A.P. Ravani, J.
1. On October, 6, 1988 Rule 57-I of the Central Excise Rules, 1944 which provides for recovery of MODVAT credit wrongly availed of or utilised in an irregular manner has been partially amended. While amending the Rule, did the Legislature manifest an intention to grant amnesty to all those manufacturers who were alleged to have wrongfully availed of the credit Did the legislature intend to demolish or destroy all that was done under the unamended provision of the Rule These and other common questions of fact and law arise in all these petitions. Hence, at the request and with the consent of the learned counsels appearing for the parties, all these matters are being heard together and are being disposed of by this common judgment and order.
2. The undisputed facts pertaining to all these petitions are that the petitioners are manufacturers of one or other article which is subject to excise duty under the relevant provisions of the Central Excises & Salt Act, 1944 (for short 'the Act') and the Central Excise Rules, 1944 (for short 'the Rules'). The petitioners have taken benefit of MODVAT scheme contained in Rule 57A to 57P of the Rules believing that they were entitled to take credit for certain 'inputs'. The petitioners utilised these 'inputs' and manufactured their end product. The petitioners took credit for the 'inputs' utilised by them for different periods. According to the Department, these manufacturers were not entitled to take credit and they had taken the credit wrongly. Hence different show cause notices were served upon different manufacturers calling upon them to show cause as to why they should not be asked to reverse the credit or if necessary to refund the amount of credit wrongly availed of. In some of the cases, the petitioners have replied to the show cause notices and the Assistant Collector concerned has passed order after hearing the petitioners. In some cases, the petitioners have rushed to this court on receipt of the show cause notice itself and without replying to the show cause notice and without waiting for the adjudication order by the appropriate excise authority.
3. The details with regard to the show cause notice issued, period covered by the show cause notice and the date of the order passed by the Assistant Collector in different petitions, together with details of article manufactured by the petitioner concerned are mentioned hereinbelow :
---------------------------------------------------------------------- Sr. No. of Products Date of Period covered Date of No. Sp. C.A. SCN in SCN impugned order ---------------------------------------------------------------------- (1) (2) (3) (4) (5) (6) ---------------------------------------------------------------------- 1. 4233/89 Detergent 22-3-1988 April to 1986 14-6-1989 powder out to Oct. 1986 of LAB & other inputs. 2. 4234/89 -do- 18-3-1988 -do- 14-6-1989 3. 4235/89 -do- 14-3-1988 -do- 14-6-1989 4. 6452/89 -do- 15-10-87 -do- 14-6-1989 5. 6934/88 Steel Strip 26-5-1988 April 1986 - of Chap. 72 to out of imported March 1987 steel sheets 27-5-1988 June 1987 to July 1987 - 6. 3103/89 Aluminium 18-8-1988 April 1987 to 8-3-1989 billets out Dec. 1987 of aluminium ingots 2-2-1988 Mar. 1986 to - July 1986 3-10-1988 Jan. 1988 to 8-3-1989 April 1988 7. 8572/88 Various 2-2-1988 6-3-1987 to - Chemicals 14-12-1987 of Chap. 28 & 29 8. 2731/89 Asbestos 23-9-1988 May 1988 15-3-1989 Cement products out of imported asbestos fibre and other inputs 9. 6932/88 Medicine 18-12-87 March 1986 to 15-3-1989 Aug. 1987 13-6-1988 Sept. 1987 to Feb. 1988 - 10. 1219/89 Engg. 18-2-1988 June 1987 to Products Dec. 1987 out of inputs 19-5-1988 Jan. 1988 to March 1988 14-12-1988 30-8-1988 Apr. 1988 to June 1988 1-11-88 July 1988 to Sept. 1988 11. 3934/89 Detergent 16-5-1988 May 1986 15-3-1989 powder out of sulphuric acid & other inputs 12. 