Latest Supreme Court Cases
CENTRAL Excise - Section 3A - Omission" being tantamount to a "deletion" is a form of repeal - Interest and Penalty provisions of Rules 96 ZO, ZP,ZQ quashed:
This is a case that only has academic value. Section 3A which empowered the Central Government to charge Excise Duty on the basis of capacity of production in respect of notified goods, was omitted on 11.5.2001 and the question was whether it was saved or not as the Section was omitted and not repealed. The consequent question was whether the Rules 96ZO, 96 ZP and 96 ZQ under Section 3A, even if they were saved could survive after the death of the parent section. The Supreme Court ruled that “Omission" being tantamount to a "deletion" is a form of repeal: On a conjoint reading of the three expressions "delete", "omit", and "repeal", the Supreme Court held that "delete" and "omit" are used interchangeably, so that when the expression "repeal" refers to "delete" it would necessarily take within its ken an omission as well. This being the case, the Supreme Court did not find any substance in the argument that a "repeal" amounts to an obliteration from the very beginning, whereas an "omission" is only in futuro. Once Section 3A is saved, the Rules too survive, but can there be interest and penalty under the rules 96ZO, 96 ZP and 96 ZQ?
The Supreme Court declared that the interest and penalty provisions under the Rules 96ZO, ZP, and ZQ of the Central Excise Rules, 1994 are invalid as:
1. since Section 3A which provides for a separate scheme for availing facilities under a compound levy scheme does not itself provide for the levying of interest, Rules 96 ZO, 96 ZP and 96 ZQ cannot do so and therefore on this ground the appellant has to succeed.
2. A penalty can only be levied by authority of statutory law, and Section 37 of the Act, does not expressly authorize the Government to levy penalty higher than Rs.5,000/. This further shows that imposition of a mandatory penalty equal to the amount of duty not being by statute would itself make rules 96ZO, 96 ZP and 96 ZQ without authority of law.
A large number of appeals was involved in this case and the Supreme Court held in favour of the assessee as far as interest and penalty were concerned.
Please see Breaking News and Shree Bhagavati Steel Rolling Mills vs Commissioner of Central Excise -
Central Excise - EOU - goods manufactured wholly out of indigenous raw materials - Valuation - Central Excise Valuation and not Customs FOB applicable:
As per Notification No. 8/1997 and 23/2003-CE, as they stood then, the duty payable by EOUs for clearance to DTA,when the goods are manufactured wholly out of indigenous raw materials, was equal to the excise duty payable by non EOUs on like goods.
In the case at hand, the goods were not sold but cleared to a sister unit and so the department felt that the value has to fixed based on the export price of similar goods and not 115% of the cost of production. The Tribunal had set aside the orders of the lower authority by reasoning that since the exemption notifications would apply and since what has to be determined under the said notifications is excise duty payable in India, such duty could only be arrived at by applying Rule 8 in cases of captive consumption and that therefore the basis of the show cause notice and the decisions by the original and appellate authorities was incorrect.
Revenue appealed to the Supreme Court and the Apex Court agreed with the Tribunal.
Sold or allowed to be sold - What is the difference? One of the earliest confusions created by our experienced all knowing babus was the usage of certain unnecessary words while drafting the Law related to EOUs about 35 years ago. The duty payable by the EOUs for goods allowed to be sold in the DTA was defined under Section 3. It became farce that goods allowed to be cleared had to suffer the Customs duty, but goods clandestinely removed were allowed a concessional excise duty. After all round litigation, this Section was amended.
Now this “allowed to be sold” has again appeared before the Supreme Court. And the Supreme Court has observed, “The test to be applied under the said notification is whether the goods in question are “allowed to be sold” in India. The aforesaid expression is obviously different from the expression “sold” and does not require any actual sale for the notification to be attracted.”
And nobody told the Supreme Court what this “allowed to be sold” is. This is the problem when you are careless with law drafting and forget history when it takes decades for a case to be decided by the Supreme Court.
This case also has only academic importance.
Please see Breaking News and Commissioner of Central Excise vs Nestle India Ltd -
Central Excise - Branded Chewing Tobacco - exemption to unbranded chewing tobacco - Not relevant whether the brand is own or not::
The assessee was manufacturing branded Gutkha under the brand name "Crane Gutkha". As per Exemption Notification 8/2001-CE, unbranded chewing tobacco was exempted.
The assessee's plea is that since this is the home brand name that brand name belongs to the assessee itself which has to be treated as unbranded. This contention proceeds on the premise that the branded goods belonging to third party only would be treated as branded and insofar as goods sold under brand name belonging to the assessee are concerned, they have to be treated as unbranded.
The Supreme Court found this contention is clearly misconceived and untenable. The definition of ‘brand name' does not limit the brand name to third party brand name. Therefore, the irresistible conclusion would be that once the goods are sold under any brand name, whether that belongs to the assessee or the third party the goods would be treated as branded .
The Revenue had an emphatic win.