advocatemmmohan

My photo

ADVOCATEMMMOHAN -  Practicing both IN CIVIL, CRIMINAL AND FAMILY LAWS,Etc.,

WELCOME TO LEGAL WORLD

WELCOME TO MY LEGAL WORLD - FOR KNOWLEDGE IN LAW & FOR LEGAL OPINIONS - SHARE THIS

Tuesday, March 28, 2017

Sub-rule (3) prescribes levy and collection of a lump sum of Rs.5 lakhs per month in cases of those manufacturers who have a total furnace capacity of three metric tonnes installed in their factories. However, such a scheme is available at the option of the assessee. In other words, a manufacturer has a choice to make a lump sum payment of Rs.5 lakhs, irrespective of his actual production for that month, in two instalments instead of paying the duty at the rate of Rs.750/- per metric tonne of the actual production of the manufacturer. Whether the capacity of three metric tonnes in the said sub-rule is the capacity of the factory per day or per month or per annum is not very clear from the language of the Rule. The expression does not appear to be defined under the Rules. Coming to Rule 96ZP(3), it also provides an option to the assessee falling under the Rule to pay the duty at the concessional rate of Rs.300 per metric tonne contrary to the liability of the assessees who do not opt to avail the procedure under sub-rule (3) to pay Rs.400 per metric tonne. But both the classes of assessees are required to pay the total duty calculated on the ACP of the factory. While those who choose to pay the lower rate of tax under sub-rule (3) pay the tax every month and those who do not opt to avail the scheme under sub-rule (3) are required to pay tax long after duty actually falls due as indicated under sub-rule (1) and (2).The only similarity between Rules 96ZO(3) and 96ZP(3) is that both the Rules seek to eliminate the benefit of the procedure under Section 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 under Rules 96ZO and 96ZP.Therefore, we find it difficult to accept the submission of the respondent that the issue is covered by the judgments of this Court in Venus Castings and Supreme Steels. In our opinion, for the reasons mentioned above, these two judgments require a further examination. Apart from that, these judgments did not deal with vires of Rule 96ZP(3). However, in view of the fact that Supreme Steels is a decision rendered by a Bench of three learned Judges, we deem it appropriate that the question of law be settled by a Bench of an appropriate strength. We, therefore, direct the Registry to place the matter before Hon’ble the Chief Justice of India for further orders.

                                                                  Reportable
                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 7823 OF 2014

M/s. Bhuwalka Steel Industries Ltd.
& Another                                    ... Appellants

                 Versus

Union of India & Others                      ... Respondents

                                    WITH

                        CIVIL APPEAL NO.7825 OF 2014

                        CIVIL APPEAL NO.7824 OF 2014






                               J U D G M E N T


Chelameswar, J.

1.    These three appeals are factually  interconnected  and  also  raise  a
common question of law.

2.    The appellants  in  Civil  Appeal  No.7823/2014  M/s.  Bhuwalka  Steel
Industries Ltd. originally owned three (3) industrial units (Hot  Re-rolling
Steel Mills) located in the State of Karnataka.  Subsequently, two of  those
units came to be acquired by the appellants in  the  other  two  appeals  in
this batch.  Further details of the acquisition may not be relevant for  the
purpose of this judgment.

3.    The production activity carried on by the three  industrial  units  of
these appellants is subject to levy of excise duty under the Central  Excise
& Salt Act, 1944 (hereafter ‘THE ACT’).  Section 3[1]  of  THE  ACT  is  the
basic charging section.

4.     However,  by  the  Finance  Act,  1997,  Section  3A[2]  came  to  be
introduced in THE ACT.
“Section 3A. Determination of annual capacity of production of  the  factory
for levy of Excise duty.— (1) Notwithstanding anything contained in  Section
3, where the Central Government, having regard to the nature of the  process
of  manufacture  or  production  of  excisable  goods   of   any   specified
description, the extent of evasion of duty in regard to such goods  or  such
other factors as may be relevant, is of the opinion that it is necessary  to
safeguard the interest of revenue, specify, by notification in the  Official
Gazette, such goods  as  notified  goods  and  there  shall  be  levied  and
collected duty of excise on such goods in accordance with the provisions  of
this section.
(2) Where a notification  is  issued  under  sub-section  (1),  the  Central
Government may, by rules, provide for determination of the  annual  capacity
of production, or such factor or factors relevant to the annual capacity  of
production of  the  factory  in  which  such  goods  are  produced,  by  the
Commissioner of Central Excise and such annual capacity of production  shall
be deemed to be the annual production of such goods by such factory:

       Provided  that  where  a  factory  producing  notified  goods  is  in
operation only during a part of the year, the production  thereof  shall  be
calculated on proportionate basis of the annual capacity of production.