3935/89 Detergent 16-5-1988 Nov. 1986 to 15-3-1989 powder out of sulphuric Feb. 1987 acid & other inputs 13. 3936/89 -do- 27-6-1988 Jan. 1988 to 20-3-1989 May 1988 14. 3937/89 -do- 16-5-1988 March 1986 to 15-3-1989 Feb. 1988 15. 3887/89 -do- 24-3-1988 Nov. 1987 to 15-3-1989 Jan. 1988 16. 3888/89 -do- 17-12-87 July 1987 to 15-3-1989 Oct. 1987 17. 3889.89 -do- 24-3-1988 Aug. 1987 to 15-3-1989 Jan. 1988 18. 3890/89 -do- 17-12-87 March 1986 to 15-3-1989 Oct. 1986 19. 3891/89 -do- 24-3-1988 Jan. 1988 15-3-1989 8-7-1988 Feb. 1988 to 15-3-1989 May 1988 20. 3892/89 -do- 21-3-1988 Nov. 1987 to 15-3-1989 Jan. 1988 21-12-1987 Mar. 1986 to 15-3-1989 Oct. 1987 8-7-1988 Feb. 1988 to 15-3-1989 May 1988 21. 3893/89 -do- 24-12-87 Mar. 1986 to 15-3-1989 Oct. 1987 24-3-1988 Nov. 1987 to 15-3-1989 Jan. 1988 22. 4236/89 -do- 19-10-1988 April 1988 to 15-3-1989 July 1988 23. 4237/89 -do- 21-11-1988 June 1988 to 20-3-1989 Oct. 1988 24. 4238/89 -do- 18-11-1988 June 1988 to 15-3-1989 Sept. 1988 1-3-1989 - 13-4-1989 25. 4239/89 -do- 18-11-1989 June 1988 to 15-3-1989 Sept. 1988 26. 4240/89 -do- 18-11-89 June 1988 to 15-3-1989 Sept. 1988 1-3-1989 - 13-4-1989 27. 4241/89 -do- 17-11-88 June 1988 to 15-3-1989 Sept. 1988 1-3-1989 - 13-4-1989 28. 4242/89 -do- 18-11-88 June 1988 to 15-3-1989 Sept. 1988 1-3-1989 - 13-4-1989 29. 4243/89 -do- 18-11-88 June 1988 to 15-3-1989 Sept. 1988 1-3-1989 - 13-4-1989 30. 4244/89 -do- 27-2-1989 - 13-4-1989 31. 3102/89 Aluminium 25-1-1989 Apr. 1987 to - billets out of Mar. 1988 aluminium ingots 32. 4903/89 Synthetic 3-12-1986 - 24-10-1988 Organic dye stuffs ----------------------------------------------------------------------
4. From the aforesaid details, it is evident that in respect of three cases at Sr. Nos. 5, 7 and 31 i.e. Special Civil Applications No. 6934/88, 8572/88 and 3102/89 the petitioners have rushed to this court without replying to the show cause notice and without waiting for adjudication order. It may also be noted that petitioner of Special Civil Application No. 6932 of 1988 (Sr. No. 9) has not replied to one of the show cause notices dated June 13, 1988. In connection with this notice, the petitioner has rushed to this court without replying to the show cause notice and without waiting for adjudication order. In all other cases adjudication order has been passed by the Assistant Collector concerned.
5. In all these petitions, the petitioners have challenged the vires of Rule 57-I as it stood prior to the amendment which came into force with effect from October 6, 1988. Rule 57-I provides for recovery of credit wrongly availed of or utilised in an irregular manner. The petitioners have also challenged the legality and validity of the order passed by the Assistant Collector. One of the contentions of the petitioners is that since there is no saving clause and the amendment is of a rule, after the amendment of the Rules the show cause notice issued earlier would lapse and no proceedings pursuant thereto would survive. At this stage it would be proper to refer to the relevant provisions of law.
(a) On June 6, 1978 Section 11-A of the Act has been inserted in the Act, by Customs, Central Excises and Salt and Central Boards of Revenue (Amendment) Act, 1978 (25 of 1978). The provisions of Section 11-A have been brought into force with effect from November 17, 1980. Section 11-A of the Act provides for recovery of duties not levied or not paid or short-levied or short paid or erroneously refunded.
(b) Rules 57A to Rule 57-I were inserted in Chapter V of the Rules as Section AA vide Notification No. 176/86, dated March 1, 1986. These rules provided for MODVAT scheme. Rule 57-I as it came into force from March 1, 1986 remained in operation till October 6, 1988. Clause 1 of Rule 57-I was amended and substituted by new clause in the same rule. Clause 2 of the Rule has not been disturbed by the amendment and it has remained unchanged.
