M/S. SHREE BHAGWATI STEEL ROLLING MILLSversusCOMMISSIONER OF CENTRAL EXCISE & ANR.

                                                                     J


                        [2015] 12 S.C.R. 332


A       M/S. SH REE BHAGWATI STEEL ROLLING MILLS
                                  v.
         COMMISSIONER OF CENTRAL EXCISE &ANR.
                   (Civil Appeal No.4280 of 2007)
B
                       NOVEMBER 24, 2015
       [A.K. SIKRI AND ROHINTON FALi NARIMAN, JJ.)
       Central Excise Act, 1944: s.3A - Compounded levy
c scheme- Interest for delayed payment of central excise duty
  u/s.3A - Held: Since s.3A which provides for a separate
  scheme does not itself provide for levying of interest, rr 96ZO,
  96ZP, 96ZQ cannot do so - None of the other provisions of
  the Central Excise Act can come to the aid of the revenue in
D such case - This is a comprehensive scheme in itself and
  general provisions in the Act and the Rules are excluded.

        Central Excise Rules, 1944: rr96ZO, 96ZP, 96ZQ -
  Constitutional validity of - Held: These rules prescribe
E imposition of penalty equal to the amount of duty outstanding
  without any discretion to reduce the same depending upon
  the time taken to deposit the duty- They were not only ultra
  vires the Act but they were arbitrary and unreasonable and
  violative of Article 14 and 19(1)(g) of the Constitution -
F Constitution of India, 1950-Articles 14, 19.
        Induction Furnace Annual Capacity Determination
  Rules, 199 7: r. 3(2) - Annual capacity of production -
  Relevant consideration - Held: Chartered Engineer
G Certificate dealing with the sanctioned electrical load for a
  furnace is a relevant consideration which can be looked at in
  the absence of other factors mentioned in r 3.

        Repeal: Omission is a form of repeal -A repeal would
H include a repeal by way of an express omission -A conjoint
                                332
 SHREE BHAGWATI STEEL ROLLING MILLS v. CMMNR.                  333
            OF CENTRAL EXCISE

reading of the three expressions "delete", "omit", and "repeal", A
shows that "delete" and "omit" are used interchangeably, so
that when the expression "repeal" refers to "delete" it would
necessarily take within its ken an omission as well - General
Clauses Act, 1897 - s. 6.
                                                                B
    Words and phrases: Omission, delete and repeal -
Meaning of -Discussed.

       Disposing of the appeals, the Court

      HELD: 1.1. When Section 6 speaks of the repeal of         C
any enactment, it refers not merely to the enactment as
a whole but also to any provision contained in any Act.
Thus, if a part of a statute is deleted, Section 6 would
nonetheless apply. Secondly, the expression "omission"
                                                                0
is nothing but a particular form of words evincing an
intention to abrogate an enactment or portion thereof. A
conjoint reading of the three expressions "delete",
"omit", and "repeal", shows that "delete" and "omit" are
used interchangeably, so that when the expression               E
"repeal" refers to "delete" it would necessarily take within
its ken an omission as well. This being the case, there is
no substance in the argument that a "repeal" amounts
to an obliteration from the very beginning, whereas an
"omission" is only in futuro. If the expression "delete"        F
would amount to a "repeal", it is clear that a conjoint
reading of Halsbury's Laws of England and the Legal
Thesaurus both lead to the same result, namely that an
"omission" being tantamount to a "deletion" is a form
of repeal. [Paras 13, 14] [344-E-G; 345-F-H; 346-A]            G

     Halsbury's Laws of England; Legal Thesaurus
     (Deluxe edition) by William C Burton 1979 Edition
     - referred to.
                                                                H
334      SUPREME COURT REPORTS               [2015] 12 S.C.R.

A        1.2. When this Court referred to Section GA in Fibre
    Board's case and held that Section GA shows that a repeal
    can be by way of an express omission, obviously what
    was meant was that an amendment which repealed a
    provision could do so by way of an express omission.
B This being the case, it is clear that Section GA
    undisputedly leads to the conclusion that a repeal would
    include a repeal by way of an express omission. Fibre
    Board's case clarifies the law in holding that an omission
    would amount to a repeal. The converse view of the law
C has led to an omitted provision being treated as if it never
    existed, as Section Gof the General Clauses Ac;t would
    not then apply to allow the previous operation of the
    provision so omitted or anything duly done or suffered
  . thereunder. Nor may a legal proceeding in respect of any
0
    right or liability be instituted, continued or enforced in
    respect of rights and liabilities acquired or incurred
    under the enactment so omitted. In the vast majority of
    cases, this would cause great public mischief, and the
E decision of Fibre Board's case is therefore clearly
    delivered by this Court for the public good, being, at the
    very least a reasonably possible view. Also, no aspect
    of the question at hand has remained unnoticed. The
    persuasive plea of the counsel to reconsider the
F judgment in Fibre Board's case is declined. This being
    the case, it is clear that on point one the present appeal
    would have to be dismissed as being concluded by the
    decision in the Fibre Board's case. [Paras 1G, 24) [347-
    F-G; 353-H; 354-A-B]
G
       1.3. Even on the point of limitation, the High Court
  noticed that the assessee undertook to pay the amount
  with interest upto 31.3.2003, on which date a last part
  payment was made. As the demand was raised. by the
H Department on 19.8.2005 i.e. within a period of three years
 SH REE BHAGWATI STEEL ROLLING MILLS v. CMMNR.                 335
             OF CENTRAL EXCISE

from 31.3.2003, it is clear that the said recovery notice A
would not be beyond the time limit. [Para 25] [354-C-D]

      1.4. Since Section 3A which provides for a separate
scheme for availing facilities under a compound levy
scheme does not itself provide for the levying of interest, B
Rules 96 ZO, 96 ZP and 96 ZQ cannot do so and therefore
on. this ground the appellant has to succeed. On this
ground alone therefore the impugned judgment is set
aside. None of the other provisions of the Central Excise
Act can come to the aid of the Revenue in cases like C
these. [Para 31] [358-D-E]

      2.1. On the facts before the Gujarat High Court, there
were three civil applications each of which challenged
the constitutional validity of the Rules 96ZO, 96ZP, 96ZQ      o
insofar as they prescribed the imposition of a penalty
equal to the amount of duty outstanding without any
discretion to reduce the same depending upon the time
taken to deposit the duty. The Gujarat High Court struck
down the aforesaid Rules on the basis that not only were       E
they ultra vires the Act but they were arbitrary and
unreasonable and therefore violative of Articles 14 and
19(1)(g) of the Constitution. Insofar the reasoning of the
High Court is concerned, on three counts it is
unexceptionable. First and foremost, a delay of even           F
one day would straightaway, without more, attract a
penalty of an equivalent amount of duty, which may be
in crores of rupees. It is clear that as has been held by
this Court, penalty imposable under the aforesaid three
Rules is inflexible and mandatory in nature. The High          G
Court is, therefore, correct in saying that an assessee
who pays the delayed amount of duty after 100 days is
to be on the same footing as an assessee who pays the
duty only after one day's delay and that therefore such        H
336      SUPREME COURT REPORTS              [2015] 12 S.C.R.