(3)   The duty of excise on notified goods shall be levied, at such rate  as
the Central Government may by notification in the Official Gazette  specify,
and collected in such manner as may be prescribed:

Provided that, where a factory producing notified goods did not produce  the
notified goods during any continuous period of not  less  than  seven  days,
duty calculated on a proportionate basis shall be abated in respect of  such
period if the manufacturer of such goods fulfils such conditions as  may  be
prescribed.

(4)   Where an assessee claims that the actual production of notified  goods
in his factory is lower than the  production  determined  under  sub-section
(2), the Commissioner of Central Excise shall, after giving  an  opportunity
to the assessee to produce evidence in support of his claim,  determine  the
actual production  and  redetermine  the  amount  of  duty  payable  by  the
assessee with reference to such actual production at the rate  specified  in
sub-section (3).

(5)   Where  the  Commissioner  of  Central  Excise  determines  the  actual
production under sub-section (4), the amount of duty already paid,  if  any,
shall be adjusted against the duty so redetermined and if the  duty  already
paid falls short of, or is in excess  of,  the  duty  so  redetermined,  the
assessee shall pay the deficiency or be entitled to a refund,  as  the  case
may be.

(6)   The provisions of this section shall not apply to  goods  produced  or
manufactured,—

in a free-trade zone and brought to any other place in India; or

by a hundred per cent export-oriented undertaking and allowed to be sold  in
India.
Explanation 1. – For the removal of doubts, it is hereby clarified that  for
the purposes of Section 3 of the Customs Tariff Act, 1975 (51 of 1975),  the
duty of excise leviable on the notified goods shall  be  deemed  to  be  the
duty of excise leviable on such goods under  the  Schedule  to  the  Central
Excise Tariff Act, 1985 (5 of 1986), read  with  any  notification  for  the
time being in force.

Explanation 2. – For the purposes of  this  section  the  expressions  “free
trade zone” and “hundred per cent export-oriented  undertaking”  shall  have
the meanings assigned to them in section 3.”
                                                         [emphasis supplied]


Section 3A authorised the identification of a certain  class  of  goods  and
levy and  collection  of  excise  duty  on  such  goods  otherwise  than  in
accordance with  the  scheme  of  levy  and  collection  contemplated  under
Section 3 of  THE  ACT.   It  appears  from  the  language  of  Section  3A,
Parliament believed that manufacturers  of  certain  classes  of  goods  are
evading payment of excise duty.  It authorised the Government  of  India  to
identify the goods, the manufacturers of which are resorting to  evasion  of
excise duty.  Section 3A(1) stipulated that such identified goods are to  be
notified in the Official  Gazette  (hereafter  “NOTIFIED  GOODS”).   Section
3A(3) as it stood at the relevant point of time stipulated that the  Central
Government may by a notification in the official gazette  specify  the  rate
of duty to be levied on NOTIFIED GOODS and the  method  and  manner  of  the
collection thereof.
      In other words, notwithstanding the prescription of the rates of  duty
pursuant to  Section  3  and  the  procedure  for  the  assessment  of  duty
liability and the mode of collection of such assessed  duty,  Government  of
India is authorised under Section 3A to prescribe different  rates  of  duty
and different modes of assessment and collection of  duty  on  the  NOTIFIED
GOODS.

Under sub-section (2), the Government of India was authorised to make  rules
providing  for  either  the  determination  of  the  “annual   capacity   of
production” (hereafter ACP) or ‘the factors relevant  to  the  ACP’  of  the
factory in which NOTIFIED GOODS are produced. The determination of  the  ACP
is required to be made by the “Commissioner of Central Excise”.  It  further
declared that a factory  where  ACP  is  determined  shall  be  presumed  to
annually produce the NOTIFIED GOODS equivalent in quantum to its ACP.

Sub-section (4) stipulates that in a case where  an  assessee  “claims  that
the actual production of his factory is lower than” the  ACP,  the  assessee
is entitled to seek the  determination  of  the  actual  production  of  the
NOTIFIED GOODS in “his factory”  by  adducing  appropriate  evidence.   Upon
such claim being made, the Commissioner of Central  Excise  is  required  to
determine  the  actual  production  of  the  assessee’s  factory  and   also
“redetermine the amount of duty payable by the assessee  with  reference  to
such actual production”.

5.    Admittedly, the goods manufactured by the three appellants fall  under
the same class and described under  the  Excise  Tariff  Act  as  “non-alloy
steel hot re-rolled products” and they were NOTIFIED GOODS at  the  relevant
point of time.