(c) Since all these petitions centre round the legality and validity of Rule 57-I of the Rules as it stood prior to the amendment and the effect of amendment, it would be proper to reproduce the provisions of this rule as it stood prior to the amendment i.e. before 6-10-1988 and subsequent to the amendment i.e. after 6-10-1988. ---------------------------------------------------------------------- Rule 57-I before 6-10-1988 Rule 57-I after 6-10-1988 ---------------------------------------------------------------------- Recovery of credit wrongly availed of or utilised in an irregular manner : (1) If the credit of duty paid on '(1)(i) Where credit of duty paid inputs has been taken wrongly, on inputs has been taken on the credit so taken may be account of an error, omission or disallowed by the proper officer misconstruction, on the part of and the amount so disallowed an officer or a manufacturer, or shall be adjusted in the credit an assessee the proper officer account or the account-current may, within six months from the maintained by the manufacturer date of such credit, serve notice or if such adjustments are not on the manufacture or the possible for any reason, by assessee who has taken such cash recovery from the credit requiring him to show manufacturer of the said goods. cause why he should not be disallowed to such credit and where the credit has already been utilised, why the amount equivalent to such credit should not be recovered from him. Provided that such manufacturer Provided that where such credit may make such adjustments on his has been taken on account of own in the credit account or the willful mis-statement, collusion account-current maintained by him or suppression of facts on the under intimation to the proper part of a manufacturer or an officer. assessee, the provisions of this clause shall have effect as if for the words 'six months' the word 'five years' were substituted. (2) If any inputs in respect of (ii) The proper officer, after which credit has been taken are considering the representation, not fully accounted for as having if any, made by the manufacturer been disposed of in the manner or the assessee on whom notice is specified in this section the served under clause (1), shall manufacturer shall upon a determine the amount of such written demand being made by the credit to be disallowed (not Assistant Collector of Central being in excess of the amount Excise pay the duty leviable on specified in the show cause such inputs within 10 days of the notice) and thereupon such notice of demand. manufacturer or assessee shall pay the amount equivalent to the credit disallowed, if the credit has been utilised, or shall not utilise the credit thus disallowed.' (2) If any inputs in respect of which credit has been taken are not fully accounted for as having been disposed of in the manner specified in this section the manufacturer shall upon a written demand being made by the Assistant Collector of Central Excise pay the duty leviable on such inputs within 10 days of the notice of demand. ----------------------------------------------------------------------
6. It is contended that Rule 57-I of the Rules as it stood prior to the amendment is ultra vires the provisions of Articles 14 and 19(1)(g) of the Constitution of India. The contention is based on the ground that there is no guideline in the rule as regards the period during which the provisions of the rule can be invoked. It is submitted that unlimited power is conferred on the executive authority. In absence of period of limitation the provision may be invoked at any time. Such conferment of power and exercise of the same would be not only arbitrary but would be unreasonable also. It is also contended that there is no provision with regard to providing for an opportunity of being heard to the assessee. Unless there is provision, for issuing show cause notice and provision for affording of an opportunity of being heard to the assessee, the provisions of the rule cannot be said to be in conformity with the provisions of Articles 14 and 19(1)(g) of the Constitution of India.
7. There is no dispute with regard to the fact that no period of limitation was provided in the rule. Therefore, the contention based on the absence of provision with regard to the period of limitation be examined. However, this contention is covered by decision of the Supreme Court in the case of Government of India v. Citadel Fine Pharmaceuticals, reported in 1989 (42) ELT 515 (SC). In that case Rule 12 of the Medicinal Toilet Preparation (Excise Duties) Rules, 1956, the provisions of which are pari materia with the unamended provisions of Rule 57-I was challenged before the Supreme Court. It was contended that the provisions of Rule 12 was unreasonable and violative of Article 14 of the Constitution of India. The Supreme Court negatived the contention and held that simply because the rule does not prescribe any period for the recovery of duty, the provisions cannot be said to be ultra vires the provisions of Article 14 of the Constitution. In absence of any provision with regard to the specific period of limitation, reasonable period of limitation has got to be read into it. This is how the Supreme Court has upheld the provisions of Rule 12 of the Medicinal Toilet Preparations (Excise Duties) Rules, 1956. The same principle would be applicable to the provisions of Rule 57-I of the Rules as it stood prior to the amendment. Hence there is no substance in this contention and the same has got to be rejected.
8. Now the contention based on the absence of specific provision with regard to the issuance of show cause notice and affording an opportunity of being heard to the assessee be examined. In substance the contention is that the provisions of Rule 57-I as it stood prior to the amendment was in conflict with the principles of natural justice and therefore the same should be held to be ultra vires the provisions of Articles 14 and 19(1)(g) of the Constitution or at any rate contrary to the principle of natural justice and hence illegal and void. The contention cannot be accepted. The absence of specific provision containing principles of natural justice in the rule does not mean that the provisions of the rule excludes the observance of principles of natural justice. The principles of natural justice is nothing but fair play in action. No one needs direction from the parliament that he is required to act fairly. Any one, be it an executive officer, or a judicial officer, who has been conferred with discretionary powers and who is charged with a duty to act judicially or impartially, is bound to act fairly. Therefore, the provision as regards applicability of principles of natural justice has got to be read into the provisions of the rule, unless it is shown that the legislature has expressly or by necessary implication excluded the observance of principles of natural justice. There is nothing in the provision of Rules 57-I as it stood then, or in any of the provisions of the Rules to indicate that the observance of principles of natural justice have been excluded and the authority invoking the provisions of Rule 57-I can ignore the principles of natural justice.
9. Here reference may be made to 'Statutory Interpretation,' by Francis Bennion (1984) page 725. The learned author states that 'unless the contrary intention appears, the conferring by an enactment of a power or duty to make a decision by implication imports related principles and rules of law. These are the principles and rules (such as the need to observe natural justice) which have been laid down or adopted by the Courts to govern the making of such decisions in the territory to which the enactment extends.' Referring to a decision in the case of R. v. Commission for Racial Equality, ex.p Hillingdon LBC (1981) The Times 17 July, the learned author states as follows :-
'It follows that the rules apply to every type of functionary upon whom any Act confers a decision making duty. They are implicit in the Act.'
