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M/S SIMBHOOLI SUGAR MILLS versus UNION OF INDIA

High Court of Judicature at Allahabad

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M/S Simbhooli Sugar Mills v. Union Of India - WRIT TAX No. 782 of 1982 [1991] RD-AH 1 (8 July 1991)

 

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HIGH COURT OF JUDICATURE OF ALLAHABAD

RESERVED

Civil Misc. Writ Petition No. 782 of 1982

M/s Simbholi Sugar Mills Ltd., Ghaziabad ..Petitioner

Vs.

Union of India and others.. .. Respondents

___

Hon'ble B.P. Jeevan Reddy, C.J.

Hon'ble R.R.K. Trivedi, J.

(Delivered by Hon'ble B.P. Jeevan Reddy, C.J.)

In this writ petition the petitioner, M/s Simbholi Sugar Mills Ltd., is

questioning the validity of the order dated 22.7.1982 passed by the Assistant

Collector of Central Excise, Division-1, Meerut under Section 11-A of the Central

Excise and Salt Act, 1944 Calling upon the petitioner to pay an amount of

Rs.11,00,912.60.

The main contention urged by Sri Sudhir Chandra, the learned counsel for

the petitioner is this; The show cause notice leading to the impugned order was

issued on 5.10.1979 under rule 10(1) of the Central Excise Rules, 194. rule 10(1)

was omitted with effect from 17.11.1980 on which date Section 11-A was

inserted in the Act. This is not a case of repeal and, therefore, Section 6 of the

General Clauses Act has no application. If so, proceedings initiated and begun

under Rule 10 cannot be continued under Section 11-A. The proceedings

initiated under Rule 10 came to an end with the omission of Rule 10. In other

words, all the proceedings under rule 10 lapsed on the date Rule 10 was omitted

and cannot be continued and no orders can be passed under Section 11-A in

such proceedings. Reliance is placed on a Division Bench decision of this Court

in M/s Ajanta Paper Products, Agra vs. Collector, Central Excise Collectorate,

Kanpur and another (1982 U.P.T.C. 105). The decision does indeed support the

said proposition. The learned Judges observed that though at one stage they

were of the view that proceedings could continue but they were constrained to

hold otherwise in view of the decision of the Supreme Court in M/s. Rayala

Corporation (P) Ltd. Vs. The Director of Enforcement (AIR 1970 SC 494). The

learned Judges held that the ratio of the said case leaves them no option but to

hold that the proceedings initiated under Rule 10 lapse on the date on which the

said rule was omitted and cannot be continued under Section 11-A of the Act.

With great respect to the learned Judges constituting the Division Bench in

M/s. Ajanta Paper Products vs. Collector, Central Excise Collectorate, Kanpur

(supra), we find ourselves unable to agree with the said view. This is not a case

where an enactment is repealed by another enactment but this is a case where a

rule made under the Act is incorporated as the provision of the Act with effect

from a particular date. In all material respects Rule 10 and Section 11-A are

similar. If so, we find it difficult to appreciate how and why the proceedings

initiated under Rule 10 cannot be continued under Section 11-A. The enactment

is the same and whether it is the provision of the Act or the Rule, it makes little

difference in principle. Indeed, this is the view taken by the Division Bench of

Madhya Pradesh High Court in Gwalior Rayon Silk Mfg. (Wvg.) Co., Ltd. vs.

Union of India and others (1983 Tax L.R. 2669). J.S. Verma, J. as he then was,

speaking for the Bench held disagreeing with the view of this Court, that

proceedings initiated under Rule 10 can certainly and properly be continued

under Section 11-A. That was also a case where the proceedings were initiated

under Rule 10 and pending those proceedings Rule 10 was omitted and Section

11-A was introduced into the Act. Final orders were the passed after the said

change. Relying upon the decision of this Court it was contended by the

petitioner therein that the proceedings initiated under Rule 10 lapsed with the

omission of the said Rule and cannot be continued under Section 11-A. The

Division Bench of Madhya Pradesh High Court examined this contention

elaborately and disagreed with the view of this Court. The relevant discussion is

found in paragraphs 10 to 15 of the judgment. The learned judges also pointed

out how the ration of the decision of the Supreme Court in M/s Raya Corporation

(P)  Ltd. vs. The Director of Enforcement (supra) does not and cannot support

the said view. We may set out the observations is so far they are relevant:

"By the Amendment Act No. 25 of 1978, S.11-A was inserted in the

Act to cover the filed falling within the ambit of R.10 framed earlier under

the Act. S.11-A was brought into force w.e.f. 17.11.1980, and

simultaneously from the same dated, R.10 was deleted, apparently

because it became redundant after bringing into force S.11-A inserted in

the Act itself. This replacement of Rule 10 framed under the Act by S.11-A

inserted in the Act itself was brought about by the notifications appearing

at pages 122 and 123 of the Paper Book. The net result has been that the

provision which existed till 17.11.1980 in the shape of R.10 framed under

the Act continued in operation since that date as a section of the Act itself.

In other words, on 17.11.1980, the provision was shifted from the Rules

framed under the Act to the Act itself. ...........