A rule treats unequals as equals and would, therefore,
  violate Article 14 of the Constitution of India. It is also
  correct in saying that there may be circumstances of
  force majeure which may prevent a bonafide assessee
  from paying the duty in time, and on certain given factual
B circumstances, despite there being no fault on the part
  of the assessee in making the deposit of duty in time, a
  mandatory penalty of an equivalent amount of duty
  would be compulsorily leviable and recoverable from
  such assessee. This would be extremely arbitrary and
C violative of Article 14 for this reason as well. Further,
  this would also be violative of the appellant's
  fundamental rights under Article 19(1 )(g) and would not
  be saved by Article 19(6), being an unreasonable
  restriction on the right to carry on trade or business.
0
  Clearly the levy of penalty in these cases of a mandatory
  nature for even one day's delay, which may be beyond
  the control of the assessee, would be arbitrary and
  excessive. The direct and immediate impact upon the
E fundamental right of the citizen is that he is exposed to
  a huge liability by way of penalty for reasons which may
  in given circumstances be beyond his control and/or for
  delay which may be minimal. The possibility of achieving
  the object of deterrence in such cases can be achieved
F by imposing a less drastic restraint. [Paras 33, 35, 36)
  [359-E-F; 360-B-G; 361-E-F]

        2.2. Under Section 37(3), the statute itself provides
  in all cases where no other penalty is provided by the
G Act that a penalty not exceeding Rs.5,000/- alone can be
  levied. Sub-Section(4) is even more telling. Even in cases
  where there is a clandestine removal of excisable goods,
  and cases where the assessee intends to evade payment
  of duty, the assessee is liable to a penalty not exceeding
H the duty leviable on such goods or Rs.10,000/-whichever
 SHREE BHAGWATI STEEL ROLLING MILLS v. CMMNR.            337
            OF CENTRAL EXCISE

 is greater. It will be noticed that the Act is very A
 circumspect in laying down penalty provisions.
 Penalties in given circumstances extend only to
 Rs.5,000/- and Rs.10,000/- which are small amounts.
 Further, even where clandestine removal and intent to
evade duty are present, yet the authorities are given a B
discretion to levy a penalty higher than Rs.10,000/- but
 not exceeding the duty leviable. In a given case,
therefore, even where there is willful intent to evade duty
and the duty amount comes to say a crore of rupees,
the authorities can in the facts and circumstances of a C
given case, levy a penalty of say Rs.25,00,000/- or
Rs.50,00,000/-. This being the position, it is clear that
when contrasted with the provisions of the Central
Excise Act itself, the penalty provisions contained in D
Rules 96ZO, 96 ZP and 96 ZQ are both arbitrary and
excessive. A penalty can only be levied by authority of
statutory law and Section 37 of the Act does not expressly
authorize the Government to levy penalty higher than
Rs.5,000/-. This further shows that imposition of a E
mandatory penalty equal to the amount of duty not being
by statute would itself make Rules 96ZO, 96 ZP and 96 ·
ZQ without authority of law. Therefore, Rules 96ZO, 96
ZP and 96 ZQ "are struck down insofar as they impose a
mandatory penalty equivalent to the amount of duty on F
the ground that these provisions are violative of Article
14, 19(1)(g) and are ultra vires the Central Excise Act.
[Paras 38, 39) [362-G-H; 363-A-F]

      3. In SLP(C) 22134 of 2000, the assessee made the G
declaration that they will pay lump sum duty on the basis
that their induction furnace has a capacity of only 3.2.
metric tons. As they were unable to trace out the original
bill, they worked out their capacity on the basis of
Chartered Engineer's Certificate which was not accepted H
338      SUPREME COURT REPORTS             [2015] 12 S.C.R.

A by the authorities. The load capacity of an induction
  furnace unit is certainly relevant material referred to in
  Rule 3(2) to determine the capacity of the furnace
  installed. It is obvious that it is not necessary to state
  such load capacity in terms for it to be included in Rule
B 3(2). Chartered Engineer Certificate dealing with the
  sanctioned electrical load for a furnace is a relevant
  consideration which can be looked at in the absence of
  other factors mentioned in Rule 3. [Para41, 42 and 43)
C [364-F-G; 366-A; 367-E-G]

        Hans Steel Rolling Mill v. CCE 2011 (3) SCR 841
        : (2011) 3 sec 748 - relied on.

        VVS Sugars v. Government ofA. P. 1999 (2) SCR
o       925: 1999 (4) sec 192 - followed.

        Mis Fibre Boards (P) Ltd., Bangalore v.
        Commissioner of Income Tax, Bangalore [2015)
        376 ITR 596 (SC); Raya/a Corporation (P) Ltd. &
E       Ors. v. Director of Enforcement, New Delhi 1970
        (1) SCR 639 : 1969 (2) SCC 412; Bhagat Ram
        Sharma v. Union of India 1988 SCR 1034 :1988
        Supp SCC 30; Keshav Mills Co. Ltd, v. CIT,
        Bombay North 1965 (2) SCR 908; Bhartidasan
 F      University and Another v. All-India Council for
        Technical Education 2001 (3) Suppl. SCR 253 :
        2001 (8) SCC 676; Krishna Processors v. Union
        oflndia 2012 (280) ELT 186 (Guj.); Md. Faruk v.
        State of M.P.1970(1) SCR 156; Bhuwalka Steel
G       Industries Ltd. v. Union of India 2003(159) ELT
        147 (Kar.)- referred to.

                       Case Law Reference

H [2015) 376 ITR 596 (SC)         referred to    Para 7
 SHREE BHAGWATI STEEL ROLLING MILLS v. CMMNR.                 339
            OF CENTRAL EXCISE

1970 (1) SCR 639                  referred to   Para 9        A

1988 SCR 1034                     referred to   Para 15

1965 (2) SCR 908                  referred to   Para 23

2001 (3) Suppl. SCR 253           referred to   Para 28       B

1999 (2) SCR 925                  followed      Para 30

2011 (3) SCR 841                  relied on     Para 31

2012 (280) ELT 186 (Guj.)         referred to   Para 32       c
1970 (1) SCR 156                  referred to   Para 35

2003 (159) ELT 147 (Kar.)         referred to   Para 42
                                                              D
     CIVIL APPELLATE JURISDICTION: Civil Appeal No.
4280 of2007
      From the Judgment and Order dated 30.10.2006 of the
High Court of Punjab and Haryana at Chandigarh in Writ
Petition No. 15029 of 2005                                    E
                                WITH

       C.A. NOS. 4281, 4282 of2007
       C. A. NO. 3031 of 2008
                                                              F
       C. A. NO. 4379 of 2010
       C. A. NOS. 908, 5448, 5449, 5452, 5453, 8685-8686 of
2011
       C.A. N0.1979of2014
                                                              G
    C.A. NOS. 13601, 13602, 13603, 13605, 13606, 13607,
13608, 13609, 13610, 13611, 13612, 13614, 13615, 13616,
13617, 13618, 13619, 13620, 13621, 13622, 13623, 13624,
13625, 13626-13627, 13628, 13629, 13630, 13631, 13632,
13633, 13634, 13635, 13636, 13637-13638, 13639, 13640,        H
340       SUPREME COURT REPORTS                 [2015] 12 S.C.R.


A 13641-13642, 13643, 13644, 13645, 13646, 13647, 13648,
  13649, 13650, 13651, 13652, 13653, 13654, 13655, 13656,
  13657, 13658, 13659, 13660, 13661, 13662, 13663, 13664,
  13665, 13666, 13667, 13668, 13669, 13670, 13671, 13672,
  13673, 13674 of2015
B
        Guru Krishan Kumar, K. Radha Krishnan, Meenakshi
  Arora, Balbir Singh, Ajay Aggarwal, Sikha Sandhu, Mallika
  Joshi, Rajan Narain, Sudhir Malhotra, Poojan Malhotra,
  Sanjeev Malhotra, Rameshwar Prasad Goyal, B. Krishna
C Prasad, Mohit D. Ram, B. V. Bairam Das, J. S. Sinha, Braj
  Kishore Mishra, Aparna Jha, M. P. Sahay, Rupesh Kumar,
  Harpreet Singh, Jitin Singhal, Pratik Raoka, Pravesh
  Bahuguna, V. Lakshmikumaran, L. Charnaya, Hemant Bajaj,
  Aditya Bhattacharya, Anandh K., M. P. Devanath, Arijit Prasad,
D T. M. Singh, R. S. Verma, Anil Katiyar, V. N. Koura, Paramjeet
  Benipal, Sum it Singh Benipal, Avneesh Arputham, Anuradha
  Arputham, Shobhit Nanda, Aruna Mathur, (for ArputhamAruna
  & Co.), Venkita Subramoniam T. R., Himanshu Shekhar,AP &
  J Chambers, George Thomas, Ejaz Maqbool, Garvesh Kabra,
E Rahul Narayan, Mohit Singh, Mahima, Rupinde~ S., Abhishek
  S. Baghel, Rajesh Kumar, R. K. Srivastava, Krishna Kumar R.
  S., K. K. L. Gautam, Rahul Nagpal forthe appearing parties.