In above view of the matter, the argument that because there is no provision for issuing show cause notice and for affording an opportunity of being heard to the assessee, the provisions of the Rules would be ultra vires has no merits and the same has got to be rejected.
10. It is next contended that Rule 57-I as it stood prior to amendment should be read in conjunction with Section 11-A of the Act. It is submitted that if credit is wrongly taken, it would be non-payment of duty or short-payment of duty. Such cases are covered by the provisions of Section 11-A of the Act. Section 11-A of the Act is the only provision in the Act regarding the recovery of duty on account of short-payment and/or under assessment. Hence it is submitted that Rule 57-I which is a subordinate legislation should be read in conformity with the parent provision in the statute which is contained in Section 11-A of the Act. In short, it is submitted that the provisions of Section 11-A of the Act as regards the period of limitation should be read into the provisions of Rule 57-I as it stood prior to the amendment by necessary implication.
11. The aforesaid contention cannot be accepted for the following reasons :-
(1) Section 11-A of the Act provides for recovery of duties in certain cases and it has come into force with effect from November 17, 1980. Thus provision is contained in the Act while the provisions of Rule 57-I relating to recovery of wrongfully availed of MODVAT credit has come into force with effect from March 1, 1986. The Government has exercised the power conferred upon it under Section 37 of the Act by which the Government is empowered to make rules to carry into effect the purpose of the Act. Rules 57A to 57P relating to MODVAT scheme are framed to streamline the process of levy and collection of excise duty. By no stretch of reasoning it can be said that the rule is enacted for extraneous purpose. It does subserve the purpose of the Act, i.e. the levy and collection of excise duty on goods manufactured or produced in the country. Rule makes a different and specific provisions with regard to MODVAT credit wrongfully availed of or wrongfully utilised. Provisions of Section 11-A do not provide that the legislature shall not make specific provisions with regard to particular types of credit availed of by the assessee. There is nothing inconsistent in Rule 57-I which cannot be enacted by the legislature when the provisions of Section 11-A of the Act is in operation. Section 11-A of the Act occupies the general field while Rule 57-I deals with specific filed of wrongful availment of MODVAT credit. Rules 57-I is enacted by the legislature in exercise of powers conferred upon it under Section 37 of the Act and not under Section 11-A of the Act. The provisions of Rule 57-I is to be in conformity with the provisions of Section 37 of the Act. On March 1, 1986 when Rules 57-I was enacted and brought on the statute books the legislature was aware about the provisions of Section 11-A of the Act being in force. Therefore it has got to be presumed that the legislature has made the provision with a specific purpose. It is cardinal principles of interpretation of statutes that the legislature does not indulge in exercise in futility.
(2) It is over-simplification to say that Rule 57-I as it stood prior to amendment is nothing but provision with regard to recovery of duty as it is in the case of short-payment of duty, short-levy of duty or under-assessment. Section 11-A of the Act is a general provision which covers and deals with all types of short-levy, short-payment and under-assessment. On the other hand, the provisions with regard to the MODVAT scheme (Rules 57A to 57P) have been introduced in the statute book by notification dated March 1, 1986, Provisions with regard to MODVAT may be analogous to the provisions of set-off contained in Rule 56A, but it is not set-off by way of proforma credit. There is distinction between the two. The very fact that despite the provisions of Section 11-A of the Act and Rule 56A being on the statute book, the legislature thought it fit and proper to make special provisions with regard to the cases of wrongful availment of credit by enacting. Rule 57-I shows that the legislature did not intend to apply the general provisions contained in Section 11-A of the Act to the cases of wrongful availment of credit which is specifically provided for in Rule 57-I.
(3) There are certain distinguishing and special features of MODVAT scheme. If these features are noted, it would be clear that the provisions with regard to MODVAT scheme is a special one and the provisions contained in Rule 57-I regarding wrongful availment of MODVAT credit is also special. The special and distinguishing features of MODVAT scheme of which Rules 57-I is a part, may be noted :-
(a) MODVAT, unlike the provisions of proforma credit contained in Rule 56A is applicable not only to raw materials, components and end products, but it applies to 'inputs' as defined in the MODVAT scheme itself. 'Input' can be an end product and it may not be necessarily raw material or component product of any other product. The term 'input' defined in the scheme itself shows that 'input' may be anything used in addition to or relating to the end product. Thus 'input' may be even packing of the end product. 'Input' may be something other than the raw material or component part of it. In this view of the matter, duty wise and commodity wise, scope of MODVAT scheme is far wider than that of set-off contained in Rule 56A of the Rules. The type of cases covered by MODVAT are required to be specifically dealt with as provided by the legislature, and they are not to be dealt with as per the provisions of Section 11-A of the Act and Rules 56A of the Rules.