In our opinion, the Supreme Court decision in Rayala Corporation's

case, (AIR 1970 SC 494) does not conclude the point arising for our

decision. In that case, R.132A(2) of the Defence of India Rules, provided

for an offence which was made punishable under sub-rule (4) thereof. It

related to prohibition of dealings in foreign exchange. R.132A as a whole

ceased to be in existence from a specified date and the question was

whether the proceedings could be validly continued for that offence after

omission of R.132A. The Supreme Court held that S.6 of the General

Clauses Act applied to repeals and not to omission and also when the

repeal is of a Central Act or Regulation and not of a rule. On this basis,

S.6 of General Clauses Act was held to be inapplicable to save the

prosecution under R.132-A, after its omission. It was also held that the

amended rules by which R.132-A had been omitted did not save a

prosecution under the omitted R.132-A. In our opinion, there is a clear

distinction in the present case as a result of which the Supreme Court

decision does not apply. The omission of the rule in respect of which the

Supreme Court had to decide was of the provision providing for the

offence itself and not dealing with any ancillary matter. In the present

case, the liability of the petitioner is based on short levy of the excise duty.

The provisions for levy of the excise duty contained in the Act and the

rules framed thereunder remained unaffected by this change and so also

the provision for penalty. R.173-C of the Excise Rules together with R.6(b)

of the Central Excise Valuation Rules, 1975 and Ss. 3 and 4(1) (b) of the

Act formed the basis of the allegation of short levy, while R.173-Q of the

Excise Rules is the basis for the penalty proceedings. These provisions

remain unaffected. In the Supreme Court decision as earlier pointed out, it

was the omitted rule which itself laid down the offence, which is not the

position in the present case. In the present case, the deletion is of R.10 of

the Excise Rules framed under the Act simultaneously with the

enforcement of S.11-A contained in the Act itself, providing merely for the

manner in which the liability arising out of short levy of excise duty under

the provisions continuing unaffected has to be enforced. In our opinion,

this distinction on facts in alone sufficient to distinguish the Supreme Court

decision in M/s. Rayala Corporation's case, (AIR 1970 SC 494) and to

indicate  that the result reached in the Allahabad decision does not

automatically flow therefrom. With respect we are, therefore, unable to

concur with the view taken in the Allahabad decision merely on the basis

of the Supreme Court decision in M/s Rayala Corporation's case.

A careful appreciation of the facts of the present case indicates that

the present is not a case of repeal of or omission of an enactment without

a saving clause in the true sense, a contended on behalf of the petitioner.

For this reason, reliance on S.6 of the General Clauses Act is

unnecessary and the absence of any saving clause at the time of bringing

about this change is also of no consequence. It is settled that a rule

framed under the Act is a part thereof and has to be so construed for all

purposes. ............

It follows that R.10 of the Excise Rules, which was in force till

17.11.1980 formed a part of the Central Excise and Salt Act, 1944, under

which it was framed and when it ceased to exist from that date, S.11-A

contained in the Act itself, which is similar, was brought into force

simultaneously maintaining the continuity. The result is that the relevant

provision which was in force till 17.11.1980 in the shape of a rule forming

part of the Act continued without any break from 17.11.1980 in the shape

of a provision in the main Act itself. This is, therefore, a case where there

has neither been any repeal nor omission of an enactment but

continuance of the same provision throughout as a part of the Act, the only

difference being that prior to 17.11.1980 it was in one part of the Act and

subsequent to that date it is in another part of the same Act, where the

same provision continues in the same Act, the difference being only in the

part of the Act where it is contained; it is difficult to appreciate how the

principles relating to repeal or omission of an enactment can apply or a

saving clause is needed to continue the proceedings initiated prior to such

a change being brought about by shifting the provision from the part of the

Act to another. It is merely a case of shifting the provision from the part of

the Act to another without any break in its continuity. No principle or

authority has been cited to show that such shifting of a provision in an

enactment also amounts to repeal or omission. The only possible

difference, which is not material for this case, could be that earlier in the

shape of a rule it was open to challenge on the ground of inconsistency

with the Act, whereas after its incorporation in the main Act itself, such

challenge would not be possible. However, this is not the questions which

arises in this petition. In this view of the matter, there can be no doubt that

this contention of the learned counsel for the petitioner must be rejected."

The above observations have our full concurrence.

Since we are disagreeing with the Division bench decision of this court, we

are duty bound to refer to the matter to a Full Bench. Accordingly the following

questions are framed for the opinion of the Full Bench:

Whether proceedings initiated under Rule 10 of the Central Excise

Rules, 1944 cannot be continued under Section 11-A of the Act ?

Whether the proceedings initiated under Rule 10 lapse on the date

Rule 10 was omitted, namely, 17.11.1980 as held by the Division Bench of

this Court in M/s Ajanta Paper Products vs. Collector, Central Excise

Collectorate, Kanpur (1982 U.P.T.C. 105) ?

The Writ petition be listed before the bench after the receipt of the opinion

of the Full Bench.

Dated 8th July 1991

DPS.


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