6.    In exercise of the powers conferred under Section 3A(2) of THE ACT,  a
set of Rules came to be framed by the Government of India w.r.t.  the  goods
manufactured by the appellants before us known as the Hot  Re-Rolling  Steel
Mills Annual Capacity Determination Rules, 1997 (hereafter “RULES of  1997”)
under a  notification  dated  1.8.1997.  Initially,  the  said  notification
contained four Rules for “determining the annual capacity of  production  of
a factory” with the aid of “hot-Re-Rolling Mill”.

7.    A month later, on 30.8.1997, Rule 5 which is the  bone  of  contention
in the present case came to be inserted in the said rules:
“5.   In case, the annual capacity determined by  the  formula  in  sub-rule
(3) of rule 3 in respect of a mill, is less than the  actual  production  of
the mill during the financial year 1996-97,  then  the  annual  capacity  so
determined shall be deemed to be equal to the actual production of the  mill
during the financial year 1996-97.”
                                                         [emphasis supplied]

The true meaning and purport of the rule shall be examined later.

8.    It is also necessary to take note of the fact  that  a  set  of  Rules
known as Central Excise Rules, 1944 were framed by the Government  of  India
in exercise of the power conferred under various provisions of  the  Central
Excise Act, 1944.  Rule 96ZP of  the  said  rules  prescribes  an  elaborate
procedure to be followed by the manufacturers of ‘Non-Alloy  Steel  Hot  Re-
rolled products” falling under various  heads  of  the  Excise  Tariff  Act,
1985.  The said Rule occurs in Chapter XI of the Rules of 1944.  Chapter  XI
was inserted in the Rules w.e.f. 01.08.1997.

9.    Section 3A(3) authorised the Central Government to  specify  the  rate
at  which  the  central  excise  duty  is  leviable  on  NOTIFIED  GOODS  by
notification.  Obviously, it is in  exercise  of  the  power  under  Section
3A(3), Rule 96ZP was made prescribing a fixed rate of duty per metric  tonne
on the goods manufactured by the appellant. It  provides  for  the  levy  of
excise duty  at  different  rates  on  the  goods  falling  under  the  same
description at Rs.400/- and Rs.300/- per  metric  tonne  respectively  under
Rule 96ZP(1) and (3) depending upon  the  assessee’s  choice  regarding  the
time of the payment of duty.  Rule 96ZP seeks to levy the excise duty  at  a
concessional rate of Rs.300/- per metric tonne.

10.   Rule 96ZP prescribes a levy not on the  basis  of  the  value  of  the
specified goods but on the quantum of  production.   It  further  authorises
the levy and collection of duty at different rates depending upon  the  mode
of payment of the duty chosen by the manufacturer.   In  other  words,  Rule
96ZP creates two classes of manufacturers of the goods  falling  within  the
sweep of the Rule, though both the classes of  manufacturers  produce  goods
of the same description.  One class who choose to pay the  duty  on  monthly
basis (falling under sub-rule (3)) and the other  class  paying  duty  in  a
manner otherwise specified under the various other sub-rules of  Rule  96ZP.


11.    Undisputedly,  Rule  96ZP  is  applicable  to  the  products  of  the
appellants herein.  It is sufficient for our  purpose  to  note  that  under
Rule 96ZP(1)[3], the manufacturer of the goods falling under  the  ambit  of
Rule 96ZP is required to debit an amount calculated at the rate of  Rs.400/-
per metric tonne on the “non-alloy steel  hot  re-rolled  products”  at  the
time of the clearance of the goods from his  factory.   Under  paragraphs  I
and II of Rule 96ZP(1), the manner of payment of  the  duty  so  debited  is
stipulated.  For example, for the  period  commencing  from  1st  September,
1997 to 31st March, 1998, a manufacturer is required to pay  by  31st  March
1998 a total amount calculated at the rate of Rs.400/- per metric  tonne  on
the ACP of his factory. The full details of the  other  paragraphs  of  sub-
rule (1) may not be necessary for the purpose of this judgment.

12.   Under sub-Rule (3)[4], a manufacturer is given an option  to  pay  the
duty in 12 equal monthly  instalments.  It  further  stipulates  that  if  a
manufacturer chooses to pay the duty on monthly basis,  the  same  shall  be
calculated at the rate of Rs.300/- per metric tonne multiplied  by  the  ACP
of the factory.  Each instalment is payable on or before the  10th  of  each
succeeding month. In other words, sub-rule (3) provides for the  levy  of  a
concessional rate of excise duty on manufacturers who  are  willing  to  opt
for a scheme of making the payment of tax on  a  monthly  basis  instead  of
postponing the payment till the end of the year  as  prescribed  under  sub-
rule  (1).  However,  sub-rule  (3)  also  imposes  a  limitation  on  those
manufacturers who opt  for  the  benefit  of  a  reduced  rate  of  duty  by
disabling them from availing the benefit of the  procedure  contemplated  in
sub-section  (4)  of  Section  3A  of  THE  ACT  –  that  is  disputing  the
correctness of the determination of the ACP of the factory  made  under  the
RULES of 1997.