(b) As far as the procedure of MODVAT scheme is concerned, it is also different. While taking MODVAT credit the assessee is not required to wait for permission of the Department. He has just to make declaration and obtain acknowledgement of the declaration. After having obtained acknowledgement of the declaration, he can straightaway start taking credit in respect of the 'inputs' utilised by him for the purpose of manufacture of end product.
(c) Basis of MODVAT - mutual trust and confidence. While enacting MODVAT provision, legislature has reposed a sort of trust or confidence on the assessee. The legislature expects the same type of candid and forthright behaviour on the part of the assessee. Assessee himself is required to keep proper account of the credit availed of and utilised. In case of mistake, even assessee himself can correct the mistake under intimation to the department.
(d) In cases governed by Section 11-A of the Act and Rules 56A of the Rules, the assessee as well as the Department may start with suspicion. The assessee may feel that the Department is trying to exact the property of the individual citizen without authority of law and even when it is authorised by law the same is being exacted unlawfully and in unjust manner. The Department may starts with the premise that so long as the assessee can, he will never pay the legitimate excise duty payable to the State. Such suspicion cannot be the basis as far as the MODVAT scheme is concerned. MODVAT scheme rests on the trust and goodwill of both the sides. It is a relationship of mutual trust. It is not a relationship of mutual distrust.
(e) Thus it is evident that the MODVAT scheme and the provisions contained therein are a special provision. The special scheme regarding availing of the MODVAT credit provides its own special provision with regard to the steps to be taken in case of wrongful availment of credit.
12. Whenever a general provision is in operation and thereafter knowing fully well that the general provision is in operation, the legislature enacts a special provision, it has got to be presumed that the legislature did not intend the general provision to apply to the special cases culled out by it. The general provision made in that sphere has got to yield to the special provision. This is one of the basic principles of interpretation of statutes. In this connection reference may be made to a decision of the Supreme Court statutes. In this connection reference may be made to a decision of the Supreme Court in the case of J.K.C.S. & W. Mills v. State of UP reported in AIR 1961 Supreme Court 1170. In Para 9 of the judgment the Supreme Court has held that specific provision prevails over the general provision and the general provision applies only to such cases which are not covered by special provision. The rule applies to both type of cases, that is, while interpreting different provisions in different statutes as well as in the same statute. The Supreme Court has observed as follows :-
'The learned Attorney-General seemed to suggest that while this rule of construction is applicable to resolve the conflict between the general provision in one Act and the special provision in another Act, the rule cannot apply in resolving a conflict between general and special provisions in the same legislative instrument. This suggestion does not find support in either principle or authority. The rule that general provisions should yield to specific provisions is not an arbitrary principle made by lawyers and judges but springs from the common understanding of men and women that when the same person gives two directions one covering a large number of matters in general and another to only some of them his intention is that these latter directions should prevail as regards these while as regards all the rest the earlier direction should have effect.'
12A. Similar view is taken by the Supreme Court in the case of State of Gujarat v. Patel Ramjibhai Danabhai reported in (1979) 3 Supreme Court Cases 347. In that case, the legality and validity of provisions of Section 33(6) of the Bombay Sales Tax Act, 1959 [corresponding to Section 14(6) of Bombay Sales Tax Act, 1953] came up for consideration before the Supreme Court. It was contended that no time-limit was provided in this specific provision, while for taking actions in other cases, Section 35 provided time-limit and therefore the provisions should be held to be ultra vires. The Supreme Court applied the maxim - GENERALIA SPECIALIBUS NON DEROSANT and negatived the contention. The Supreme Court held that the provision of S. 33(6) of the Bombay Sales Tax Act, 1959 was confined to a particular class of tax evaders while Section 35 of the Bombay Sales Tax Act, 1959, was a general provision dealing with escaped assessment or under assessment. Thus whenever the legislature makes general provision and in the same sphere makes a special provision which would be applicable to specific cases, the provision relating to specific cases would be applicable to specific cases and not the provision relating to general cases.
13. Thus in view of the first principles as regards the interpretation of statutes and in view of the aforesaid two decisions of the Supreme Court, the contention that the provision of Section 11-A of the Act as regards the period of limitation should be read into Rule 57-I as it stood prior to the amendment cannot be accepted.
14. The learned counsels for the petitioners have relied upon the following four decisions in support of their contention that the provisions of Section 11-A of the Act should be read into the provisions of Rule 57-I of the Rules as it stood prior to the amendment.