          The Judgment of the Court was delivered by
 F
          R.F. NARIMAN, J. 1. Leave granted.

         2. This batch of appeals raises questions relating to the
   demand for interest and penalty under Rules 9620, 96 ZP and
 G 96 ZQ of the Central Excise Rules, 1994, which were framed
   in order to effectuate the provisions contained in Section 3A
   of the Central Excise Act, 1994. Several High Courts have
   struck down the said Rules relating to penalty as being ultra
   vires the parent provision and violative of Articles 14 and
 H
  SHREE BHAGWATI STEEL ROLLING MILLS v. CMMNR.                     341
       OF CENTRAL EXCISE [R.F. NARIMAN, J.]

 19(1)(g) of the Constitution. Most of the appeals in this batch A
 are. therefore, by the Union of India. However, before dealing
 with the said appeals, it is necessary to first semegate Civil
 Appeal No.4280 of 2007 which raises a slightly different
 question from the questions raised in the other appeals and
 decide it first.                                                B

       3.. The question which arises for decision in the said
 appeal is the demand, by means of a letter dated 19.8.2005,
 for payment of interest for delayed payment of central excise
 duty under Section 3Aofthe Central Excise Act, 1944.          C

        4. The case of the appellant is that it took a rolling mill on
  lease for the period from 1997 to 2000 and manufactured
  rerolled non-alloyed steel products. On 1.9.1997 the
  compounded levy scheme was introduced by way of insertion o
  of Section 3A of the Central Excise Act. The appellant opted
  for the aforesaid scheme under Rule 96ZP of the Central
  Excise Rules. When the lease expired, the appellant
  surrendered its registration certificate on 1.6.2000. As stated
  hereinabove, on 19.8.2005 the impugned notice was issued E
  to the appellant demanding interest for delayed payment of
· duty for the period 1997 to 2000.

       5. The High Court framed two questions which arose for
 its conf' ideration: (1) whether "omission" of the compounded      F
 levy scheme in 2001 wipes out the liability of the assessee for
 the period during which the scheme was in operation, and (2)
 whether the letter of demand of interest for delayed payment
 was liable to be set aside on the ground of delay.
                                                                   G
         6. The High Court found, after distinguishing some of the
 judgments of this Court, and after relying upon Section 38A of
 the Central Excise Act, which was added vide Section 131 of
 the Finance Act, 2001, that on omission of Section 3A, the
 liability of the assessee was not wiped out.                      H
342         SUPREME COURT REPORTS                   [2015] 12 S.C.R.


A           7. Shri Ajay Aggarwal, learned counsel who appeared
      on behalf of the appellant fairly submitted that a recent judgment
      delivered by this Bench, namely, Mis Fibre Boards (P) Ltd.,
      Bangalore v. Commissioner of lncom·e Tax, Bangalore,
  [2015] 376 ITR 596 (SC), would cover the matter before us
B being directly against the appellant's case. However, he
  submitted that for various reasons this judgment requires a
  relock and ought to be referred to a larger Bench of three
  Judges. Shri Aggarwal argued the matter with great ability and
  we listened to him with considerable interest.
c
        8. First, it may be stated that the judgment of this Court
  in the Fibre Board's case has taken the view that an
  "omission" would amount to a "repeal", after referring to several
  authorities of this Court, G.P. Singh's Principles of Statutory
D Interpretation, Section 6A of the General Clauses Act, 1897,
  and a passage in Halsbury's Laws of England. Ultimately, this
  Court arrived at the conclusion that an "omission" would amount
  to a "repeal" for the purpose of Section 24 of the General
  Clauses Act. Since the same expression, namely, "repeal" is
E used both in Section 6 and Section 24 of the General Clauses
  Act, the construction of the said expression in both sections
  would, therefore, include within it "omissions" made by the
  legislature.

 F      9. Shri Aggarwal, however, argued that there is a
  fundamental distinction between a "repeal" and an "omission"
  in that in the case of a "repeal" the statute is obliterated from
  the very beginning whereas in the case of an "omission" what
  gets omitted is only from the date of "omission" and not before.
G This being the case, it is clear that things already done in the
  case of an "omission" would be saved. However, a "repeal"
  without a savings clause like Section 6 of the General Clauses
  Act would not so save things already done· under the repealed
H statute. He further argued that Section 6A which was relied
 SH REE BHAGWATI STEEL ROLLING MILLS v. CMMNR.                        343
       OF CENTRAL EXCISE [R.F. NARIMAN, J.]

upon by the Bench in the Fibre Board's case did not state that        A
an "omission" would be included within the expression "repeal",
but that if Section 6A were carefully read, an "omission" would
only be included in an "amendment" which, under the Section,
can be by way of omission, insertion or substitution. Therefore,
it is fallacious to state that Section 6A would lead to the           B
conclusion that "omissions" are included in "repeals". He further
argued that in any event, the true ratio decidendi of the
Constitution Bench decision in Rayala Corporation (P) Ltd.
& Ors. v. Director of Enforcement, New Delhi, 1969 (2)
sec 412, is that an "omission" cannot amount to a "repeal"            C
inasmuch as the first reason given for distinguishing the Madhya
Pradesh High Court's judgment in that case was that Section
6 cannot apply to the omission of a rule because an "omission"
is not a "repeal". He further argued that as the Madhya Pradesh
                                                                      0
High Court's decision was put forward by the respondent in
that case in support of their argument, the Constitution Bench's
dealing with the said. decision in order to overcome it would
necessarily be the ratio decidendi of the said decision, and
being a Constitution Bench decision, would be binding upon            E
this Bench. He further referred to Section 31 of the Prevention
of Corruption Act, 1988, which, in his opinion, makes it clear
that Parliament itself has understood that a repeal under
Section 6 of the General Clauses Act would not apply to
omissions. He has further argued that it may be true that the         F
expression "repeal" is normally used when an entire statute is
done away with, as opposed to an "omission" which is applied
only when part of the statute is deleted, but said that this is not
invariably the case, and referred to Section 1 of the Indian
ContractAct in which enactments mentioned in the schedule             G
are repealed not in their entirety but only to the extent provided
and, therefore, argued that the expression "repeals" will apply
also to a part of an enactment as opposed to the enactment
as a whole.
                                                                      H
344         SUPREME COURT REPORTS                  [2015] 12 S.C.R.


A           10. Shri Radhakrishnan, learned senior counsel
      appearing on behalf of the revenue supported the judgment of
      this Court in the Fibre Board's case and said that recent
      judgments delivered which have clarified the law ought not to
      be disturbed in the larger public interest.
B
            11. Since Shri Aggarwal has made detailed submissions
      on why according to him the judgment in the Fibre Board's
      case is not correctly decided, we propose to deal with each of
      those submissions in some detail.
c           12. First and foremost, it is important to refer to the
      definition of "enactment" contained in Section 3(19) of the
      General Clauses Act. The said definition clause states that
      "enactment" shall mean the following:-
D          "enactment" shall include a Regulation (as hereinafter
           defined) and any Regulation of the Bengal, Madras or
           Bombay Code, and shall also include any provision
           contained in any Act or in any such Regulation as
           aforesaid."
E
        13. From this it is clear that when Section 6 speaks of
  the repeal of any enactment, it refers not merely to the
  enactment as a whole but also to any provision contained in
  any Act. Thus, it is clear that if a part of a statute is deleted,
F Section 6 would nonetheless apply. Secondly, it is clear, as
  has bee·n stated by referring to a passage in Halsbury's Laws
  of England in the Fibre Board's judgment, that the expression
  "omission" is nothing but a particular form of words evincing
  an intention to abrogate an enactment or portion thereof. This
G is made further clear by the Legal Thesaurus (Deluxe Edition)
  by William C Burton, 1979 Edition. The expression "delete" is
  defined by the Thesaurus as follows:

           "Delete: - Blot out, cancel, censor, cross off, cross out,
H          cut, cut out, dele, discard, do away with, drop, edit out,
 SHREE BHAGWATI STEEL ROLLING MILLS v. CMMNR.                        345
      OF CENTRAL EXCISE [R.F. NARIMAN, J.]

     efface, elide, eliminate, eradicate, erase, excise, expel, A
     expunge, extirpate, get rid of, leave out, modify by
     excisions, obliterate, omit, remove, rub out, rule out,
     scratch out, strike off, take out, weed wipe out."