13.   It is in this background of the provisions of law, these  appeals  are
required to be decided.

14.   In  all  these  appeals,  the  ACP  of  the  concerned  factories  was
determined by different orders.  Obviously the ACP so  determined  was  less
than the actual production of each one of the factories  for  the  financial
year 1996-97.  Therefore, the ACP was “deemed” to be the same as the  actual
production  for  the  financial  year  1996-1997  in  view  of  the  mandate
contained under Rule 5 of the RULES of 1997.

15.   Aggrieved by the determination of  the  ACP  each  of  the  appellants
pursued multiple legal proceedings:
They appealed to the CESTAT;
They invoked the authority of the Commissioner of Central Excise under  sub-
section (4) of Section 3A; and
Simultaneously, they filed writ petitions challenging the  validity  of  the
abovementioned Rule 5 in the Karnataka High Court.

16.   The writ  petitions  came  to  be  dismissed  by  the  judgment  dated
07.12.2005 of  the  learned  Single  Judge  of  the  Karnataka  High  Court.
Aggrieved, the appellants herein carried the matter  by  way  of  an  intra-
court appeal to a Division  Bench  of  the  Karnataka  High  Court.  By  the
judgment under  appeal,  a  Division  Bench  of  the  Karnataka  High  Court
dismissed the appeals.  Hence these appeals.

17.   The validity of Rule 5 of the RULES of 1997 is challenged both  before
the High Court and before us on two grounds:
1.    That the Rule is ultra vires the authority conferred under Section  3A
of THE ACT; and

2.    That the Rule is violative  of  Article  14  of  the  Constitution  of
India.

Because the Rule creates two classes of manufacturers:-

(i)   whose ACP is determined to be more than  their  actual  production  in
the financial year 1996-97.

(ii)  Whose ACP is determined to be less than their  actual  production  for
the financial year 1996-97; and

imposes an irrational tax burden  on  the  2nd  of  the  abovementioned  two
classes of manufacturers falling within the ambit of the RULES of 1997.


18.   We shall first deal with the submission that Rule 5 of  the  RULES  of
1997 is ultra vires Section 3A of THE ACT.
      It is argued that Rule 5 creates a fiction when it stipulates:

“… the annual capacity so determined shall be deemed  to  be  equal  to  the
actual production of the mill during the financial year 1996-97.”
                                                         [emphasis supplied]



19.   According to the appellants, Section 3A(2) of THE ACT  itself  creates
a fiction for the purpose of  determining  the  ACP  while  authorizing  the
Government of India to make rules for the determination of  ACP.  Therefore,
the RULES cannot prescribe a further fiction. The  appellants  placed  heavy
reliance for this proposition on  a  judgment  of  this  Court  reported  in
Agricultural Market Committee v. Shalimar Chemical Works Ltd., (1997) 5  SCC
516.

20.   On the other hand, it is argued by the respondent that Rule  5  though
textually  appears  to  be  creating  a  fiction,  in  substance,  it   only
stipulates a factor relevant for determination of  ACP  and,  therefore,  is
clearly intra vires.

21.   To determine the issue, it  is  required  to  examine  the  scheme  of
Section 3A of  THE  ACT,  the  relevant  Rules  framed  thereunder  and  the
mischief which Parliament sought to control while enacting Section  3A.   In
the context, we must keep in mind the general scheme of THE ACT.

22.   Section 3 of THE ACT, as it existed at  the  relevant  point  of  time
authorised the levy and collection of a duty  of  excise  on  all  excisable
goods  which  are  produced  or  manufactured  in  India.    The  expression
“excisable goods” is  defined  under  Section  2(d)  of  THE  ACT.   At  the
relevant point of time, it read as follows:
“Section  2(d).  “excisable  goods”  means  goods  specified  in  the  First
Schedule and the Second Schedule to the Central Excise Tariff Act,  1985  (5
of 1986) as being subject to a duty of excise and includes salt;”


The rates of duty for the various classes of goods are stipulated from  time
to time under the Central Excise Tariff Act, 1985.  Section  4  of  THE  ACT
stipulated the method and manner of determination of the value of the  goods
for  the  purpose  of  the  determination  of  the  duty  liability  of  the
manufacturers who manufacture or produce goods which are chargeable to  duty
w.r.t. their value.