1. Collector of Central Excise, Baroda v. Kosan Metal Products Ltd., reported in 1988 (38) ELT 573 (SC).
2. Zenith Tin Works Pvt. Ltd. v. Union of India, reported in 1986 (23) ELT 357 (Bom.).
3. Premier Tyres Ltd. v. Collector of Central Excise, Cochin, reported in 1986 (26) ELT 42 (Tribunal).
4. 1979 (4) ELT 407 (AP).
The first decision of the Supreme Court is pertaining to the demand made on the basis of entry in monthly RT 12. In that case the Supreme Court held that the provisions of Section 11-A of the Act were applicable and the larger period of limitation of 5 years under the proviso to Section 11-A of the Act was held to be inapplicable. In that case no question arose as to how the two different provisions in the same statute, one general and another specific, are to be harmoniously construed. Therefore this decision is of no help to the petitioners. Similarly, other three decisions are also of no help to the petitioners because the provisions of the Act and the Rules which came up for consideration before the High Courts and the Tribunal were general provisions and not special or specific provisions as contained in the MODVAT scheme. For these reasons all these decisions are not required to be dealt with in further details.
15. The learned counsels for the petitioners contended that Rule 57-I was amended with effect from October 6, 1988. Sub-rule (1) of Rule 57-I was substituted by introducing fresh sub-rule (1). Sub-rule (2) of Rule 57-I has not been touched by the amendment and there is no saving clause in the amendment of the Rules. In view of this change in law, it is submitted that the proceedings initiated under the provisions of Rule 57-I of the Rules as it stood prior to the amendment would lapse. In support of this contention, the learned counsels appearing for the petitioners have relied upon a decision of the Supreme Court in the case of Royala Corporation Pvt. Ltd. v. The Director of Enforcement & Ors., reported in AIR 1970 SC 494. In that case the Supreme Court was concerned with the effect of a repeal (by efflux of time) of the provisions of temporary statute. Certain provisions of Defence of India Rules, 1962 ceased to be in operation by efflux of time. Thereafter, under the provisions of law which had ceased to be in operation, criminal complaint was filed against the accused. The accused challenged the maintainability of the complaint itself on the ground that the statute under which he is alleged to have committed offence was no longer in force when the complaint was filed. In this context, the Supreme Court held that when a temporary statute stands repealed either by efflux of time or by operation of law the proceedings initiated under the repealed statute would not survive. In that case, the proceedings were not initiated under a permanent statute. The proceedings were initiated after repeal (by efflux of time) of a temporary statute. In the instant case, we are not concerned with repeal of a statute. The question before the Court is as to what is the effect of amendment of part of a rule. Again, the Court is not concerned with the provisions of any temporary statute. The provisions of 'the Act' and 'the Rules' cannot be said to be temporary statute. A temporary statute would be one, the operation of which is limited by the legislature itself for a limited specified period. There is nothing in the Act or in the Rules to indicate that the legislature desired that the Act and the Rules remain in operation for a limited period only. Moreover, this Court is concerned with the effect of amendment and not of repeal. Further, even on facts the question before the Supreme court in Royala Corporation case (supra) was altogether different from the question that has arisen before this Court. In that case, the proceedings by way of filing complaint was initiated after the statute (Defence of India Rules) ceased to be in operation. In these petitions, it is nobody's case that the show cause notices have been issued after the provisions of the rule was repealed or ceased to be in operation. For the aforesaid reasons, the decision of the Supreme Court in the case of Royala Corporation (supra) is of no help to the petitioners.
16. The learned counsel appearing for the petitioners have relied upon two decision of this High Court, one in the case of Mahendra Mills Ltd. v. Union of India, reported in 29(2) GLR page 906 and another in the case of Amit Processors Pvt. Ltd. v. Union of India & Ors., reported in 1985 (21) ELT 24 (Guj.). In the aforesaid two decisions, the effect of repeal of Rules 10 and 10A of the Rules has been considered, These two decisions are of no help to the petitioners for the following reasons :
(1) Both the aforesaid decisions, in the case of Mahendra Mills Ltd. and Amit Processors Pvt. Ltd., rendered by two different Division Benches of this High Court, have followed the decision of the Supreme Court in the case of Royala Corporation Pvt. Ltd. (supra). For the reasons stated hereinabove the decision of the Supreme Court in the case of Royala Corporation (supra) is not applicable to the facts and circumstances of the cases on hand. For the same reasons, these two decisions of this High Court are also not relevant and not applicable to the facts and circumstances of the cases on hand. These decisions cannot be treated as precedent for deciding the question as to what is the effect of partial amendment of Rule 57-I of the Rules.
(2) In the instant case, the Court is concerned with the amendment of the Rules and not with the repeal of the Rules. These two rules (Rules 10 and 10A) were repealed entirely with effect from November 16, 1980 and it was not the case of amendment of part of a rule.
