2003 Supreme(SC) 1170

2004(1) Supreme 217
Supreme Court of India
(From Central Excise Customs and Gold Control Appellate Tribunal, New Delhi)
V.N. Khare CJI, S.B. Sinha & Dr. AR. Lakshmanan, JJ.
ITW Signode India Ltd. -Appellant
versus
Collector of Central Excise -Respondent
Civil Appeal No. 7868 of 1995
Decided on 19-11-2003
Counsel for the Parties :
For the Appellant : V. Lakshmikumaran, Alok Yadav and V. Balachandran, Advocates.
For the Respondent : Dhruv Mehta, Ms. Vibha Dutta Makhija and B.K. Prasad, Advocates.

Important point
Section 11A of the Central Excise Act as amended by Act No. 10 of 2000 with retrospective effect and given retrospective operation w.e.f. 27-12-1985, is a valid piece of legislation.

Headnote:Central Excise Tariff Act, 1985-Central Excise Act, 1944-Section 11A as amended by Act No. 10 of 2000 given retroactive operation from 27-12-1985-Validity of-Effect of a validating statute-Appellant manufactures and deals in box strappings-For that purpose they receive duty paid cold rolled steel strips-Several processes are undertaken for manufacturing the end product-Appellant’s case that resultant product falls under Tariff Item No. 26AA (iii) and no further excise duty is leviable thereupon-Assistant Collector stated that box strappings would be classifiable under Tariff Item 68-Appellant protested thereagainst-Subsequent order of Assistant Collector allowing appellant’s claim-Notice issued calling upon appellant to explain as to why processes undertaken by them would not amount to manufacture with immediate effect and that goods should be classified under chapter sub-heading 7308.90 of Excise Tariff Act upon invoking Rule 9A r/ws 11A of the Act-Amendment of Section 11A by Act No. 10 of 2000 with retrospective effect-Validity challenged by appellant-Whether Section 11A of the Act as amended is a valid piece of legislation-(Yes)-Period of limitation for issuing such show cause notice.

       Held : Section 11A deals with a case when inter alia excise duty has been levied or has been short-levied or short-paid. The word “such” occurring after the words “whether or not” refers to non-levy, non-payment, short-levy or short-payment or erroneous refund. It is, therefore, not correct to contend that the word “such” indicates only such short-levy which has been held to be non-existent in Cotspun having regard to Rule 173B. Such short-levy or non-levy may be on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods. Thus, any approval made in terms of Rule 10, in the event, any mistake therein is detected, would also come within the purview of the expression “such short-levy or short-payment”. Such notice is to be served on the person chargeable with the duty which inter alia has been short-levy or short-paid. It is true that Rule 173B has not been amended. But even if the same has not been done, it would not make a material difference as now a comprehensive provision has been made in the primary Act, and, thus, a rule framed thereunder even in case of conflict must give way to the substantive statute. It is a well-settled principle of law that in case of a conflict between a substantive act and delegated legislation, the former shall prevail inasmuch as delegated legislation must be read in the context of the primary/legislative act and not the vice-versa. (Paras 53 & 54)

       As the provision of Section 11A is a recovery provision as regards non-levy or non-paid or short-levy or short-paid or erroneously refunded duties by reason of the said amendment the Parliament had merely provided that an approval on the basis of a classification list inter alia in case of a short-levy can be recovered if a finding is arrived at that the goods had undergone a short-levy. For the aforementioned purpose, Clause 110 of the Finance Act, validating actions taken under Section 11A can be taken into consideration whereby and whereunder a legal fiction is created. (Para 55)

       A statute, it is trite, must be read as a whole. The plenary power of legislation of the Parliament or the State Legislature in relation to the legislative fields specified under Seventh Schedule of the Constitution of India is not disputed. A statutory act may be enacted prospectively or retrospectively. A retrospective effect indisputably can be given in case of curative and validating statute. In fact curative statutes by their very nature are intended to operate upon and affect past transaction having regard to the fact that they operate on conditions already existing. However, the scope of the validating act may vary from case to case. For the reasons aforementioned, we are of the opinion that the Section 11A of the Act as amended is a valid piece of legislation. (Paras 59 and 60)

       It is not in dispute that in terms of Section 11A a show cause notice for short-levy could have been issued only within six months from the relevant date. Only in the event, such short-levy was imposed on account of fraud, collusion, willful mis-statement or suppression of facts with an intent to evade payment of duty on the part of the manufacturer, the extended period of limitation of five years could be invoked. (Para 62)

       The question of limitation involves a question of jurisdiction. The findings of fact on the question of jurisdiction would be a jurisdictional fact. Such a jurisdictional question is to be determined having regard to both fact and law involved therein. The Tribunal, in our opinion, committed a manifest error in not determining the said question, particularly, when in the absence of any finding of fact that such short-levy of excise duty related to any positive act on the part of the appellant by way of fraud, collusion, willful mis-statement or suppression of facts, the extended period of limitation could not have been invoked and in that view of the matter no show cause notice in terms of Rule 10 could have been issued. (Para 68)