PUNJAB NATIONAL BANK versus UNION OF INDIA & ORS.

Citation: [2022] 1 S.C.R. 661 · Decided: 24-02-2022 · Supreme Court of India · Bench: L. NAGESWARA RAO · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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[2022] 1 S.C.R. 661
661
PUNJAB NATIONAL BANK
v.
UNION OF INDIA & ORS.
(Civil Appeal No. 2196 of 2012)
FEBRUARY 24, 2022
[L. NAGESWARA RAO AND VINEET SARAN, JJ.]
Central Excise Rules, 1944: r.173(Q)(2) – Confiscation and
penalty – On facts, issuance of notice to RIL company for evasion
of excise duty and violation of Central Excise Act – Demand of
excise duty confirmed and imposition of penalty u/r. 173(Q)(1) and
order of confiscation of land, building plant and machinery u/
r.173(Q)(2) passed –Subsequently, confiscation order set aside by
the tribunal and the matter remanded back to de novo proceedings
since r.173(Q)(2) had been omitted by notification dated 12.05.2000
– Thereafter, RIL availed credit facilities from the appellant Bank,
mortgaged all its movable and immovable properties, and also
created a charge on the assets and block of the company –
Subsequently, the Commissioner again confirmed the demand of
excise duty, imposed penalty and also ordered for confiscation of
all land, building, plant, machinery of RIL – Besides this, RIL was
also issued notice u/s. 13(2) and also s.13(4) of the SARFAESI Act
since RIL failed to clear loan amount of the appellant Bank – Writ
petition by the appellant Bank challenging the orders of confiscation
– Dismissed by the High Court – On appeal, held: Commissioner of
Customs and Central Excise could not have invoked the powers u/
r. 173Q(2) on 26.03.2007 and 29.03.2007 for confiscation of land,
buildings etc., when on such date, the said r. 173Q(2) was not in
the Statute books, having been omitted by a notification dated
12.05.2000 – Dues of the secured creditor, the appellant- bank,
would have priority over the dues of the Excise Department, as
even after insertion of s. 11E in the 1944 Act w.e.f. 08.04.2011, and
the provisions contained in the SARFAESI Act, 2002 would have an
overriding effect on the provisions of the 1944 Act – Thus, the
confiscation orders quashed – Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002
– Central Excise Act, 1944 – ss. 11E, 38A – General Clauses Act,
1897 – s. 6.
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SUPREME COURT REPORTS
[2022] 1 S.C.R.
Allowing the appeal, the Court
HELD:1. The Commissioner of Customs and Central
Excise could not have invoked the powers under Rule 173Q(2)
of the Central Excise Rules, 1944 on 26.03.2007 and 29.03.2007
for confiscation of land, buildings etc., when on such date, the
said Rule 173Q(2) was not in the Statute books, having been
omitted by a notification dated 12.05.2000. Secondly, the dues of
the secured creditor, i.e. the Appellant- bank, would have priority
over the dues of the Central Excise Department, as even after
insertion of Section 11E in the Central Excise Act, 1944 w.e.f.
08.04.2011, and the provisions contained in the SARFAESI Act,
2002 would have an overriding effect on the provisions of the
Central Excise Act of 1944.The confiscation orders dated
26.03.2007 and 29.03.2007, passed by the Commissioner Customs
and Central Excise are quashed. [Para 47, 48][694-F-H]
2.1 There is no find merit in the submission of the
respondent that notwithstanding the omission of Section 173Q(2)
from the Central Excise Rules, 1944 vide notification dated
12.05.2000, the respondent No. 3 was entitled to continue the
proceedings on account of Section 38A(c) and Section 38A(e) of
the Central Excise Act, 1944, read along with Section 6 of the
General Clauses Act, 1897. [Para 33][686-A-B]
2.2 In the instant case, the proceedings initiated under the
erstwhile Rule 173Q(2) would come to an end on the repeal of
the said Rule 173Q(2) of the Central Excise Rules, 1944.
Respondent counsel’s submission that the proceedings would
be saved on account of Section 38A(c) and 38A(e) of the Central
Excise Act, 1944 and Section 6 of the General Clauses Act, 1897,
is misplaced and lacks statutory backing. Section 6 of the General
Clauses Act, 1897 is applicable where any Central Act or
Regulation made after commencement of the General Clauses
Act repeals any enactment. It is not applicable in the case of
omission of a “Rule”. Hence, the question of applicability of
Section 6 is decided in the negative. Secondly, on the issue of
applicability of Section 38A(c) and 38A(e) of the Central Excise
Act, 1944, it is held that the respondent would not be able to
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enjoy its protection because Section 38A(c) and 38A(e) are
attracted only when “unless a different intention appears”

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