    Likewise the expression "omit" is also defined by this           B
Thesaurus as follows:-

     "Omit-Abstain from inserting, bypass, cast aside, count
     out, cut out, delete, discard, dodge, drop exclude,
     exclude, fail to do, fail to include, fail to insert, fail to   C
     mention, leave out, leave undone, let go, let pass, let slip,
     miss, neglect, omittere, pass over, praetermittere, skip,
     slight, transire."

     And the expression "repeal" is defined as follows:-
                                                                     D
     "Repeal:- Abolish, abrogare, abrogate, annul, avoid,
     cancel, countermand, declare null and void, delete,
     eliminate, formally withdraw, invalidate, make void,
     negate, nullify, obliterate, officially withdraw, override,
     overrule, quash, recall, render invalid, rescind,               E
     rescindere, retract, reverse, revoke, set aside, vacate,
     void, withdraw."

       14. On a conjoint reading of the three expressions
"delete", "omit", and "repeal", it becomes clear that "delete" F
and "omit" are used interchangeably, so that when the
expression "repeal" refers to "delete" it would necessarily take
within its ken an omission as well. This being the case, we do
not find any substance in the argument that a "repeal" amounts
to an obliteration from the very beginning, whereas an G
"omission" is only in futuro. If the expression "delete" would
amount to a "repeal", which the appellant's counsel does not
deny, it is clear that a conjoint reading of Halsbury's Laws of
England and the Legal Thesaurus cited hereinabove both lead H
346         SUPREME COURT REPORTS                   [2015] 12 S.C.R.


A     to the same result, namely that an "omission" being tantamount
      to a "deletion" is a form of repeal.

        15. Learned counsel's second argument that Section 6A
  when it speaks of an "omission" only speaks of an
B "amendment" which omits and, therefore does not refer to a
  repeal is equally fallacious. In Bhagat Ram Sharma v. Union
  of India, 1988 Supp SCC 30, this Court held that there is no
  real distinction between a repeal and an amendment and that
  "amendment" is in fact a wider term which includes deletion
C of a provision in an existing statute. In the said judgment, this
  Court held:-

           "17. It is a matter of legislative practice to provide while
           enacting an amending law, that an existing provision shall
o          be deleted and a new provision substituted. Such deletion
           has the effect of repeal of the existing provision. Such a
           law may also provide for the introduction of a new
           provision. There is no real distinction between 'repeal'
           and an 'amendment'. In Sutherland's Statutory
E          Construction, 3rd Edn., Vol. 1 at p. 477, the learned author
           makes the following statement of law:

           The distinction between repeal and amendment as these
           terms are .used by the Courts is arbitrary. Naturally the
F          use of these terms by the Court is based largely on how
           the Legislature have developed and applied these terms
           in labelling their enactments. When a section is being
           added to an Act or a provision added to a section, the
           Legislatures commonly entitled the Act as an
G          amendment. ... When a provision is withdrawn from a
           section, the Legislatures call the Act an amendment
           particularly when a provision is added to replace the one
           withdrawn. However, when an entire Act or section is
           abrogated and no new section is added to replace it,
H          Legislatures label the Act accomplishing this result a
 SHREE BHAGWATI STEELROLLING MILLS v. CMMNR.                      347
      OF CENTRAL EXCISE [R.F. NARI MAN, J.]

     repeal. Thus as used by the Legislatures, amendment A
     and repeal may differ in kind - addition as opposed to
     withdrawal or only in degree -abrogation of part of a
     section as opposed to abrogation of a whole section or
     Act; or more commonly, in both kind and degree -
     addition of a provision to a section to replace a provision B
     being abrogated as opposed by abrogation of a whole
     section of an Act. This arbitrary distinction has been
     followed by the Courts, and they have developed
     separate rules of construction for each. However, they
     have recognised that frequently an Act purporting to be C
     an amendment has the same qualitative effect as a
     repeal - the abrogation of an existing statutory provision
     -and have therefore applied the term "implied repeal' and
     the rules of construction applicable to repeals to such
                                                                 0
     amendments.

     18. Amendment is in fact. a wider term and it includes
     abrogation or deletion of a provision in ·an existing
     statute. If the amendment of an existing law is small, the
     Act professes to amend; if it is extensive, it repeals a     E
     law and re-enacts it. An amendment of substantive law
     is not retrospective unless expressly laid down or by
     necessary' implication inferred." (at para 17 & 18)

     16. It is clear, therefore, that when this Court referred to F
Section 6A in Fibre Board's case and held that Section 6A
shows that a repeal can be by way of an express omission,
obviously what was meant was that an amendment which
repealed a provision could do so by way of an express
omission. This being the case, it is clear that Section 6A G
undisputedly leads to the conclusion that a repeal would include
a repeal by way of an express omission.

     17. Learned counsel then argued that while distinguishing
the Madhya Pradesh High Court's judgment in Rayala                H
348       SUPREME COURT REPORTS                   [2015] 12 S.C.R.


A Corporation, a Constitution Bench of this Court expressly held
  as the first reason that Section 6 applies only to repeals and
  not to omissions. The Fibre Board's judgment has clearly
  held as follows:

 B        "First aod foremost, it will be noticed that two reasons
          were given in Rayala Corporation (P) Ltd. for
          distinguishing the Madhya Pradesh High Court judgment.
          Ordinarily, both reasons would form the ratio decidendi
          for the said decision and both reasons wou!d be binding
c         upon us. But we find that once it is held that Section 6 of
          the General Clauses Act would itself not apply to a rule
          which is subordinate legislation as it applies only to a
          Central Act or Regulation, it would be wholly unnecessary
          to state that on a construction of the word "repeal" in
D         Section 6 of the General Clauses Act, "omissions" made
          by the legislature would not be included. Assume, on the
          other hand, that the Constitution Bench had given two
          reaso~s for the non-applicability of Section 6 of the
          General Clauses Act. In such a situation, obviously both
 E        reasons would be ratio decidendi and would be binding
          upon a subsequent bench. However, once it is found
          that Section 6 itself would not apply, it would be wholly
          ~uperfluous to further state that on an interpretation of
          the word "repeal", an "omission" would not be included.
 F
          We are, therefore, of the view that the second so-called
          ratio of the Constitution Bench in Raya la Corporation
          (P) Ltd. cannot be said to be a ratio decidendi at all and
          is really in the nature of obiter dicta." (at para 27)
G          18. Merely because the Constitution Bench referred to a
    repeal not amounting to an omission as the first reason given
    for distinguishing the Madhya Pradesh High Court's judgment
  . would not undo the effect of paragraph 27 of Fibre Board's
 H case which, as has already been stated, clearly makes the
 SHREE BHAGWATI STEEL ROLLING MILLS v. CMMNR.                        349
      OF CENTRAL EXCISE [R.F. NARIMAN, J.]

distinction between Section 6 not applying at all and Section        A
6 being construed in a particular manner. Obviously, if the
Section were not to apply at all, any construction of the Section
would necessarily be in the nature of obiter dicta.

      19. We also find that Section 6 could not possibly apply       B
to the facts in Rayala Corporation's case for yet another
reason. Clause 2 of the amendment rules which was referred
to in paragraph 14 of the judgment in Raya la Corporation
reads as follows:-

      "ln the Defence of India Rules, 1962, rule 132A (relating      C
      to prohibition of dealings in foreign exchange) shall be
      omitted except as respects things done or omitted to be
      done under that rule."

