ORDER
1. These two writ petitions may be considered together since they involve common issues both on facts and law. W.P. No. 9525 of 1982 has been filed for issue of A Writ of Certiorari to quash the order of the second respondent dated 4-10-1982 in A. No. 289/82(M)/C.No. V/27/13/82 whereunder the second respondent rejected the appeal filed by the writ petitioner against the order of the third respondent dated 17-7-1982. W.P. No. 9526 of 1982 is for a writ Certiorarified Mandamus to quash the consequent demand made by the fourth respondent in Demand No. V/27/2/2/77 Serial No. E/63-114531 dated 3-8-1982 and forbearing him from enforcing the demand made therein.
2. Before dealing with the various contentions raised, the facts of the case may be briefly stated as follows : The Writ petitioners were having a Rolling Mill where they convert Aluminium Ingots into Redraw Rods which are the raw material for Aluminium conductors. The petitioners have been licensed under the provisions of the Central Excise Rules, 1944 and they enjoy proforma credit under Rule 56-A of the said Rules. The Superintendent, Madras Sough Range of the Department undertook inspection and verification of the accounts of the petitioners and it appeared to have revealed a shortage of 102.426 metric tonnes of aluminium ingots for the period from 26-3-1970 to 11-8-1971 for which the writ petitioners availed the proforma credit. The Superintendent also issued a show cause notice on 6-4-1972 calling upon them to show cause as to why duty at 25% B.E.D. Plus 20% S.E.D. amounting to Rs. 1,22,603.89 should not be demanded. A detailed reply dated 3-5-1972 was submitted wherein the writ petitioners explained that the shortage was due to melting loss to the tune of 2% which is an invisible loss, unaccounted scrap, rejects, etc. and metal in the melter and holder. Thereafter, another notice was issued on 28-8-1975 calling upon the petitioners to submit once again an explanation to the earlier notice, since there was jurisdictional change. Again on 8-9-1975 a detailed reply has been sent and a personal hearing was also given on 16-10-1975.
Thereafter till 1977, nothing happened when again a show cause notice dated 18-1-1977 was issued giving a fresh personal hearing. It is after all these, the third respondent passed the order dated 17-7-1982 holding that the writ petitioners are liable to pay duty on the shortage of 70.313 m.ts. of aluminium ingots not duly accounted for by them under Rule 56-A(3)(v) and Rule 9-A(3A) of the Central Excise Rules, 1944. Thereupon, the writ petitioners filed an appeal before the second respondent who, by the impugned order dated 4-10-1982, rejected the appeal. Against this order, W.P. No. 9525 of 1982 has been filed. While so, the fourth respondent issued a demand dated 3-8-1982 consequent upon the order of the third respondent which is being challenged in W.P. No. 9526 of 1982.
3. Mr. Habibullah Badsha, learned counsel appearing for the petitioners made the following submissions :- (a) with the omission of Rule 10 and Rule 173J with effect from 17-11-1980 the impugned proceedings as well as consequential demand made are totally without jurisdiction. Assuming that the power under the rules ensure, the proceedings passed beyond the period of three months in a nullity; (b) Section 11A, which was introduced with effect from 17-11-1980, makes it clear that the proceedings contemplated therein could be taken only within a period of six months from the relevant date; (c) If the department decides to have the benefit of the extended period of limitation stipulated in the proviso to Section 11A, the necessary basic averments required for attracting the proviso should have been pleaded in the very show cause notice. On the fact of this case, neither the show cause notice not the impugned order contains any such averments and consequently the benefit of the proviso is not available to the Department; (d) The Department failed to properly apply its mind and give due deductions as claimed in arriving at the so-called shortages; and (e) the valuation adopted is also arbitrary. Learned Counsel did not elaborate the last two points, but submitted that those points would arise for consideration in detail only after a decision is rendered on the other points and the plea of the petitioner is rejected.
4. Mr. P. Narasimhan, Senior Central Government Standing Counsel appearing for the respondents submitted that the plea of limitation is untenable, that as a person enjoying the proforma credit under Rule 56A, failure to account the goods received tantamounts to clandestine removal in violation of Rules 9(1), 52A, 173P and 173G attracting also a penalty under Rule 56A(3)(v) of the Rules and in any event in respect of a demand under Rule 10, the time limit is one year when Rule 10 is read with Rule 173J prior to 6-8-1977 and not three months as contended by the counsel for the writ petitioners. Learned counsel for the Department, therefore, submitted that not withstanding the omission of rule 10 etc. the impugned proceedings and the consequential demand are quite in accordance with law.
5. As far the contention based on the omission of the rules concerned, learned counsel for the writ petitioners referred to the decisions reported in Rayala Corpn. v. Director of Enforcement (A.I.R. 1970 S.C. 494 at page 502) M/s. Ajanta Paper Products v. The Collector of Central Excise Collectorate and another (1982 ELT 201), Amit Processors Pvt. Ltd. v. Union of India (1985 (21) ELT 24 at 27) and Madura Coats Ltd., v. Assistant Collector of Central Excise (1990 (48) ELT 321). In meeting the said submissions, Learned Counsel for the Department brought to my notice the decision reported Gwalior Rayon Mfg. (Wvg.) Co. v. Union of India and others (1982 ELT 844 M.P.) which took a view different from the view taken in the judgment relied upon by the learned counsel for the writ petitioners.
