MIS. BHUWALKA STEEL INDUSTRIES LTD. & ANO!HER versus UNION OF IND!A & OTHERS

Citation: [2017] 2 S.C.R. 993 · Decided: 24-03-2017 · Supreme Court of India · Bench: JASTI CHELAMESWAR · Disposal: Matter referred to larger bench

Cited by 3 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

[2017] 2 S.C.R. 993 
MIS. BHUWALKA STEEL INDUSTRIES LTD. & ANO!HER 
A 
v. 
UNION OF IND!A & OTHERS 
(Civil Appeal No.7823 of2014) 
MARCH 24, 2017 
[J. CHELAMESWAR AND ABHAY MANOHAR SAPRE, JJ.] 
Central Excise Act, 1944 - s.3A - Purpose of inco11Jorailng 
s. 3A - Discussed. 
Central Excise Rules. 1944 - rr. 96ZP(3) and 96Z0(3) -
Whether an assessee who chooses once to pay duty in terms of 
r. 96ZP(3) can be compelled to pay duty calculated in accordance 
with the said rule for all times to come without any regard to actual 
production - Department relied on Venus Castings and Supre~1e Steel 
case rendered by Supreme Court to stale that the assessee who makes 
a choice once to avail the scheme under r. 96ZP(3) cannot go beyond 
his choice - However, in both these cases, Supreme Court was 
dealing with 1: 96Z0(3) - In Venus Castings, a r~ference was made 
to r. 96ZP and it was observed that r. 96ZO and 1: 96ZP provide for 
procedure to be followed by the mamifacll/rer of ingots and billets 
and hot re-rolled products and the scheme envisaged tlv1t these 
provisions was identical - Held: There are broad similarities between 
these rules but they are not identical -
The only similarity between 
r. 96Z0(3) and r. 96ZP(3) is that both the Rules seek to eliminate 
the benefit of the procedure u!s.3A(4) of the Act in cases of those 
assessees who choose to opt for levy and collection of excise duty 
in accordance with the sub-rules (3) which are exceptions to the 
general Rules of levy and collection of duties provided u/n: 96ZO 
and 96ZP -
Therefore, it is difficult to accept the submission of the 
Department that the issue is covered by the judgments of t/:is Court 
rendered in Venus Castings and Supreme Steels - These two 
;udgments require a ji1rther examination - Apart from that, these 
;udgments did not deal with vires of r. 96ZP(3} - However. in view 
of the fact that Supreme Steels is a decision rendered by a Bench of 
three Judges, it is deemed appropriate that the question of law be 
settled by a Bench of an appropriate strength - Matter referred to 
larger bench - Hot re-rolling Steel Mills Annual Capacity 
Determination Rules, 1997 - 1:5 - Central Excise Act, 1944 -
993 
B 
c 
D 
E 
F 
G 
H 
994 
SUPREME COURT REPORTS 
[2017] 2 S.C.R. 
A 
s. 3A - Reference to larger bench. 
B 
c 
D 
E 
F 
G 
H 
Interpretation qf statutes: 
Legal fiction and presumption - Distinction between - Held: 
A fiction assumes somethilig which is known to be false, while 
presumption assumes something which may possibly be true. 
Legal fiction - Only sovereign legislative bodies can create 
legal fiction but not a subordinate /'!"' making body. 
Referring the matter to larger bench, the Court 
HELD: 1. Parliament from time to time took notice f!f the 
fact that some of the manufacturers/producers of excisable goods 
are evading duty by suppressing the information of the q11a•1tum 
of actual production/manufacture of goods undertaken by them. 
Therefore, Sectio113A was introduced which authorised a diff~rent 
mode of levy, assessment and collection of excise duty on notified 
goods. Under the Scheme of Section 3A, the need to constantly 
monitor the actual quantum of notified goods produced/ 
manufactured is obviated by declaring that the ACP of factory is 
deemed to be the annual production of the factory for the purpose 
of levy and collection of excise duty. [Para 24] [1010-B-C) 
2. llot re-rolling Steel Mills Annual Capacity Determination 
Rules, 1997 prescribed the procedure by which the ACP is to be 
determined. Rule 3 prescribed a formula based 011 various factors 
mentioned therein for the determination of the ACP. The 
grievance of appellant is against Rule 5 which mandates that the 
ACP determined in accordance with Rule 3 be discarded i:t the 
circumstances mentioned under Ruic 5. Rule 5 stipulated that if 
the ACP determined in accordance with the preceding four Rules 
is less than the actual production of a particular assessee for the 
financial year 1996-1997, the authority determining the ACP is 
required to abandon the figure of ACP arrived at by employing 
the procedure contained in Rules 1 to 4 and adopt the actual 
production achieved by the assessce for the financial year 1_996-
97 to be the ACP of that assessce. The words "sflal/ be deemed 
to be" occurring in both Section 3A(2) and Ruic 5 appear to c;eate 
a fiction. But on a true and proper construction they do not create 
a legal fiction. Section 3A(2) only embodies a

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