Case Note & Summary
The Supreme Court was hearing a reference arising from a Division Bench judgment in Bhuwalka Steel Industries Ltd. v. Union of India. The original challenge was to the vires of Rule 5 of the 1997 Rules, which was alleged to be ultra vires Section 3A of the Central Excise Act and violative of Article 14 of the Constitution. The Division Bench, instead of deciding that issue, referred a different question to a larger Bench: whether an assessee who once opts to pay duty under Rule 96-ZP(3) can be compelled to pay duty under that Rule for all times without regard to actual production. The assessee's counsel, Mrs. Nalini Chidambaram, submitted that she was not challenging that question and that the original challenge was to Rule 5. The Court held that the referred question did not arise on the facts and was not disputed by the assessee. Accordingly, the reference was answered by stating that the question posed did not arise, and the matter was remitted to a Division Bench to decide the original issues raised in para 20 of the Bhuwalka judgment, along with other issues in the tagged matters.
Headnote
A) Central Excise - Reference to Larger Bench - Question Not Arising on Facts - The Division Bench referred a question regarding compulsion to pay duty under Rule 96-ZP(3) without regard to actual production, but the assessee did not dispute that question and the original challenge was to the vires of Rule 5 of the 1997 Rules. Held that the referred question did not arise on facts and the matter is remitted to the Division Bench to decide the original issues. (Paras 4-5) B) Central Excise - Vires of Rule 5 of the 1997 Rules - Challenge under Section 3A of the Central Excise Act, 1944 and Article 14 of the Constitution - The original challenge was that Rule 5 creates two classes of manufacturers and imposes irrational tax burden. The Division Bench had not answered this question. Held that the matter be sent back to the Division Bench to decide these issues. (Paras 1, 5)
Issue of Consideration
Whether the question referred to a larger Bench (whether an assessee who chooses once to pay duty under Rule 96-ZP(3) can be compelled to pay duty calculated under that Rule for all times without regard to actual production) arose on the facts and was disputed by the assessee.
Final Decision
The Supreme Court answered the reference by stating that the question posed did not arise on the facts and was not disputed by the assessee. The matter is sent back to a Division Bench to decide the questions stated in para 20 of Bhuwalka Steel Industries Ltd. v. Union of India, along with other issues in the tagged matters.
Law Points
- Rule 5 of the 1997 Rules
- Section 3A of the Central Excise Act
- 1944
- Article 14 of the Constitution of India
- Rule 96-ZP(3) of the Central Excise Rules
