IMPORTANT POINT
A taxing statute should be strictly construed.

JUDGMENT

D.K. Jain, J. —

1. Leave granted in SLP (C) Nos. 35323-35324 of 2010.

2. This batch of appeals, by grant of leave, arises out of judgements and orders dated 17th October 2001 in C.C.E.S.No.4 of 2001, 21st October, 2003 in C.E.C. 11, 12, 13 of 2003 and C.E.C. No.122 of 2003 passed by the High Court of Punjab & Haryana; 6th November 2009 in Review application No.29356 of 2008 and 8th July 2010 in C.E. Reference application No.113 of 2000 both passed by the High Court of Judicature at Allahabad. By the impugned judgements, in the main reference applications, filed by the Commissioner of Central Excise, under Section 35H of the Central Excise Act, 1944 (for short “the Act”), the questions referred by the Customs, Excise and Gold (Control) Appellate Tribunal, as it then existed, (for short “the Tribunal”) have been answered in favour of the assessee and the review applications preferred by the Commissioner against the said judgments have been dismissed.

3. Since all the appeals involve a common question of law, these are being disposed of by this common judgment. However, to appreciate the controversy, the facts emerging from C.A.No.3400 of 2003 are being adverted to. These are as follows :

4. Section 3A of the Act, which has a chequered history of insertions and omissions in the Act, was inserted in the Act for the second time by Act 26 of 1997, with effect from 14th May, 1997, the provision relevant for the purpose of these appeals. The Section has again been omitted by Act 14 of 2001, with effect from 11th May, 2001. Section 3A of the Act enables the Central Government to charge Excise duty on goods on the basis of annual capacity of production of mills etc. in respect of the notified goods.

The relevant part of the Section reads as follows:

“3A. Power of Central Government to charge excise duty on the basis of capacity of production in respect of notified goods.— (1) Notwithstanding anything contained in section 3, where the Central Government, having regard to the nature of the process of manufacture or production of excisable goods of any specified description, the extent of evasion of duty in regard to such goods or such other factors as may be relevant, is of the opinion that it is necessary to safeguard the interest of revenue, specify, by notification in the Official Gazette, such goods as notified goods and there shall be levied and collected duty of excise on such goods in accordance with the provisions of this section.

(2) Where a notification is issued under sub-section (1), the Central Government may, by rules,—

(a) provide the manner for determination of the annual capacity of production of the factory, in which such goods are produced, by an officer not below the rank of Assistant Commissioner of Central Excise and such annual capacity shall be deemed to be the annual production of such goods by such factory; or

(b) (i) specify the factor relevant to the production of such goods and the quantity that is deemed to be produced by use of a unit of such factor; and

(ii) provide for the determination of the annual capacity of production of the factory in which such goods are produced on the basis of such factor by an officer not below the rank of Assistant Commissioner of Central Excise and such annual capacity of production shall be deemed to be the annual production of such goods by such factory:

Provided that where a factory producing notified goods is in operation during a part of the year only, the annual production thereof shall be calculated on proportionate basis of the annual capacity of production:

Provided further that in a case where the factor relevant to the production is altered or modified at any time during the year, the annual production shall be re-determined on a proportionate basis having regard to such alteration or modification.

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5. It is clear from a bare reading of the Section that the reason which persuaded the Leg