M/S. Rajesh Textile Industries vs Commissioner Of Central Excise & S.T., ...

(Arising out of OIO-07/COMMR/2007 dated 10.08.2007, passed by Commissioner Central Excise & Service Tax, Ahmedabad)

M/s. Rajesh Textile Industries : Appellant (s)

VERSUS

Commissioner of Central Excise & S.T., Ahmedabad : Respondent (s)

Represented by :

For Appellant (s) : Ms. Dimple Gohil, Advocate For Respondent (s) : Shri T.K. Sikdar, Authorised Representative

For approval and signature :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Hon'ble Member (Technical)

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

No 3 Whether their Lordships wish to see the fair copy of the Order?

Seen 4 Whether Order is to be circulated to the Departmental authorities?

Yes

CORAM :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Hon'ble Member (Technical)

Date of Hearing / Decision : 29.09.2015

ORDER No. A/11362/2015 Dated 29.09.2015

Per : Mr. P.K. Das;

Heard both sides and perused the record.

2. The appellants were engaged in the processing of fabrics classifiable under Chapter 52,54,55,58 and 60 of the schedule to Central Excise Tariff Act, 1985 with the aid of power. The appellants were having two Hot Air Stenters viz. Stenter No.1, make Hitech Engineering, having five chambers and Stenter No.2 Babros having four chambers. The appellants factory was covered under the provisions of Hot Air Stenter Independent Textile Processors Annual Capacity Determination Rules, 1998 issued in exercise of power under Section 3A of the Central Excise Act, 1944, with effect from 16.12.1998 and they were required to discharge the Central Excise duty on the basis of Annual Production Capacity determined under the said Rules read with Section 3A of the Central Excise Act, 1944.

3. The main contention of the learned Advocate on behalf of the appellant is that the adjudication order was passed on 13.08.2007, after the omission of Rule 96ZQ and therefore, the impugned order cannot be sustained. She relied upon the decision of the Hon'ble Gujarat High Court in the case of Krishna Processors vs. UOI  2012 (280) ELT 186 (Guj.), as followed by this Tribunal in the case of Inducto Steel Limited vs. CCE & ST, Bhavnagar  Order No. A/10974/2015 dated 18.06.2015.

4. The learned Authorised Representative on behalf of the Revenue submits that the Hon'ble Supreme Court in the case of CCE, Gujarat vs. Roop Textiles Mills Limited  2007 (213) ELT 486 (SC), on identical issue remanded the matter to the Hon'ble Gujarat High Court. The learned Advocate submits that after this remand, the Hon'ble High Court in the case of Krishna Processors (supra), decided the matter on 16.03.2012.

4. We find that the Hon'ble Gujarat High Court in the case of Krishna Processors (supra) held that omission of Rules 96ZO, ZP and 96ZQ of the erstwhile Central Excise Rules, 1944 with effect from 01.3.2001, by Notification No. 6/2001-CE (NT) and of Section 3A of the Central Excise Act, 1944 with effect from 11.05.2001, both without saving clauses for initiation of proceeding for liabilities, for all proceedings which were pending as on 11.05.2001, even if initiated prior to 11.05.2001, would therefore automatically lapsed. The relevant portion of the said decision is, as under:-

19?As regards the fourth question, viz., whether in view of Section 132 of the Finance Act, 2001 everything done under the old provision is saved, on behalf of the Revenue, reliance has been placed upon Section 132 of the Finance Act, 2001 to contend that the same validates all actions taken or anything done or omitted to be done or purported to have been taken or done or omitted to be done under any rule, notification or order made or issued under the Central Excise Act and that all such actions shall be deemed to be and to always have been, for all purposes, as validly and effectively taken or 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. In this regard, it may be pertinent to note that what Section 132 validates is all actions covered under Section 131 of the Finance Act, 2001, that is, Section 38A of the Act as if the same had been in force at all material times. In the present case, apart from the fact that Section 38 of the Act, does not save the provisions which have been omitted, even if it is assumed that omissions are covered thereunder, the same would be applicable only for the period prior to 11th May, 2001, till Section 3A came to be omitted. Section 38A saves actions taken or rights and liabilities accrued under any rule, notification or order made or issued under the Act. The same does not save any action taken or rights and liabilities accrued under any provision of the Act. Thus, Section 3A stands unconditionally omitted from the statute book without any saving clause in favour of pending proceedings. All actions thereunder must, therefore, stop at the stage where they were when the provision came to be omitted, and if the proceedings had not been concluded before the omission came into effect, the same cannot be concluded thereafter.

