TaxTMI 
TaxTMI 
2005 (9) TMI 114
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....M/s. Ajanta Paper Products v. Collector, Central Excise Collectorate, Kanpur (1982 U.P.T.C. 165) 3.The petitioner is a duly incorporated company engaged in the manufacture of sugar which is a excisable goods under item no. 1 of the First Schedule to the Central Excise and Salt Act, 1944 (here-in-after referred to as the Act) where, at the relevant time, duty was payable at 37.5% ad valorem together with additional duty at 7.5% ad valorem. In order to spur sugar producing units to increase sugar production during the lean period, the Central Government issued Notification No. 108 of 1978 on 28-4-1978 granting exemption from excise duty on so much of sugar produced in excess of the average of last three years for the period 1-5-1978 to 15-8-1978 to the extent of Rs. 54/- per quintal for free sale sugar and Rs. 9.60 per quintal for levy sugar. The petitioner allegedly produced 47314.98 quintal of excess sugar and thus claimed exemption to the extent of Rs. 25,55,008.90 and was permitted to credit it to its Personal Ledger Account as proforma credit in pursuance of the aforesaid exemption Notification. However, vide show cause notice dated 5-10-1979 issued under Rule 10(1) of the Ru....
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.... the decision of Madhya Pradesh High Court in the case of Gwalior Rayon Mfg. (Wrg) Co. v. Union of India (1980 (10) E.L.T. 844) where a contrary view was taken, it referred the two questions to be answered by the Full Beach. 7.Before we proceed further, it would be convenient to note Rule 10 which provided for recovery of duties as follows:- "Recovery of duties not levied or not paid, or short-levied or not paid in full or erroneously refunded. - (1) Where any duty has not been levied or paid or has been short-levied or erroneously refunded or any duty assessed has not been paid in full, the proper officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid, or which has been short-levied, or to whom the refund has erroneously been made, or which has not been paid in full, requiring him to show cause why he should not pay the amount specified in the notice : Provided that :- (a) Where any duty has not been levied or paid, has been short-levied or has not been paid in full, by reason of fraud, collusion or any wilful mis-statement or suppression of f....
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....neously refunded, a Central Excise Officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice : Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect, as if for the words "six months", the words "five years" were substituted. Explanation - Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of six months or five years, as the case may be. The Assistant Collector of Central Excise shall, after considering the representation, if any, made by the person on whom notice is se....
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....Kolhapur Sugarcane (supra) was considering the same question as to whether proceedings under Rule 10 or 10A could continue after its omission without any saving clause in Rule 10 or in Section 11A on the omission of Rule 10 or whether they could be saved by Section 6 of General Clauses Act. 11.Let us consider the reasons given by the bench in support of its conclusion in para 34 of the report it held ………… correct to say that in considering the question of maintainability of pending proceedings initiated under a particular provision of the after the said provision was omitted the court is not to look for a provision in the newly added rule for continuing the pending proceedings. It is also not correct to say that the test is whether there is any provision in the rules to the effect that pending proceedings will lapse on omission of the rule under which the notice was issued. It is our considered view that in such a case the court is to look to the provision in the rule which has been introduced after omission of the previous rule to determine whether pending proceedings will continue or lapse. If there is a provision therein that pending proceedings shall continue and be ....
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....der 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 under any rule, notification or order so amended, repealed, superseded or rescinded; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed under or in violation of any rule, notification or order so amended, repealed, superseded or rescinded; or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if the rul....
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....uch 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." 19.The section validates any action taken under any such rule at any time between 28-2-1944 and 11-5-2001, when it received the assent of the President and Section 38A was for all purposes to be deemed to be on the Statute book, notwithstanding anything contained in any judgment or order of any court. It legalizes any action taken under any rule under the Act in spite of its amendment, supersession repeal or r....
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.... is clear it should not be defeated by a mechanical construction even if there is some ineptness in language." In a yet to be reported decision, the Apex Court, while considering the effect of a substitution in an exemption notification, though not expressly retrospective, relied upon its object and purpose to give it retrospectively after observing - "An. exemption notification, it is trite, must be construed having regard to the object and purpose which the same seeks to achieve. It is also well settled that an expression used in a Statute should be given its ordinary meaning unless it leads to an anomalous or absurd situation."- Government of India and others v. Indian Tobacco Association - 2005 (187) E.L.T. 162 (S.C.) (Civil Appeal No. 5196 of 2005 decided on 23-8-2005). Where words of comprehensive import are used, courts cannot restrict the meaning to defeat the avowed object of the legislature. Where words of both comprehensive and restrictive import are used, the courts do apply "abundant caution" principle. In such situation the courts do resort to 'mischief rule' or "purposive construction" which enables it to consider the four criteria, (a) what was the law before making....
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....eld that neither the proceedings were saved by the General Clauses Act nor by any other provision in the Act. This reflected directly on the revenue of the State and under these circumstances Section 38A was introduced to cure the defect of the deletion and provide the remedy by enacting the section which, to an extent, is in pari materia with Section 6 of the General Clauses Act. In a way, the deficiency found in notification omitting Rule 10 and Act 25 of 1978 introducing Section 11A are sought to be remedied. The intention of the legislature is crystal clear that proceedings initiated under Rule 10 would not lapse but could be taken to its logical conclusion for which Section 38A has been introduced. 24.Section 38A uses the words 'amendment', 'repealed', 'superseded'' and 'rescinded' with regard to such rule. 'Amendment' has come up for consideration before various courts, its implication was also considered by the Apex Court in the case of Bhagat Ram v. Union of India (AIR 1988 S.C. 740), after noting with approval the statement of law made in Sutherland's Statutory Construction, (3rd Edition Vol. 1 at page 477) while considering the distinction between 'repeal' and 'amendme....
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....er enlarge the scope of the section, or as 'abundant caution'. Even otherwise the exercise of omission of Rule 10 and enacting Section 11A would squarely fall within 'supersession' as used in Section 38A. 26.Though a faint effort was made that insertion is colorable exercise and tends to indirectly offset a Constitutional Bench pronouncement the argument does not appear to be correct. The power of validating acts have been recognised by courts and doctrine of colorable exercise of power does not involve motive, the only question to be asked is - whether there is legislative competence? But legislative competence has been challenged. As already observed hereinabove, insertion of Section 38A was to remove the defect as pointed out in Kolhapur Sugarcane case. The Apex Court in the case of Welfare Association A.R.P. Maharashtra and another v. Ranjit P Gonil and others - 2003 (9) S.C.C. 358, when confronted with similar facts and argument, after considering several Constitutional Bench decisions has held in paragraph 46 that "Thus, it is permissible for the Legislature, subject to its legislative competence otherwise, to enact a law which will withdraw or fundamentally alter the very....