IMPORTANT POINT
The interest and penalty provisions under the Rules 96ZO, ZP, and ZQ of the Central Excise Rules, 1994 are invalid.

Headnote:(a) General Clauses Act 1897 – Section 6 – Repeal, omission and deletion – Omission, being tantamount to deletion, is a form of repeal. (Para 14)
       [2015] 376 ITR 596 (SC) – Relied upon
       (1969) 2 SCC 412 – Referred
       (b) General Clauses Act, 1897 – Section 6A – Repeal can be by way of express omission – Repeal would include a repeal by way of an express omission – Implied repeal. (Para 16)
       1988 Supp SCC 30 – Relied upon
       (c) Administration of Justice – Judicial propriety – Relook of a judgment – When warranted – Judgment in public good, view taken being a reasonably possible view, all aspects of question at hand noticed – Such judgment does not need relook. (Para 24)
       (1965) 2 SCR 908 – Relied upon
       (d) Limitation – Assessee undertaking to pay the amount with interest upto 31.3.2003 – Appellant made last part payment on that date – Demand raised by Revenue on 19.8.2005 – Within limitation of three years. (Para 25)
       (e) Central Excise Act, 1994 – Section 3A r/w Rules 96 ZO, 96 ZP and 96 ZQ, Central Excise Rules, 1994 – Section 3A not providing for charging of interest – Rules made under the Act providing for charging of interest – Contrary to provisions of the Act – Even though not declared ultra vires in absence of challenge to their validity, the rules cannot be acted upon – Appellants not liable to pay interest. (Para 31)
       (2001) 8 SCC 676; (1999) 4 SCC 192; (2011) 3 SCC 748 – Relied upon
       (f) Central Excise Act, 1994 – Section 3A r/w Rules 96 ZO, 96 ZP and 96 ZQ, Central Excise Rules, 1994 – Penalty – Challenge to validity of Rules 96 ZO, 96 ZP and 96 ZQ – Rules providing for penalty on delayed payment – Ultra vires the Act insofar as section 3A does not provide for penalty on delayed payment – Secondly, rules prescribing same penalty of an equivalent amount of duty for 1 day delay or 100 day delay notwithstanding the delay being bona fide or under force majeure circumstances – Violative of Article 14 and Article 19(1)(g) of Constitution of India – Section 37 – Providing penalty not exceeding Rs.5000 – Rules arbitrary and excessive. (Para 33, 35, 36, 39)
       (1970) 1 SCR 156 – Relied upon
       2012 (280) ELT 186 (Guj.) – Cited with approval
       (g) Induction Furnace Annual Capacity Determination Rules, 1997 – Rule 3(2) – Capacity of induction furnace unit – Determination of – Load capacity of the unit – Relevant material for determination of capacity – Chartered Engineer Certificate, while certifying capacity of induction furnace unit, dealing with the sanctioned electrical load for the furnace – Such information can be looked into in the absence of other factors mentioned in Rule 3 – No infirmity. (Para 43)
       2003(159) ELT 147 (Kar.) – Cited with approval
       Facts of the case:
       Civil Appeal No.4280 of 2007
       The appellant took a rolling mill on lease for the period from 1997 to 2000 and manufactured rerolled non-alloyed steel products.
       On 1.9.1997 the compounded levy scheme was introduced by way of insertion of Section 3A of the Central Excise Act. The appellant opted for the aforesaid scheme under Rule 96ZP of the Central Excise Rules. When the lease expired, the appellant surrendered its registration certificate on 1.6.2000. As stated hereinabove, on 19.8.2005 the impugned notice was issued to the appellant demanding interest for delayed payment of duty for the period 1997 to 2000.
       The High Court found that on omission of Section 3A, the liability of the assessee was not wiped out.

       Finding of the Court:
       The interest and penalty provisions under the Rules 96ZO, ZP, and ZQ of the Central Excise Rules, 1994 are invalid.
       Result: Appeals disposed of.

