FABRIL GASOSA Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS petition raises a question whether the rule of limitation as contained in Section 11a of the Central Excise Act, 1944, is applicable for an application under Rule 57-I of the Central Excise Rules, 1944, as it stood before the amendment incorporated by the Notification No. 28/88-C. E. (N. T.) with effect from 6th October, 1988.

(2.) IT is the case of the petitioner herein that the amendment effected in Rule 57-I on 6th October, 1988, introducing a clause of limitation in the said rule is inconsequential inasmuch as the same rule of limitation was very much on the statute book in the form of Section 11a and therefore, even before the amendment of Rule 57-I, the respondent State was prohibited from recovering any duty of excise which has not been levied or paid or has been short-levied, or short-paid after the period of six months from the relevant date and if the said non-payment or short-payment or non-levying or short-levying has occurred as a reason of any fraud, wilful misstatement, collusion or suppression of facts, or contravention of any of the provisions of the Act or the Rules made thereunder with intent to evade payment of duty by such person or his agent, they within five years from that relevant date, whereas the respondents contend that the Modvat Scheme as is contained in Rule 57a to Rule 57u in Chapter AA of the Central Excise Rules, 1944, is a complete Code in itself and no rule of limitation was there before the Rule came to be amended on 6th October, 1988. Therefore when the authorities found that the excise duty was not properly levied or short-levied or there is a short-payment or non-payment, they have a right to recover it irrespective of any period of limitation. When the Modvat credit was wrongly claimed, the authorities had a right to recover it and it is not that they can recover it only within the period prescribed by Section 11a. Since there is not much dispute on the facts in the case, we address ourselves to the point required to be adjudicated.

(3.) THERE appear to be divergent views taken by different High Courts on the point. A learned Single Judge of the Karnataka High Court in Thungabhadra Steel Products Ltd. v. Superintendent of Central Excise (1991 (56) E. L. T. 340 (Kar.)) has taken a view that Rule 57-I as it stood before the amendment effected in 1988 should receive the same interpretation as it should receive after the amendment, since the provision of limitation was very much there in the substantive law. A Division Bench of the Madras High Court in the case of Advani Oerlikon Ltd. v. Assistant Collector of Central Excise (1993 (63) E. L. T. 427 (Mad.)) also ruled that a rule to stand the test of validity has to serve the purpose of the Act and though the Rule as it stood then did not contemplate any notice or any period of limitation for the demand, the rule of limitation as found in Section 11a of the Act has still to be applied. As against this, a Division Bench of the Gujarat High Court in Torrent Laboratories Pvt. Ltd. v. U. O. I. (1991 (55) E. L. T. 25 (Guj.)) has taken a different view and opined that the rule of limitation was not applicable to the recoveries under the Modvat Scheme before the limitation clause was incorporated by amending Rule 57-I on 6th October, 1988. The learned Judges of the Division Bench of the Gujarat High Court observed that there is always a presumption that the Legislature never intends evasion of a provision of the statute. The Courts would be slow to put a construction on the provision of the statute which would otherwise defeat legislative purpose. It is the duty of the Court to see that the Act is upheld and the objection with which the Act is enacted in furthered. In other words, the Court is required to uphold the integrity of the Act. They noticed that if the construction canvassed by the learned Counsel for the petitioners is adopted and it is held that the action taken under the unamended provisions of the Rules would lapse on account of the amendment of the Rule, the integrity of the Act itself would be undermined. Such a construction cannot be adopted as such cannot be the intention of the Legislature. They held that the notice which was later incorporated in it and before the amendment the rule of limitation contained in Section 11a was not applicable for the recoveries of illegal credit claimed by the parties under Modvat Scheme.