19.1?In the facts of the present case, as noticed earlier, in Special Civil Application No. 1984 of 2002, the show-cause notice itself has been issued on 4th October, 2001, that is, after the omission of Rules 96ZQ, 96ZO and 96ZP of the Rules whereas in the other two writ petitions the show cause notice had been issued prior to omission of said rules, however, the proceedings had not been concluded prior to the omission of Section 3A of the Act. Insofar as intitiation of proceedings after omission of the Rule 96ZQ, 96ZP and 96ZO is concerned, as held hereinabove, the same is not saved by the notification dated 1st March, 2001 whereby the said rules came to be omitted. Insofar as continuance of proceedings under the said rules after the omission of the said rules is concerned, as held hereinabove, after omission of Section 3A of the Act without any saving clause, the power to conclude those proceedings disappeared from the scene. Therefore, even in case of proceedings initiated prior to the omission of Rule 96ZQ, 96ZP and 96ZO of the Rules, if the same were not concluded prior to the omission of Section 3A of the Act, there was no power to proceed further and conclude the same. Under the circumstances, any action taken under Rules 96ZQ, 96ZO and 96ZP of the Rules after Section 3A of the Act came to be omitted from the statute book without any saving clause, would be without authority of law and as such any orders passed in respect thereof after the omission of Section 3A of the Act would be non est. As a result of the aforesaid discussion, the orders impugned in the present petitions are required to be quashed and set aside as being without authority of law.

20. & 21. ..

22.?For the foregoing reasons, the petitions succeed and are accordingly allowed. Rule 96ZQ(5)(ii) of the Central Excise Rules, 1944 is held to be ultra vires Articles 14, 19(1)(g) and 265 of the Constitution of India. It is further held that after the omission of Rules 96ZQ, 96ZP and 96ZO of the Rules with effect from 1st March, 2001 no proceedings could have been initiated thereunder and after the omission of Section 3A of the Act with effect from 11th May, 2001, without any saving clause, no pending proceeding under the said rules which had not been concluded before the omission came into effect, could be concluded thereafter. The proceedings culminating into the impugned orders having been initiated/concluded after the omission of Rules 96ZQ, 96ZP and 96ZO of the Rules and Section 3A of the Act are, therefore, without any authority of law and as such, cannot be sustained. The impugned orders dated 9th November, 2001/1st January, 2002 (Special Civil Application No. 1984 of 2002), dated 31st December, 2003 (Special Civil Application No. 3637 of 2004) and dated 30th October, 2001 (Special Civil Application No. 6779 of 2003) are hereby quashed and set aside. Rule is made absolute accordingly in each of the petitions with no order as to costs.

5. In the case of Inducto Steel Limited (supra), the Tribunal held as under:-

4. We find that, the issue is no more res-integra, in view of the decision of the Honble Gujarat High Court in the case of Krishna Processors vs. Union of India - 2012 (280) E.L.T. 186 (Guj.). The Learned Advocate on behalf of the appellant relied upon the following decision as under:-

1. Mahamaya Steel Industries Ltd. CCE, Raipur 2014 (307) ELT 186 (Guj.)

2. Shiv Surendra Steel Rolling Engg. Mills vs. CCE, Ludhiana - 2014 (303) E.L.T. (Tri. Del.)

3. CCE, Jaipur vs. Alwar Processors Pvt. Limited vs. Alwar Processors Pvt. Limited - 2014 (308) E.L.T. 720 (Tri.  Del)

4. Shreeji Concast Limited vs. CCE, Rajkot - 2002 (139) E.L.T. 131 (Tri. Mumbai)

5. For the purpose of proper appreciation of the case, the relevant portion of the decision in the case of M/s Krishna Processors (supra) is reproduced below:- 17.4. Thus, any obligation or liability etc. acquired, accrued or incurred under Section 3A of the Act would not be saved by Section 6 of the General Clauses Act. The next question that arises for consideration is as to whether after the omission of Section 3A of the Act with effect from 11th May, 2001 proceedings initiated under Rules 96ZQ, 96ZP and 96ZO of the Rules would survive, or in other words what would be the position of obligations or liabilities incurred under Rules 96ZQ, 96ZP and 96ZO of the Rules after the omission of Section 3A. As noticed earlier, Rule 96ZQ of the Rules only lays down the procedure to be followed by the independent processor of textile fabrics, the manner of payment of duty and the consequences of non-payment of duty within the prescribed period, etc. Likewise, is the case with Rules 96ZP and 96ZO of the Rules. Rules 96ZQ, 96ZP and 96ZO are not the charging provisions. The charging provision is Section 3A of the Act and Rules 96ZQ etc. are merely machinery provisions. Thus, any liability which accrues is under Section 3A of the Act. Accordingly, when the charging Section itself is deleted without any saving clause, no recovery under the said Section can be made by resorting to Rule 96ZQ of the Rules. Action, if any, can be taken only under the regular provisions of the Act.

6. In view of the above discussion, respectively following the decision of the Honble Gujarat High Court in the case of M/s Krishna Processors (supra), we set-aside the impugned order. The appeal filed by the appellant is allowed. The application for extension of stay order is dismissed as infructuous.

6. In view of the above discussions, we find that the impugned order cannot be sustained. Accordingly, the impugned order is set-aside. Appeal filed by the appellant is allowed.

(Dictated and pronounced in the Court)

(P.M. Saleem) (P.K. Das) Member (Technical) Member (Judicial) ..KL

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