      20. A cursory reading of clause 2 shows that after omitting    D
Rule 132A of the Defence of India Rules, 1962, the provision
contains its own saving clause. This being the case, Section
6 can in any case have no application as Section 6 only applies
to a Central Act or regulation "unless a different intention
appears". A different intention clearly appear~ ona reading of       E
clause 2 as only a very limited savings clause is incorporated
therein. In fact, this aspect is noticed by the Constitution Bench
in paragraph 18 of its judgment, in which the Constitution Bench
states:-
                                                                     F
      "As we have indicated earlier, the notification of the
      Ministry of Home Affairs omitting Rule 132-Aofthe D.l.Rs.
      did not make any such provision similar to that contained
      in Section 6 of the General Clauses Act."
                                                                     G
     21. It was then urged before us that Section 31 of the
Prevention of Corruption Act, 1988 would also lead to the
conclusion that Parliament itself is cognizant of the fact that an
omission cannot amount to a repeal". Section 31 of the
Prevention of Corruption Act, 1988, states as follows:-              H
350       SUPREME COURT REPORTS                  [2015] 12 S.C.R.


A         "Section 31 - Omission of certain sections of Act 45 of
          1860

         Sections 161to165A (both inclusive) of the Indian Penal
         Code, 1860 (45of1860) shall be omitted, and section 6
B        of the General Clauses Act, 1897 (10 of 1897), shall
         apply to such omission as ifthe said sections had been
         repealed by a Central Act."

         22. It is settled law that Parliament is presumed to know
C the law when it enacts a particular piece of legislation. The
  Prevention of Corruption Act was passed in the year 1988,
  that is long after 1969 when the Constitution Bench decision
  in Rayala Corporation had been delivered. It is, therefore,
  presumed that P2rliament enacted Section 31 knowing that
o the decision in Raya la Corporation had stated that an omission
  would not amount to a repeal and it is for this reason that
  Section 31 was enacted. This again does not take us further
  as this statement of the law in Raya la Corporation is no longer
  the law declared by the Supreme Court after the decision in
E the Fibre Board's case. This reason therefore again cannot
  avail the appellant.

        23. The reference to the savings provision in Section 1
  of the Indian Contract Act again does not take us very much
F further as the expression "repeal" as has been pointed out
  above can be of part of an enactment also. This being the
  case, when the legislature uses the word "omit" it usually does
  so when it wishes to delete a particular section as opposed to
  deleting an entire Act. As has been noticed both in Fibre
G Board's case and hereinabove, these are all expressions
  which only go to form and not to substance. Even assuming
  for the sake of argument that we were inclined to agree with
  Shri Aggarwal. given the force of his inexorable logic, this Court
  has laid down the parameters of when it would be expedient
H to have a relook at a particular decision in the case of Keshav
SHREE BHAGWATI STEEL ROLLING MILLS v. CMMNR.                   351
     OF CENTRAL EXCISE [R.F. NARI MAN, J.]

Mills Co. Ltd. v. CIT, Bombay North, 1965 (2) SCR 908, as A
follows.-

     "In dealing with the question as to whether the earlier
     decisions of this Court in the New Jehangir Mills
     [1959]371TR11 (SC) case and the Petlad Co. Ltd. [1963] B        ·
     S.C.R. 871 case should be reconsidered and revised
     by us, we ought to be clear as to the approach which
    should be adopted in such cases. Mr. Palkhivala has not
    disputed the fact that, in proper case, this Court has
     inherent jurisdiction to reconsi~er and revise its earlier C
    decisions, and so, the abstract question as to whether
    such a power vests in this Court or not need not detain
     us. In exercising this inherent power, however, this would
     naturally like to impose certain reasonable limitations and .
    would be reluctant to entertain pleas for the D
     reconsideration and revision of its earlier decisions,
     unless it is satisfied that there are compelling and
    substantial reasons to do so. It general judicial
    experience that in matters of law involving question of
    constructing statutory or constitutional provisions, two E
    views are often reasonably possible and when judicial
    approach has to make a choice between the two
    reasonably possible views, the process of decision-
    making is often very difficult and delicate. When this Court F
    hears appeals against decisions of the High Courts and
    is required to consider the propriety or correctness of
    the view taken by the High Courts on any point of law, it
    would be open to this Court to hold that though the view
    taken by the High Court is reasonably possible, the G
    alternative view which is also reasonably possible is
    better and should be preferred. In such a case, the choice
    is between the view taken by the High Court whose
    judgment is under appeal, and the alternative view which
     appears to this Court to be more reasonable; and in H
352   SUPREME COURT REPORTS                    [2015] 12 S.C.R. .

A     accepting it own view in preference to that of the High
      Court, this Court would be discharging its duty as Court
      of Appeal. But different considerations must inevitably .
      arise where a previous decision of this Court has taken
      a particular view as to the construction of a statutory
B     provision as,"forinstance, section 66(4) of the Act. When
      it is urged that the view already taken by this Court should
      be reviewed and revised, it may not necessarily be an
      adequate reason for such review and revision to hold
      that though the earlier view is a reasonably possible view,
c     the alternative view which is pressed on the subsequent
      occasion is more reasonable. In reviewing and revising
      its earlier decision, this Court should ask itself whether
      in interests of the public good or for any other valid and
      compulsive reasons, it is necessary that the earlier
D
      decision should be revised. When this Court decides
      questions of law, its decisions are, under Article 141,
      binding on all courts within the territory of India, and so, it
      must be the constant endeavour and concern of this Court
E     to introduce and maintain an element of certainty and
      continuity in the interpretation of law in the country.
      Frequent exercise by this Court of its power to review its
      earlier decisions on the ground that the view pressed
      before it later appears to the Court to be more
F     reasonable, may incidentally tend to make law uncertain
      and introduce confusion which must be consistently
      avoided. That is not to say that if on a subsequent
      occasion, the Court is satisfied that its earlier decision
      was clearly erroneous, it should hesitate to correct the
G     error; but before a previous decision is pronounced to
      be plainly erroneous, the Court must satisfied with a fair
      amount of unanimity amongst its members that a revision
      of the said view is fully justified. It is not possible or
      desirable, and in any case it would be inexpedient to lay
H     down any principles which should govern the approach
SH REE BHAGWATI STEEL ROLLING MILLS v. CMMNR.                  353
      OF CENTRAL EXCISE [R.F. NARIMAN, J.]

     of the Court in dealing with the question of reviewing and A
     revising its earlier decisions. It would always depend
     upon several relevant considerations:- What is the nature
     of the infirmity or error on which a plea for review and
     revision of the earlier view is based? On the earlier
     occasion, did some patent aspects of the question remain B
     unnoticed, or was the attention of the Court not drawn to
     any relevant and material statutory provision, or was any
     previous decision of this Court bearing on the point not
     noticed? Is the Court hearing such plea fairly unanimous
     that there is such an error in the earlier view? What would C
     be the impact of the error on the general administration
     of law or on public good ? Has the earlier decision been
     followed on subsequent occasions either by this Court
     or by the High Courts? And, would the reversal of the
                                                                 0
     earlier decision lead to public inconvenience, hardship
     or mischief? These and other relevant considerations
     must be carefully borne in mind whenever this Court is
     called upon to exercise its jurisdiction to review and
     review and revise its earlier decisions." (at page 921- E
     922)

      24. Fibre Board's case is a recent judgment which, as
has correctly been argued by Shri Radhakrishnan, learned
senior counsel on behalf of the revenue, clarifies the law in F
holding that an omission would amount to a repeal. The
converse view of the law has led to an omitted provision being
treated as if it never existed, as Section 6 of the General
Clauses Act would not then apply to allow the previous
operation of the provision so omitted or anything duiy done or G
suffered thereunder. Nor may a legal proceeding in respect of
any right or liability be instituted, continued or enforced in
respect of rights and liabilities acquired or incurred under the
enactment so omitted. In the vast majority of cases, this would
cause great public mischief, and the decision of Fibre Board's H
354         SUPREME COURT REPORTS                  [2015] 12 S.C.R.