(3) The Court is not to consider the effect of repeal of Rules 10 and 10A of the Rules. The Court is concerned with the effect of amendment of part of Rule 57-I brought in operation from October 6, 1988. Thus the provision which came up for consideration before two different Division Benches of this High Court was altogether different.
(4) There is difference between amendment of rule and repeal of rule or for that matter amendment of any provision of statute and repeal of statute. The contention that there is no difference between amendment and repeal cannot be accepted. The decision of the Supreme Court in the case of Bhagat Ram v. Union of India, reported in AIR 1988 SC 740 does not lay down the principle that there is no difference between amendment and repeal. Head Note 'C' of the report, if read in isolation and out of context, is misleading. But reading the entire decision and particularly paragraphs 17, 18 and 19 of the report it becomes clear that howsoever fine the distinction may be, but there is distinction between amendment of a statute and repeal of a statute. As observed by the Supreme Court itself in Bhagat Ram's case (supra), the amendment is a wider term and includes abrogation or deletion of a provision in an existing statute. Amendment of a statute may be by way of addition alone and there may not be deletion of a single letter of the provision in question. In such cases amendment and repeal can never be same.
(5) As indicated hereinabove, the goal of inquiry is to find out the intention of the legislature in bringing about the change in the law. The goal of the inquiry is not to find out as to whether a particular provision of General Clauses Act, 1897 would be applicable or not. The course we are adopting is in confirmity with the principles laid down in the decisions of the Supreme Court in the case of State of Punjab v. Mohar Singh, reported in 1955 (1) SCR 893, and reiterated in the case of State of Orissa v. H. A. Tulloch & CO., reported in AIR 1964 SC 1284, and again the case of M. S. Shivananda v. K. S. R. T. Corporation, reported in AIR 1980 SC 77.
For the aforesaid reasons, the decisions rendered by this High Court in the case of Mahendra Mills (supra) and Amit Processors (supra) are of no help to the petitioners and they are not required to be gone into in further details. In fairness to the learned counsels appearing for the petitioners it must be stated that during the course of dictation of the judgment Mr. Paresh N. Dave who was present on behalf of Mr. Kamal B. Trivedi for M/s. Trivedi, Dupta & Dave fairly stated that we need not go into the correctness or otherwise of the decisions of this High Court in the case of Mahendra Mills (supra) and in the case of Amit Processors (supra). In view of this concession we do not elaborate our reasons for not following the aforesaid two decisions. However, we may make it clear that we have reservations about the correctness of these two decisions, and we prima facie feel that the relevant decisions of the Supreme Court on the point were not brought to the notice of this Court. However, since these two decisions are not on the point at issue and since the learned counsel appearing for the petitioners made concession as stated above, we are not making elaborate discussion on this point.
17. Here it would not be out of place to refer to a decision of the Supreme Court in the case of State of Orissa v. H. A. Tulloch & Co., reported in AIR 1964 SC 1284. Five Judges Bench of the Supreme Court has, in that case, considered this aspect in Para 21 of the judgment in detail. The Supreme Court has considered the principle on which the saving clause in Section 6 of the General Clauses Act, 1897 is based. The Supreme Court inter alia observed as follows :-
'So far as the statutory construction is concerned, it is one of the cardinal principles of the law that there is no distinction or difference between an express provision and a provision which is necessarily implied, for it is only the form that differs in the two cases and there is no difference in intention or in substance. A repeal may be brought about by repugnant legislation, without even any reference to the Act intended to be repealed for once legislative competence to effect a repeal is posted, it matters little whether this is done expressly or inferentially or by the enactment of repugnant legislation. If such is the basis upon which repeals and implied repeals are brought about it appears to us to be both logical as well as in accordance with the principles upon which the rule as to implied repeal rests to attribute to that legislation which effects a repeal by necessary implication the same intention as that which would attend the case of an express repeal, where an intention to effect a repeal is attributed to a legislature then the same would, in our opinion attract the incident of the saving found in S. 6 for the rules of construction embodied in the General Clauses Act are, so to speak, the basic assumptions on which statutes are drafted.'
In that case demand notices were issued under the Orissa Act which had disappeared by virtue of superior legislation passed by the Union Parliament. Later on the authority of the notices were challenged. The High Court upheld the challenge to the notices. The Supreme Court reversed the decision and upheld that the notices were valid and the amount of fees could be recovered even though the Orissa Act had disappeared by virtue of the superior legislation.
18. In this connection reference may be made to another decision of the Supreme Court in the case of M. S. Shivananda v. K. S. R. T. Corpn., reported in AIR 1980 Supreme Court 77. In Para 12 of the judgment the Supreme Court has inter alia observed as follows :
'In considering the effect of an expiration of a temporary Act, it would be unsafe to lay down any inflexible rule. It certainly requires very clear and unmistakable language in a subsequent Act of the legislature to revive or re-create an expired right. If, however, the right created by the statute is of an enduring character and has vested in the person, that right cannot be taken away because the statute by which it was created has expired. In order to ascertain whether the rights and liabilities under the repealed Ordinance have been put an end to by the Act, 'the line of enquiry would be not whether' in the words of Mukherjee, J. in State of Punjab v. Mohar Singh, (1955) 1 SCR 893, 'the new Act expressly keeps alive old rights and liabilities under the repealed Ordinance but whether it manifests an intention to destroy them'.'