6. After giving my careful consideration to the decisions cited by the respective counsel, I am inclined to agree with the ratio laid down in M/s. Ajanta Paper Products v. The Collector of Central Excise and another (1982 ELT 201), and Amit Processors Pvt. Ltd. v. Union of India and others (1985 ELT 844). I consider that in the light of the categorical pronouncement of the Supreme Court in the decision reported in Rayala Corpn. v. Director of Enforcement (A.I.R. 1970 S.C. 494) the ratio of which will squarely apply to the case on hand, any action taken under the rules and Amit Processors Pvt. Ltd. v. Union of India (1985 (21) ELT 24) in preference to the ratio laid down in the decision in Gwalior Rayon Mfg. (Wvg.) Co. which stood omitted before the action culminated into a final order, will lapse and the proceedings also initiated will not survive the omission of rules. This is on account of the fact that Sec. 6 of the General Clauses Act will have no application in respect of a repeal or omission of a rule as in this case. The submission on behalf of the Department that Section 11A of the Act, which has been brought into force simultaneously with the omission of the rules, saves the action initiated by them during the currency of the rule is not acceptable.
It is well accepted principle of common law rule that the consequences of even the repeal of a statute are very drastic and that except in respect of transactions, past and closed, a Legislation after its repeal, is completely obliterated as if it had never been enacted. The inevitable conclusion of the same is to destroy the inchoate rights and all causes of action that might have arisen under the repealed legislation. Therefore, except in respect of cases where proceedings were commenced, pursued and brought to a finality before the repeal or omission, no proceedings under a repealed provision of law can be either commenced or continued after its repeal or omission. It is only to avert such drastic consequences and avoid serious anomalies the General Clauses Act, 1987 contains a specific provision in the form of Section 6 to save the rights accrued as well as the right to proceed in respect of such right accrued. Unfortunately, a rule made under an act cannot be equated to the provisions of the Act itself and in a case like this, where one rule is omitted or repealed by another rule, on the very terms of Section 6 of the General Clauses Act, the same will not be attracted. In such cases, it would have been well open to the legislature to introduce a special saving clause on the lines of the provisions contained in Section 6 of General Clauses Act, 1987. It is an indisputable fact that no such saving clause has been enacted to deal with a situation arising out of an omission or repeal of a rule in general or with reference to the omission of the particular rule in question in this case. I consider that in the absence of a specific saving provision on lines similar to Section 6 of the General Clauses Act, 1897, the omission of a rule only leads to an inevitable conclusion that the omitted rule cannot be relied upon for initiating any action afresh or for continuing the action already initiated even though the said action relates to the period when the rule was in force.
7. I am not prepared to accept the submission of the learned counsel for the respondents that the view expressed in Gwalior Rayon Mfg. (Wvg.) Co. v. UOI and others (1982 (10) ELT 844) should be accepted in preference to the view expressed in M/s. Ajanta Paper Products v. The Collector of Central Excise Collector and another (1982 ELT 201), Amit Processors Pvt. Ltd., v. Union of India (1985 (21) ELT 24). From the perusal of judgment rendered in Gwalior Rayon Mfg. (Wvg.) Co. v. UOI and others (1982 (10) ELT 844), it is seen that the reasoning rested on the principle that the rules made under a stature must be treated for all purposes of construction or obligation exactly as if they were in the Act and are to be of the same effect as if contained in the Act for all purposes of construction or obligation. The Apex Court of the Country had an occasion to consider the effect of a provision which stipulated that regulations and rules made under the Act would have the effect “as if enacted in this Act” in the decision reported in Chief Inspector of Mines v. Karamchand Thapper and at page 23 of the Report (SCR), it was held as follows :-
“The true position appears to be that the Rules and regulations do not lose their character as rules and regulations, even though they are to be of the same effect as if contained in the Act. They continue to be rules subordinate to the Act, and though for certain purposes, including the purpose of construction they are to be treated as if contained in the Act, their true nature as subordinate rule is not lost.”
Consequently, the rules made under a statue do not lose their true nature as subordinate legislation and raised to the status of an enactment to attract the application of Section 6 of the General Clauses Act.
8. Kanakaraj, J. has also taken a similar view in the decision reported in Madura Coats Ltd., v. Asstt. Collector of Central Excise (1990 (48) ELT 321). Though before the learned Judge, the Judgment referred to above do not appear to have been placed for consideration, the categorical pronouncement of the learned Judge on this point also obliges me to take the stand which I have taken. Consequently, I am of the view that the impugned proceedings passed long after the omission of rules in question are liable to be set aside as being totally without jurisdiction. In the light of my conclusion as above, there is no need to decide the other issues raised relating to the available period of limitation in respect of instant case as well as the issues raised on merits. Consequently, the impugned proceedings are quashed. The writ petitions are allowed. But there will be no order as to costs.