A     case is therefore clearly delivered by this Court for the public
      good, being, at the very least a reasonably possible view. Also,
      no aspect of the question at hand has remained unnoticed.
      For this reason also we decline to accept Shri Aggarwal's
      persuasive plea to reconsider the judgment in Fibre Board's
B     case. This being the case, it is clear that on point one the
      present appeal. would have to be dismissed as being
      concluded by the decision in the Fibre Board's case.
                              '
        25. Even on the point of limitation, we find that the High
C Court noticed that the assessee undertook to pay the amount
  with interest upto 31.3.2003, on which date a last part payment
  was made. As the demand was raised by the Department on
  19.8.2005 i.e. within a period of three years from 31.3.2003, it
  is clear that the said recovery notice would not be beyond the
D time limit.

         26. However, ShriAggarwal has also argued that in this
  appeal as well as in Civil Appeal No.4281and4282 of2007,
  the Rule providing for payment of interest would itself be ultra
E vires inasmuch as Section 3AoftheAct does not itself provide
  for the payment of interest. He argued that despite the fact
  that this point was not raised before any of the authorities below
  he ought to be allowed to raise it for the first time in this Court
  not only as it is a pure question of law but also because,
F according to him, this Court has held that rules which are ultra
  vires ought to be ignored by the courts even if there is no
  substantive challenge to them.

        27.Shri Radhakrishnan, learned senior advocate
G appearing for the revenue, strongly contradicts this position
  and has vehemently argued that since this issue was never
  raised before the authorities below, this Court should not allow
  the appellant to raise it at this belated stage. He further
  submitted that in any case it would not be necessary for the
H statute to provide for interest and it is good enough that
SHREE BHAGWATI STEEL ROLLING MILLS v. CMMNR.                      355
     OF CENTRAL EXCISE [RF. NARIMAN, J.]

subordinate legislation in the nature of a rule could do so. A
Inasmuch as these cases relate to interest and penalty leviable
under certain provisions of the Central Excis·e Rules, it may
be necessary to set out the said provisions. They read as
follows:
                                                                  B
      "RULE 96ZO. Procedure to be followed by the
     manufacturer of ingots and billets.
     (3) ....... .
     Provided also that where a manufactufer fails to pay the C
     whole of the amount payable for any month by the 15th
     day or the last day of such month, as the case may be,
     he shall be liable to,-
     (i) Pay the outstanding amount of duty along with interest
     thereon at the rate of eighteen per cent. per annum, D
     calculated forthe period from the 16th day of such month
     or the 1st day of next month, as the case may be, till the
     date of actual payment of the outstanding amount; and
     (ii) A penalty equal to such outstanding amount of duty or E
     five thousand rupees, whichever is greater."
    RULE 96ZP. Procedure to be followed by the
manufacturer of hot rolled products.

     (3) .......                                                  F

     Provided also that where a manufacturer fails to pay the
     whole of amount of duty payable for any month by the
     1Qth day of such month, he shall be liable to pay, -     ·

     (i) The outstanding amount of duty along with interest G
     thereon at the rate of eighteen per cent. per annum
     calculated for the period from the 11th day of such month
     till the date of actual payment of the outstanding amount;
     and                                                        H
356       SUPREME COURT REPORTS                   (2015] 12 S.C.R.


A        (ii) A penalty equal to the amount of duty outstanding
         from him at the end of such month or five thousand rupees,
         whichever is greater.

          Rule 96ZQ Procedure to be followed by the
 B        independent processor of textile fabrics.

           (5) If an independent processor fails to pay the amount
          of duty or any part thereof by the date specified in sub-
          rule (3), he shall be liable to,-
c         (i) Pay the outstanding amount of duty along with interest
          at the rate of thirty-six per cent per annum calculated for
        · the outstanding period on the outstanding amount; and

          (ii) A penalty equal to an amount of duty outstanding from
D         him or rupees five thousand, whichever is greater."

        28. Shri Aggarwal in order to buttress his submission
  that he ought to be allowed to raise a pure question of law
  going to the very jurisdiction to levy interest cited before us the
E judgment in Bhartidasan University and Another v. All-
  India Council for Technical Education, 2001 (8) SCC 676,
  and in particular paragraph 14 thereof which reads as follow:-

         "The fact that the Regulations may have the force of law
F        or when made have to be laid down before the legislature
         concerned do not confer any more sanctity or immunity
         as though they are statutory provisions themselves.
         Consequently, when the power to make Regulations are
         confined to certain limits and made to flow in a well defined
G        canal within stipulated banks, those actually made or
         shown and found to be not made within its confines but
         outside them, the Courts are bound to ignore them when
         the question of their enforcement arise and the mere fact
         that there was no specific relief sought for to strike down
H        or declare them ultra vi res, particularly when the party in
SHREE BHAGWATI STEEL ROLLING MILLS v. CMMNR.                      357
     OF CENTRAL EXCISE [R.F. NARI MAN, J.]

       sufferance is a Respondent to the lis or proceedings A
      cannot confer any further sanctity or authority and validity
      which it is shown and found to obviously and patently lack.
       It would, therefore, be a myth to state that Regulations
       made under Section 23 of the Act have "Constitutional"
      and legal status, even unmindful of the fact that anyone B
       or more of them are found to be not consistent with
       specific provisions of the Act itself. Thus, the Regulations
       in question, which theAICTE could not have made so as
      to bind universities/UGC within the confines of the
       powers conferred upon it, cannot be enforced against or C
       bind an University in the matter of any necessity to seek
       prior approval to commence a new department or course
       and programme in technical education in any university
       or any of its departments and constituent institutions."
                                                                    D
       29. It would be seen that ShriAggarwal is on firm ground
because this Court has specifically stated that rules or
regulations which are in the nature of subordinate legislation
which are ultra vires are bound to be ignored by the courts
when the question of their enforcement arises and the mere E
fact that there is no specific relief sought for to strike down or
declare them ultra vires would not stand in the court's way of
not enforcing them. We also feel that since this is a question
of the very jurisdiction to levy interest and is otherwise covered F
by a Constitution Bench decision of this Court, it would.be a
travesty of justice if we would not to allow Shri Aggarwal to
make this submission.

     30. On merits, the matter is no longer res integra. A
Constitution Bench decision of this Court in VVS Sugars v. G
Government of A.P., 1999 (4) SCC 192, has held, following
two earlier judgments of this Court, as follows:-

     "This Court in India Carbon Ltd. v. State of
     Assam [(1997)_6 SCC 479] has held, after analysing the H
 358       SUPREME COURT REPORTS                   [2015] 12 S.C.R.


. A       Constitution Bench judgment in J.K. Synthetics
          Ltd. V. CTO [(1994) 4    sec  276] that interest can be
          levied and charged on delayed payment of tax only if the
          statute that levies and charges the tax makes a
          substantive provision in this behalf. There being no
 B        substantive provision in the Act for the levy of interest on
          arrears of tax that applied to purchases of sugarcane
          made subsequent to the date of commencement of the
          amending Act, no interest thereon could be so levied,
          based on the application of the said Rule 45 or
 c        otherwise."

         31. Applying the Constitution Bench decision stated
   above, it will have to be declared that since Section 3A which
   provides for a separate scheme for availing facilities under a
 D compound levy scheme does not itself provide for the levying
   of interest, Rules 96 ZO, 96 ZP and 96 ZQ cannot do so and
   therefore on this ground the appellant in Shree Bhagwati Steel
   Rolling Mills has to succeed. On this ground alone therefore
   the impugned judgment is set aside. That none of the other
 E provisions of the Central Excise Act can come to the aid of the
   Revenue in cases like these has been laid down by this Court
   in Hans Steel Rolling Mill v. CCE, (2011) 3 SCC 748 as
   follows:

 F        "13. On going through the records it is clearly established
          that the appellants are availing the facilities under the
          compound levy scheme, which they themselves opted
          for and filed declarations furnishing details about the
          annual capacity of production and duty payable on such
 G        capacity of production. It has to be taken into
          consideration that the compounded levy scheme for
          collection of duty based on annual capacity of production
          under Section 3 of the Act and the 1997 Rules is a
          separate scheme from the normal scheme for collection
 H
SHREE BHAGWATI STEEL ROLLING MILLS v. CMMNR.                       359
     OF CENTRAL EXCISE [R.F. NARI MAN, J.)

     of Central excise duty on goods manufactured in the A
     country. Under the same, Rule 96-ZP of the Central Excise
     Rules stipulate the method of payment and Rule 96-ZP ·
     contains detailed provision regarding time and manner
     of payment and it also contains provisions relating to
     payment of interest and penalty in event of delay in B
     payment or non-payment of dues. Thus, this is a
     comprehensive scheme in itself and general provisions
     in the Act and the Rules are excluded." (at page 751)

       32. We now come to the other appeals which concern C
themselves with penalties that are leviable under Rules 96 ZO,
96 ZP and 96 ZQ. Since the lead judgment is a detailed
judgment by a Division Bench of the Gujarat High Court reported
in Krishna Processors v. Union of India, 2012 (280) ELT
 186 (Guj.) and followed by other High Courts, we will refer only D
to this decision.

