2026-VIL-1847-CESTAT-AHM-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Compounded Levy Scheme - Survival of duty demand after omission of Section 3A of the Central Excise Act, 1944 without saving clause - Appellant, an independent processor of man-made fabrics, was issued SCNs demanding duty under the Compounded Levy Scheme on the basis of the number of hot air stenter chambers, and the Commissioner confirmed the demand in remand proceedings - Whether proceedings for recovery of duty can continue after omission of Section 3A by the Finance Act, 2001 without any saving clause - HELD - The Supreme Court held that omission is nothing but a particular form of words evincing an intention to abrogate an enactment or portion thereof, that omission and deletion are used interchangeably, and that omission is a form of repeal to which Section 6 of the General Clauses Act, 1897 applies, since repeal under Section 6 refers also to any provision contained in any Act. The earlier view that omission does not amount to repeal was clarified by the Supreme Court as not the correct legal position. The Bombay High Court and the Rajasthan High Court, following this decision, upheld the duty demand while quashing interest. The contrary view of the Gujarat High Court was rendered without the benefit of this principle - Following the Supreme Court, the duty demand confirmed by the Commissioner after omission of Section 3A survives, and the order is upheld to the extent of confirmation of central excise duty - Interest and penalty under Rule 96ZQ(5) of the Central Excise Rules, 1944 - Compounded Levy Scheme - Commissioner confirmed duty demand with interest and imposed penalty under Rule 96ZQ(5) - Whether interest and penalty under Rule 96ZQ can be sustained - HELD - The Supreme Court declared that the interest and penalty provisions under Rules 96ZO, 96ZP and 96ZQ are invalid, as Section 3A, which provides a separate scheme for the compounded levy, does not itself provide for levy of interest, and the Rules cannot do so - The demand of interest and penalty is set aside, and the appeal is partly allowed.
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