid to such person and at such time and place as the officer may specify." Rule 10A provided the machinery for collection of tax from the assessee after the goods had left the factory premises. This r....
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....ake any specific provision for the collection of any duty or of any deficiency in duty if the duty has for any reason been short-levied, or of any other sum of any kind payable to the collecting Government under the Act or these rules, such duty, deficiency in duty or sum shall on written demand made by the proper officer, be paid to such person and at such time and place, as the proper officer may specify." 11. Rule 12 was somewhat similar to Rule 10A of the Rules and had been held to be ultra vires on the ground that it did not have the required statutory backing. In M/s. Agarwal Brothers v. The Union of India - 1984 (15) E.L.T. 82 (Mad.) = 1972 (2) M.L.J. 476, it was held that a licence issued under the Central Excise Rules was personal to the licensee and therefore, a transferee of factory licensed to manufacture iron and steel products from the former licensee could only be treated as a new licensee after the relevant date mentioned in the Notification No. 131 of 1962, dated 13th June, 1962, and as the petitioner applied for a licence much later, the exemption under the Notification was not available to the petitioner who could not be applying for renewal of the earlier licen....
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....ity of Rule 10A of the Rules, the Court did not consider the said question on merits in view of the submission made by the standing counsel for the State Government on the basis of Rule 10A in the light of the earlier decisions of the same High Court, striking down Rule 12 of the Medicinal and Toilet Preparations (Excise Duties) Rules. That decision cannot obviously be regarded as authority supporting the contention that Rule 10A was ultra vires the rule-making power. 13. We find that Rule 10A, was incorporated because of the decision of the Nagpur High Court in M/s. Chhotabhai Jethabhai Patel v. Union of India - (1952) I.L.R. Nag. 156. After that decision the Central Government by a notification, dated December 8, 1951, amended the Rules by addition of the new Rule 10A. The assessee challenged the validity of the Rule but a full bench of the Nagpur High Court rejected the assessee's contention and held that Rule 10A covered a case for increased levy on the basis of a change of law. That decision was challenged before this Court unsuccessfully. This Court in Chhotabhai Jethabhai Patel and Co. v. The Union of India : 1962 (2) Suppl. S.C.R. 1, rejected the assessee's claim regarding....
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.... and applied it to the appropriate facts and circumstances of different cases. It would be reasonable to infer that in none of the cases any doubt about the validity of the Rule 10A was entertained. 17. We may now examine the contention that at the relevant time Rule 10A was not covered by the rule making power conferred on the Central Government by Section 37. Section 37 dealt with power of Central Government to make Rules. Sub-section (1) said : "The Central Government may make rules to carry into effect the purposes of this Act." Sub-section (2) enumerated the matters the rules might provide for `in particular' and "without prejudice to the generality of the foregoing power". Thus, the section did not require that the enumerated rules would be exhaustive. Any rule if it could be shown to have been made "to carry into effect the purposes of the Act" would be within the rule making power. Chapter II of the Act dealt with the levy and collection of duty. Section 3 as it stood at the relevant time provided that duties specified in the First Schedule were to be levied. We have quoted sub-section (1). The First Schedule contained Item Nos., description of goods and rates of duty. Se....