      33. On the facts before the Gujarat High Court, there were
three civil applications each of which challenged the
constitutional validity of the aforesaid rules insofar as they     E
prescribed the imposition of a penalty equal to the amount of
duty outstanding without any discretion to reduce the same
depending upon the time taken to deposit the duty. The Gujarat
High Court struck down the aforesaid Rules on the basis that
not only were they ultra vires the Act but they were arbitrary     F
and unreasonable and therefore violative of Articles 14 and
19(1 )(g) of the Constitution.

      34. Shri Radhakrishnan, learned senior advocate
appearing on behalf of the revenue found it extremely difficult G
to argue that the aforesaid judgment was wrong. He therefore
asked us to limit the effect of the judgment when it further held
that after omission of the aforesaid Rules with effect from
1.3.2001 no proceedings could have been initiated thereunder.
                                                                  H
360          SUPREME COURT REPORTS                   [2015] 12 S.C.R.


A In this submission he is correct for the simple reason that the
  Gujarat High Court followed Rayala Corporation in holding
  that "omissions" would not amount to "repeals'', which this Court
  has now clarified is not the correct legal position.

B            35. However, insofar the reasoning of the High Court is
       concerned on the aspects stated hereinabove, we find that
      on all three counts it is unexceptionable. First and foremost, a
      delay of even one day would straightaway, without more, attract
      a penalty of an equivalent amount of duty, which may be in
C     crores of rupees. It is clear that as has been held by this Court,
      penalty imposable under the aforesaid three Rules is inflexible
      and mandatory in nature. The High Court is,. therefore, correct
      in saying that an assessee who pays the delayed amount of
      duty after 100 days is to be on the same footing as an assessee
D     who pays the duty only after one day's delay and that therefore
      such rule treats unequals as equals and would, therefore,
      violate Article 14 of the Constitution of India. It is also correct
      in saying that there may be circumstances of force majeure
      which may prevent a bonafide assessee from paying the duty
E     in time, and on certain given factual circumstances, despite
      there being no fault on the part of the assessee in making the
      deposit of duty in time, a mandatory penalty of an equivalent
      amount of duty would be compulsorily leviable and recoverable
F     from such assessee. This would be extremely arbitrary and
      violative of Article 14 for this reason as well. Further, we agree
      with the High Court in stating that this would also be violative
      of the appellant's fundamental rights under Article 19(1 )(g) and
      would not be saved by Article 19(6), being an unreasonable
G     restriction on the right to carry on trade or business. Clearly
      the levy of penalty in these cases of a mandatory nature for
      even one day's delay, which may be beyond the control of the
      assessee, would be arbitrary and excessive. In such
      circumstances, this Court has held in Md. Faruk v. State of
H     M.P., 1970(1) SCR 156:
SH REE BHAGWATI STEEL ROLLING MILLS v. CMMNR.                     361
      OF CENTRAL EXCISE [R.F. NARI MAN, J.]

     "The Court must in considering the validity of the           A
     impugned law imposing a prohibition on the carrying on
     of a business or profession, attempt an evaluation of its
     direct and immediate impact upon the fundamental rights
     of the citizens affected thereby and the larger public
     interest sought to be ensured in the light of the object     B
     sought to be achieved, the necessity to restrict the
     citizen's freedom, the inherent pernicious nature of the
     act prohibited or its capacity or tendency to be harmful
     to the general public, the possibility of achieving the
     object by imposing a less drastic restraint, and in the      C
     absence of exceptional situations such as the prevalence
     of a state of emergency-national or local-or the necessity
     to maintain essential supplies, or the necessity to stop
     activities inherently dangerous, the existence of a
                                                                  0
     machinery to satisfy the administrative authority that no
     case for imposing the restriction is made out or that a
     less drastic restriction may ensure the object intended
     to be achieved." (at page 161)

        36.The direct and immediate impact upon the E
fundamental right of the citizen is that he is exposed to a huge
liability by way of penalty for reasons which may in given
circumstances be beyond his control and/or for delay which
may be minimal. The possibility of achieving the object of F
deterrence in such cases can be achieved by imposing a less
drastic restraint. In point of fact when we contrast these
provisions with Section 37 of the Act, it becomes clear how
arbitrary and excessive they are.

     37. Section 37(3) and 37(4) of the Central Excise Act G
reads as follows:-

     "Section 37. Power of Central Government to make rules.

                                                                  H
    362       SUPREME COURT REPORTS                   [2015] 12 S.C.R.


    A         (3) In making rules under this section, the Central
              Government may provide that any person committing a
              breach of any rule shall, where no other penalty is provided
              by this Act, be liable to a penalty not exceeding five
              thousand rupees.
    B
              (4) Notwithstanding anything contained in sub-section (3),
              and without prejudice to the provisions of section 9, in
              making rules under this section, the Central Government
              may provide that if any anufacturer, producer or licensee
    c         of a warehouse -

              (a) removes any excisable goods in contravention of the
              provisions of any such rule, or

              (b) does not account for all such goods manufactured,
    D
              produced or stored by him, or

             (c) engages in the manufacture, production or storage
             of such goods without having applied for the registration
             required under section 6, or
    E
             (d) contravenes the provisions of any such rule with intent
             to evade payment of duty,

             then, all such goods shall be liable to confiscation and
    F        the manufacturer, producer or licensee shall be liable to
             a penalty not exceeding the duty leviable ori such goods
             or ten thousand rupees, whichever is greater;"

             38. Under Section 37(3), the statute itself provides in all
    G cases where no other penalty is provided by the Act that a
/
      penalty not exceeding Rs.5,000/- alone can be levied. Sub-
      Section(4) is even more telling. Even in cases where there is
      a clandestine removal of excisable goods, and cases where
      the assessee intends to evade payment of duty, the assessee
    H is liable to a penalty not exceeding the duty leviable on such
 SHREE BHAGWATI STEEL ROLLING MILLS v. CMMNR.                  363
      OF CENTRAL EXCISE [RF. NARIMAN, J.]

goods or Rs.10,000/- whichever is greater. It will be noticed A.
that the Act is very circumspect in laying down penalty
provisions. Penalties in given circumstances extend only to
Rs.5,000/- and Rs.10,000/-which are small amounts. Further,
even where clandestine removal and intent to evade duty are
present, yet the authorities are given a discretion to levy a B
penalty higher than Rs.10,000/- but not exceeding the duty
leviable. In a given case, therefore, even where there is willful
intent to evade duty and the duty amount comes to say a crore
of rupees, the authorities can in the facts and circumstances
of a given case, levy a penalty of say Rs.25,00,000/- or C
Rs.50,00,000/-. This being the position, it is clear that when
contrasted with the provisions of the Central Excise Act itself,
the penalty provisions contained in Rules 96ZO, 96 ZP and 96 ·
ZQ are both arbitrary and excessive.
                                                                D
        39. A penalty can only be levied by authority of statutory
· law, and Section 37 of the Act, as has been extracted above
  does not expressly authorize the Government to levy penalty .
  higher than Rs.5,000/-. This further shows that imposition of a
  mandatory penalty equal to the amount of duty not being by E
  statute would itself make rules 96ZO, 96 ZP and 96 ZQ without
  authority of law. We, therefore, uphold the contention of the
  assessees in all these cases and strike down rules 96ZO, 96
  ZP and 96 ZQ insofar as they impose a mandatory penalty F
  equivalent to the amount of duty on the ground that these
  provisions are violative of Article 14, 19(1)(g) and are ultra
  vires the Central Excise Act.
       40. It now remains to deal with SLP( civil) No.22134 of
2000, (APSAssociates v. Commissioner of Central Excise). G
In this SLP, the Punjab and Haryana High ·court has passed a
judgment on 20.5.2008 in which it construed Rule 3(2) of the
Induction FurnaceAnnual Capacity Determination Rules, 1997.
The said Rule is set out hereinbelow:-
                                                               H
364       SUPREME COURT REPORTS                    [2015] 12 S.C.R.


