Case Note & Summary
The Supreme Court heard an appeal by special leave against the judgment of the Allahabad High Court dismissing a writ petition challenging a search warrant issued by the Assistant Collector, Central Excise, Allahabad. The appellant, a public limited company owning a factory at Varanasi manufacturing chemicals including ammonia, had paid excise duty at the concessional rate of Rs. 25 per metric ton for ammonia used in fertiliser manufacture between May 1962 and March 1964. The Central Excise authorities received information that part of the ammonia had been utilised for purposes other than fertiliser manufacture, attracting the higher rate of Rs. 125 per metric ton, and considered that there had been evasion of duty. On May 11, 1968, the Assistant Collector issued a warrant for search and seizure, pursuant to which the factory premises were searched and documents seized. The appellant filed a writ petition in the High Court, which was dismissed by a Single Judge and upheld by a Division Bench. Before the Supreme Court, three contentions were raised: first, that Section 12 of the Central Excises and Salt Act, 1944 was void for excessive delegation because it empowered the Central Government to make "modifications and alterations" to the applied provisions; second, that after the repeal of the Sea Customs Act, 1878, it was not open to apply Section 105(1) of the Customs Act, 1962; and third, that the warrant was not issued in accordance with Section 105(1) of the Customs Act, 1962. The Court rejected the first contention, holding that the power to restrict and modify does not include the power to make essential changes; alterations are confined to minor character and no change in principle. The notifications at issue made no changes falling within "alterations". On the second contention, the Court applied Section 8(1) of the General Clauses Act, 1897, which provides that references to repealed and re-enacted provisions are construed as references to the new provisions unless a different intention appears. It rejected the incorporation by reference argument, stating that Section 12 only delegates limited power to draw upon the provisions of the Sea Customs Act. On the third contention, the Court found that the Assistant Collector had relevant material to form a belief under Section 105(1). Accordingly, the Supreme Court dismissed the appeal and upheld the validity of the search warrant and the notifications.
Headnote
A) Constitutional Law - Excessive Delegation - Delegated Legislation Validity - Central Excises and Salt Act, 1944, Section 12 - The appellant challenged Section 12 as void for excessive delegation because it permitted "modifications and alterations" of applied provisions. The Supreme Court held that the power to restrict and modify does not import the power to make essential changes; alterations are confined to minor character and no change in principle is involved. The notifications at issue made no changes falling within the word "alterations"; no excessive delegation or change in legislative policy arose. Held that Section 12 is not void. B) Interpretation of Statutes - Repeal and Re-enactment - Section 8(1) General Clauses Act, 1897 - Whether after repeal of Sea Customs Act, 1878, the Customs Act, 1962 could be applied under Section 12 of the Excise Act. The Court held that Section 8(1) General Clauses Act provides that references to repealed provisions are construed as references to re-enacted provisions unless a different intention appears; therefore the Customs Act, 1962 can be read in place of the Sea Customs Act, 1878. The Court rejected the incorporation by reference argument, holding that Section 12 only delegates limited power to draw upon provisions. Held that the notification applying Section 105(1) of the Customs Act, 1962 was valid. C) Customs Law - Search and Seizure - Reason to Believe - Customs Act, 1962, Section 105(1) - The appellant contended that the Assistant Collector issued the warrant without due application of mind. The Court examined the material and held that there was information of duty evasion; it could not be said that the Assistant Collector had no relevant material upon which the belief could be founded. Held that the search warrant was valid.
Issue of Consideration
Whether Section 12 of the Central Excises and Salt Act, 1944 was void for excessive delegation; whether after repeal of the Sea Customs Act, 1878, the Central Government could apply Section 105(1) of the Customs Act, 1962 under Section 12 read with Section 8(1) of the General Clauses Act; whether the Assistant Collector issued the search warrant after due application of mind to relevant materials under Section 105(1) of the Customs Act, 1962
Final Decision
Appeal dismissed; Supreme Court upheld the validity of the search warrant and the notifications. Section 12 of the Central Excises and Salt Act, 1944 was held not void for excessive delegation; the Customs Act, 1962 was validly applied under Section 8(1) of the General Clauses Act; and the Assistant Collector had relevant material to form a belief under Section 105(1) of the Customs Act, 1962.
Law Points
- Power to restrict and modify does not import power to make essential changes
- alterations confined to minor character
- no change in principle
- Section 8(1) General Clauses Act applies to references to repealed and re-enacted provisions
- Section 12 Central Excises and Salt Act delegates limited power to draw upon Sea Customs Act provisions
- search warrant under Section 105(1) Customs Act requires reason to believe based on relevant material