Judgment

R.F. Nariman, J.

1. Leave granted.

2. This batch of appeals raises questions relating to the demand for interest and penalty under Rules 96ZO, 96 ZP and 96 ZQ of the Central Excise Rules, 1994, which were framed in order to effectuate the provisions contained in Section 3A of the Central Excise Act, 1994. Several High Courts have struck down the said Rules relating to penalty as being ultra vires the parent provision and violative of Articles 14 and 19(1)(g) of the Constitution. Most of the appeals in this batch are, therefore, by the Union of India. However, before dealing with the said appeals, it is necessary to first segregate Civil Appeal No.4280 of 2007 which raises a slightly different question from the questions raised in the other appeals and decide it first.

3. The question which arises for decision in the said appeal is the demand, by means of a letter dated 19.8.2005, for payment of interest for delayed payment of central excise duty under Section 3A of the Central Excise Act, 1944.

4. The case of the appellant is that it took a rolling mill on lease for the period from 1997 to 2000 and manufactured rerolled non-alloyed steel products. On 1.9.1997 the compounded levy scheme was introduced by way of insertion of Section 3A of the Central Excise Act. The appellant opted for the aforesaid scheme under Rule 96ZP of the Central Excise Rules. When the lease expired, the appellant surrendered its registration certificate on 1.6.2000. As stated hereinabove, on 19.8.2005 the impugned notice was issued to the appellant demanding interest for delayed payment of duty for the period 1997 to 2000.

5. The High Court framed two questions which arose for its consideration: (1) whether “omission” of the compounded levy scheme in 2001 wipes out the liability of the assessee for the period during which the scheme was in operation, and (2) whether the letter of demand of interest for delayed payment was liable to be set aside on the ground of delay.

6. The High Court found, after distinguishing some of the judgments of this Court, and after relying upon Section 38A of the Central Excise Act, which was added vide Section 131 of the Finance Act, 2001 that on omission of Section 3A, the liability of the assessee was not wiped out.

7. Shri Ajay Aggarwal, learned counsel who appeared on behalf of the appellant fairly submitted that a recent judgment delivered by this Bench, namely, M/s Fibre Boards (P) Ltd., Bangalore v. Commissioner of Income Tax, Bangalore, [2015] 376 ITR 596 (SC), would cover the matter before us being directly against the appellant’s case. However, he submitted that for various reasons this judgment requires a relook and ought to be referred to a larger Bench of three Judges. Shri Aggarwal argued the matter with great ability and we listened to him with considerable interest.

8. First, it may be stated that the judgment of this Court in the Fibre Board’s case has taken the view that an “omission” would amount to a “repeal”, after referring to several authorities of this Court, G.P. Singh’s Principles of Statutory Interpretation, Section 6A of the General Clauses Act, 1897, and a passage in Halsbury’s Laws of England. Ultimately, this Court arrived at the conclusion that an “omission” would amount to a “repeal” for the purpose of Section 24 of the General Clauses Act. Since the same expression, namely, “repeal” is used both in Section 6 and Section 24 of the General Clauses Act, the construction of the said expression in both sections would, therefore, include within it “omissions” made by the legislature.

9. Shri Aggarwal, however, argued that there is a fundamental distinction between a “repeal” and an “omission” in that in the case of a “repeal” the statute is obliterated from the very beginning whereas in the case of an “omission” what gets omitted is only from the date of “omission” and not before. This being the case, it is clear that things already done in the case of an “omission” would be saved. However, a “repea

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2015 Supreme(SC) 1079

IMPORTANT POINTThe interest and penalty provisions under the Rules 96ZO, ZP, and ZQ of the Central Excise Rules, 1994 are invalid.

Cases Referred (9)

IMPORTANT POINT
The interest and penalty provisions under the Rules 96ZO, ZP, and ZQ of the Central Excise Rules, 1994 are invalid.