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CASE NO.: Appeal (civil)  5109 of 2002

PETITIONER: M/s. Jay Mahakali Rolling Mills

RESPONDENT: Union of India & Ors

DATE OF JUDGMENT: 06/08/2007

BENCH: Dr. ARIJIT PASAYAT & LOKESHWAR SINGH PANTA

JUDGMENT: J U D G M E N T

[With Civil Appeal No. 855 of 2006]

Dr. ARIJIT PASAYAT, J.

1.      Challenge in these appeals is to the order passed by the  Division Bench of the Gujarat High Court dismissing the writ  petition filed against the orders of the Customs, Excise &  (Gold) Control Appellate Tribunal, West Regional Bench, at  Mumbai (in short ’CEGAT’).   

2.      Background facts in Civil Appeal No.5109 of 2002 in a  nutshell are as follows:

       A show-cause notice was issued to the appellant alleging  that the appellant was not entitled to the exemption under  Notification No.208/83-CE dated 1.8.1983 on the final  product falling under Tariff Item No.25(9)(ii).  Allegation was  that the appellant M/s Jay Mahakali Rolling Mills had  contravened the provisions of Rule 174 of the Central Excise  Rules, 1944 (in short the ’Rules’) read with Section 6 of the  Central Excise and Salt At, 1944 (in short the ’Act’) and Rules  173-B; 53 read with 173-G(4); 9(1), 49, 52-A read with 173- G(1), 173-G(2) and 174-F; 54 read with 173-F(3) of the Rules  and thereby committed the offence of the nature described in  clauses (a), (b), (c) & (d) of sub rule (1) of Rule 173(Q) of the  Rules by reasons of wilful misstatement, suppression of facts  with intent to evade payment of central excise duty. The  appellant was, therefore, asked to show-cause as to why  Central Excise Duty amounting to Rs.12,67,006.19, on  3473.705.2.2 MT excisable goods i.e. rolling products  manufactured and cleared by it without payment of duty for  the period 23.8.1984 to 31.8.1987 should not be recovered  from it under Rule 9(2) of the Rules read with proviso to sub- section(1) of Section 11-A of the Act.  They were also required  to show-cause as to why penalty should not be imposed under  clauses (a), (b), (c) and (d) of sub Rule (1) of  Rule 173-Q and  Rule 9(2) of the Rules. In response, appellant submitted that  in Notification No.101/87-C.E. dated 27.3.1987 materials were  specified as inputs in view of the amendment. It was  submitted that there was no ill-intention or suppression of  facts and/or intention to evade duty. Therefore, penalty  cannot be imposed. The Adjudicating Authority rejected the  contention and held that duty and penalty were leviable. The  order was challenged before the CEGAT which dismissed the  appeal. It was held that the amendment made to the

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notification on 27.3.1987 has prospective application and has  no retrospective application as contended by the appellant. It  was further held that items which were earlier included were  specified. Therefore, the stand that the amendment was  merely clarificatory is without any substance. It was held that  duty liable was to be reduced by the duty payable from  27.3.1987 to 31.8.1987 amounting to Rs.2,28.898.80. The  penalty was reduced to Rs.75,000/-.

3.      In the appeal before the High Court stands taken before  the Adjudicating Authority and CEGAT were reiterated. The  High Court by the impugned order held that there was no  basis to accept the contention that the notification was  intended to be given retrospective effect.  The writ petition was  dismissed.

4.      In support of the appeal, learned counsel for the  appellant submitted that the view of the authority, the CEGAT  and High Court cannot be maintained. The amendment  brought about by Notification No.101/87-C.E. dated  27.3.1987 was merely clarificatory. The CEGAT wrongly held  that the said notification was operating with prospective effect.  Material on record pointed to the contrary. Learned counsel for  the respondents supported the orders of the courts below and  the High Court.   

5.      Circular dated 31.3.1987 reads as follows:          "C.B.S.E. CIRCULARS & CLARIFCATIONS ON EXCISE & CUSTOMS

CUSTOMS CIRCULARS

F.No.374/71/86-TRU                      Dated: 31.3.1987 M.O. Fin. (Deptt. Of Rev.)

Subject:        Changes in the customs duty structure in  respect of ships for breaking up falling under  heading No.89.08 and the excise duty  structure in respect of ship breaking scrap  falling under heading Nos. 72.15 and 73.09  regarding.

       In accordance with the customs Notifications Nos.  142/87 to 143/87 and central excise Notification Nos.  101/87 and 103/87, all dated the 27th March, 1987  certain changes have been made in the customs duty  structure relating to ships\026for breaking and excise duty  structure in respect of ship breaking scrap. xxx

6.      Thus, various products like bars and rods made from  such ship breaking scrap would now be exempt from excise  duty.

7.      A bare reading of the circular clearly shows that it was  intended to have prospective effect.

8.      It is to be noted that in the Circular dated 31.3.1987 it  has been stated that the "products like bars and rods made  from such ship breaking scrap would "now" exempt from  excise duty". The effect of the word "now" is that it is to

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operate henceforth.  If the intention was to give retrospective  effect, it would have been stated to be so specifically.

9.      "Retrospective" means looking backward, contemplating  what is past, having reference to a statute or things existing  before the Statute in question. Retrospective law means a law  which looks backward or contemplates the past; one, which is  made to affect acts or facts occurring, or rights occurring,  before it comes into force. Retroactive statute means a statute,  which creates a new obligation on transactions or  considerations or destroys or impairs vested rights.

10.     By the amendment relatable to Notification on 27.3.1987,  items which were earlier not included were specified as inputs  have been included. That being so, the contention that the  amendment merely clarified the notification as it stood prior to  the amendment, is not untenable.

11.     Looked at from any angle the High Court’s order does not  suffer from any infirmity to warrant interference. The appeal is  dismissed.             12.     In view of dismissal of Civil Appeal No.5109 of 2002, Civil  Appeal No.855 of 2006 is dismissed.