In view of the aforesaid decisions of the Supreme Court, what is required is to ascertain the intention of the legislature in bringing about the amendment in Rule 57-I of the Rules. The question to be posited, examined and answered is :- Did the legislature manifest an intention to destroy all that was done under the unamended provision of Rule 57-I Did the legislature intend to grant general amnesty to all those who were alleged to have taken MODVAT credit wrongfully or had utilised the same in wrongful manner
18A. Rule 57-I of the Rules provided for taking measures in case of wrongful availment of credit. Clause (1) of the rule has been substituted by adding fresh clause (1). By introducing this amendment, what did not legislature do The legislature simply made detailed and precise provision with regard to period of limitation and the show cause notice to be issued and for affording an opportunity of being heard to the assessee in certain case. As indicated hereinabove, the provisions with regard to the limitation and the provisions with regard to affording an opportunity of being heard were required to be read into the rules. Thus, that which was a implicit in the rule has been made explicit with little more precision, by introducing the amendment. By introduction of the amendment in the rule, by no stretch of reasoning it can be said that the legislature wanted to give amnesty to persons who are alleged to have availed of MODVAT credit wrongfully. There is no indication whatsoever either in the history of the particular provisions of the Rules or in the subsequent steps taken by the legislature or in the context of the rules to indicate that the legislature desired to give pardon to the assessees who were alleged to have taken MODVAT credit wrongfully.
19. There is always a presumption that the legislature never intends evasion of a provision of statute. The Courts would be slow to put construction on the provision of the statute which would otherwise defeat legislative purpose. The legislative purpose in enacting the Act and the Rules is to levy excise duty on excisable goods in accordance with law. It is the duty of the Court to see that the Act is upheld and the object with which the Act is enacted is fulfilled. In other words, the Court is required to uphold the integrity of the Act. In this connection reference may be made to Bennion's Statutory Interpretation (1984) page 718 which reads as follows :-
'An Act has its integrity, which the Courts seek to uphold. They turn against a construction which would enable persons to undermine this integrity by using the scheme of the Act in unintended ways.'
If the constriction canvassed by the learned Counsels for the petitioners is adopted and if it is held that the action taken under the unamended provisions of the Rules would lapse on account of the amendment having been brought in part of the rule, the integrity of the Act itself would be undermined. Such a construction cannot be adopted and such cannot be the intention of the legislature.
20. In above view of the matter, there is no substance in any of the contentions raised by the learned counsels appearing for the petitioners. Hence the challenge to the legality and validity of the Rules fails.
21. In view of the aforesaid position, how is it necessary for us to go into the details of factual aspects in each and every case There is no dispute with regard to the fact that the Assistant Collector can and he is bound to decide the disputes with regard to the show cause notices issued against each one of the assessee. Similarly, appeal is provided against the order of the Assistant Collector. Therefore, it would not be proper for us to go into individual facts of the case of each assessee and decide as to whether the petitioner had rightly availed of the credit or wrongly availed of the same as alleged by the Department. For the reasons stated by us in the case of Gujarat Heavy Chemicals Ltd. (Special Civil Application No. 6149 of 1989, decided on September 12, 1989) wherever there is an alternative remedy available under the provisions of the statute, it would be proper to direct the petitioners to approach before the appropriate departmental authority and to agitate their grievance before such departmental authority. In cases where the petitioners have not filed appeal against the order passed by the Assistant Collector, it would be open to the respective petitioners to file appeal before the appropriate appellate authority. If such appeal is filed on or before March 22, 1990, the same shall be treated as having been filed within time and shall be decided on merits without raising the plea of limitation.
22. As far as the petitioners who have not replied to the show cause notice and have rushed to this Court, they will be at liberty to file reply to the show cause notices. If reply is filed on or before March 22, 1990 the same shall be treated as having been filed within time and shall be decided on merits without raising the plea of limitation. In case where reply is filed to the show cause notice and the decision thereon is not rendered by the Assistant Collector, it will be open to the Assistant Collector to proceed further with the same in accordance with law and pass order on merits.
23. It will be open to all the petitioners to apply before the appropriate departmental authority for stay of the recovery of the amount in question. If and when such application is filed, the same shall be decided on merits in accordance with law. However, in facts of the case, it is directed that the ad interim relief granted earlier shall continue till March 22, 1990.
24. Subject to the aforesaid observations and directions, all the petitions are rejected. Rule discharged.