A         "3. The annual capacity of production referred to in
          Rule 2 shall be determined in the following manner,
          namely:-

          The Commissioner of Central Excise (hereinafter
B         referred to as the Commissioner) shall call for an
          authenticated copy of the manufacturer's invoice or
          trader's invoice, who have supplied or installed the
          furnace or crucible to the induction furnace unit, and
          ascertain the total capacity of the furnaces installed in
C         the factory on the basis of such invoice or document;

          (1) If the invoice or document referred to in sub rule
          (1) is not available for any reason with the manufacturer
          then the Commissioner shall ascertain the capacity of
D         thi:: furnaces installed in the induction furnace unit on the
          basis of the capacity of comparable furnaces
          installed in any other factory in respect of which the
          manufacturer's invoice or other document indicating the
          capacity of the furnace is available or, if not so possible,
E         on the basis of any other material as may be
          relevant for this purpose. The Commissioner may,
          if he so desires, consult any technical authority for
          this purpose;"

F       41. On the facts in this case, the assessee made a
  declaration dated 9.9.1997 that they will pay lump sum duty on
  the basis that their induction furnace has a capacity of only 3.2
  metric tons. As they were unable to trace out the original bill,
  they worked out their capacity on the basis of a Chartered
G Engineer's Certificate dated 7.9.1997 which stated as follows:-

      "REF. : Js   CE/97                        DATED 07.09.97
                   197


H                     TO WHOM IT MAY CONCERN
SHREE BHAGWATI STEEL ROLLING MILLS v. CMMNR.                  365
     OF CENTRAL EXCISE [R.F. NARI MAN, J .]

   On the request of Mis. A.P.S. ASSOCIATES PVT A
   LIMITED, I visited their works at D-133, Phase V. Focal
   Point. Ludhiana for inspection of the INDUCTION
   FURNACE and assessing the capacity thereof.

   The party has ONE FURNACE of following                     B
   specifications:-

   MAKE        GEC              CAPACITY               3200
   KG/1600 KW/1200 V.

   While assessing the capacity of a FURNACE for a C
   particular heat. It may please be noted that besides
   crucible size, other factors affecting the capacity are as
   follows:

   Incoming Power to the crucible from the Power Pack D
   System of the FURNACE and its quality.

   Power fed to the crucible from the Power Pack System
   of the FURNACE and its quality.
                                                               E
   Quality/Mix of Scrap.

   Lining quality and its thickness.

   The heatwise capacity may vary for a crucible out over a
   given period of time, the average outpuUCapacity shall      F
   remain almost same.

   However, in this case, it may please be noted that at
   present, this unit has a sanctioned load of 1680 KVA
   (Photocopy enclosed) resulting in a load of 1428 KW, G
   that can be utilized by the unit. After allowing for an Aux.
   load of approximately 125 KW, the load available for
   melting shall be approximately 1300 KW. As such, the
   unit shall not be able to utilize the full capacity of the
   furnace i.e. 1600 KW."                                       H
366       SUPREME COURT REPORTS                  [2015] 12 S.C.R.


A       42. The said declaration and Chartered Engineer
  Certificate have not been accepted by the authorities below,
  and the High Court rejected it on the footing that Rule 3(2) of
  the aforesaid Rules did not, in terms, refer to the sanctioned
  load of electrical units, and therefore this could not be taken
B into account for the purpose of ascertaining the capacity of
  the furnaces installed in the induction furnace unit. We find
  that.the Karnataka High Court Bhuwalka Steel lndu·stries
  Ltd. v. Union Of India 2003(159) ELT 147 (Kar.), after quoting
  the aforesaid Rule, held as follows:-
C
          "11. Section 3-A of the Central Excise Act provides for a
          power to change the excise duty on the basis of capacity
          of production in respect of the notified goods. This has
          been introduced with a view to safeguard the interest of
D         Revenue and to arrest evasion of duty. Sub-section (2)
         of Section 3-A provides for framing of Rules in the matter
         of determination of the annual capacity. It specifically
         provides for taking into consideration such factor or
         factors relevant for annual capacity of production of the
E        factory in which goods are produced. Therefore, relevant
         factor like power factor is not alien for determination of
         annual production capacity in terms of Section 3-A of
         the Act. At this stage it is to be noticed that the formula
         provided in Rule 3 of the Induction Furnace Annual
F        Capacity Determination Rules provides for three
         contingencies. The first contingency is the determination
         on the basis of authenticated copy of the manufacturers
         invoice or traders invoice who have supplied or installed
         the furnace. The second contingency is that in the absence
G
         of the invoice document being available for any reason
         with the manufacturer that the Commissioner is to
         ascertain the capacity on the basis of the capacity of the
         comparable furnaces available in similar industry. The
H        third contingency is determination of the annual capacity
SHREE BHAGWATI STEEL ROLLING MILLS v. CMMNR.                      367
     OF CENTRAL EXCISE [R.F. NARIMAN, J.]

     of production of ingots by formula. The formula isACP    =    A
     TCF x 3200. ACP is nothing but the annual capacity of
     production of the factory. TCF is also again referred to
     the total capacity. Therefore, capacity plays a vital role in
     terms of levy of excess duty.
                                                                   B
     12. In the case on hand, the petitioner has sought for an
     option that the annual capacity is to be determined on pro
     rata basis in terms of Rule 96-Z0(3) of the Rules.
     Petitioner has produced sufficient material with regard
     to power factor being a relevant one. As I mentioned c
     earlier, it is not the case of the respondents that power
     factor is not-a relevant factor in terms of the endorsement.
     Helplessness is the answer given in the endorsement.
     There is no prohibition under the rules for taking into
     consideration the power factor for determination of the D
     annual capacity. So long as the power factor is not said
     to be irrelevant factor, that factor has to go into the
     process of determination in terms of Section 3-A read
     with the Rules."
                                                                  E
       43. We are in broad agreement with the Karnataka High
Court view as it is clear that the load capacity of an induction
furnace unit is certainly relevant material referred to in Rule
3(2) to determine the capacity ofthe furnace installed. It is
obvious that it is not necessary to state such load capacity in F
terms for it to be included in Rule 3(2). Agreeing· therefore
with the Kamataka High Court's view we set aside the judgment
of the Punjab and Haryana High Court and declare that a
Chartered Engineer Certificate dealing with the sanctioned
electrical load for a furnace is a relevant consideration which G
can be looked at in the absence of other factors mentioned in
Rule 3. This appeal is disposed of accordingly.
     44. Conclusion
     We have declared in this judgment that the interest and H
368          SUPREME COURT REPORTS              [2015) 12 S.C.R.


A penalty provisions under the Rules 96ZO, ZP, and ZQ of the
  Central Excise Rules, 1994 are invalid .for the reasons
  assigned in the judgment. Accordingly, the appeals filed by
  the Revenue are dismissed and the appeals filed by the
  assessees are allowed to the extent indicated above. It may
B be noted that in an appeal from a judgment of the Allahabad
  High Court dated·8.11.2012 in SLP (C) No. 9796/2012, it has
  been held that the levy of penalty under the aforesaid provisions
  is mandatory in character. In view of what has been held by us
  today, this appeal will also have to be allowed in the same
C terms as the other assessees' appeals which have. been
  allowed. All the aforesaid appeals are disposed of accordingly.

      Devika Gujral                              Appeals disposed of.