23.    Determination  of  the  quantum  of  the  goods  manufactured  is  an
essential exercise for collecting  the  excise  duty,  because  the  taxable
event for  levy  and  collection  of  excise  duty  is  the  manufacture  or
production of goods. Therefore, the need to determine the actual quantum  of
the goods manufactured.  The Act and the  Rules  made  thereunder  prescribe
different   methods   for   the   determination   of    the    quantum    of
production/manufacture  of  excisable  goods  undertaken   by   any   person
(manufacturer) for the purpose of determining the tax liability  of  such  a
person.

24.   Parliament from time to time took notice of the fact that some of  the
manufacturers/producers of excisable goods are evading duty  by  suppressing
the information of the quantum of  actual  production/manufacture  of  goods
undertaken by them.  Therefore, Section 3A was introduced  which  authorised
a different 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.


25.   RULES of 1997 prescribed the procedure by  which  the  ACP  is  to  be
determined. Rule 3 prescribed a formula based on various  factors  mentioned
therein for the determination of the ACP.  The appellants have no  grievance
regarding the procedure stipulated for the determination of the ACP.   Their
only grievance is against Rule 5 which mandates that the ACP  determined  in
accordance with Rule 3 be discarded in  the  circumstances  mentioned  under
Rule 5.


26.   The appellant submitted that Section 3A(2) creates a legal fiction  by
declaring that the annual production of factory in which NOTIFIED GOODS  are
produced is the same as that of the ACP of that factory.  Rule 5  creates  a
further fiction which is not either authorised by Section 3A or  permissible
for a non-sovereign  law  making  body  making  subordinate  legislation  in
exercise of the delegated power conferred under a statute.  We must make  it
clear that  the  appellants  did  not  challenge  the  constitutionality  of
Section 3A(2).


27.   The appellants placed heavy reliance on paragraph 28  of  Agricultural
Market Committee.
“28.    The Government to whom the power  to  make  rules  was  given  under
Section 33 and the committee to whom power to make bye-laws was given  under
Section 34 widened the scope of “presumption” by providing further  that  if
a notified agricultural produce is weighed, measured or counted  within  the
notified area, it shall be deemed to have been sold  or  purchased  in  that
area. The creation of legal fiction is thus beyond the  legislative  policy.
Such legal fiction could be created only by the legislature  and  not  by  a
delegate in exercise of the rule-making power. We are,  therefore,  in  full
agreement with the High Court that Rule 74(2) and Bye-law 24(5)  are  beyond
the scope of the Act and, therefore, ultra vires.  The  reliance  placed  by
the assessing authority as also by the appellate  and  revisional  authority
on these provisions was wholly misplaced  and  they  are  not  justified  in
holding, merely on the basis of weighment of  “copra”  within  the  notified
area committee that the transaction  of  sale  took  place  in  that  market
area.”



28.  The argument of the appellants with respect to Rule  5  appears  to  be
two-fold: (i)    a legal fiction (deeming provision) can only be created  by
legislation but not by subordinate legislation; and (ii)  even  otherwise  a
fiction created by the subordinate legislation cannot  be  in  contravention
of the provisions of the parent enactment[5].

29.   We are in total agreement with the principle laid down by  this  Court
in paragraph 28 of Agricultural Market Committee.

30.   However, the question in this case is – whether Section  3A(2)  and/or
Rule 5 really create fictions.  To understand  the  same,  the  context  and
purpose of Section 3A and Rule 5 is required to  be  examined.   The  Scheme
and purpose  of  Section  3A  is  already  examined  at  para  20.   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  assessee
for the financial year 1996-97[6] to be the ACP of that assessee.

31.   The words “shall be deemed to be” occurring in both Section 3A(2)  and
Rule 5 appear to create a fiction.  But  in  our  opinion,  on  a  true  and
proper construction (as rightly  argued  by  the  respondent)  they  do  not
create a legal fiction.  In Consolidated Coffee Ltd.  &  Another  v.  Coffee
Board, Bangalore, (1980) 3 SCC 358, it was held: (page 371, para 11)
“… the word  “deemed”  is  used  a  great  deal  in  modern  legislation  in
different senses and it is not that a deeming provision is every  time  made
for the purpose of creating a fiction.  A deeming provision  might  be  made
to include what is obvious or  what  is  uncertain  or  to  impose  for  the
purpose of a statute an artificial construction of a  word  or  phrase  that
would not otherwise prevail, but in each case it would be a question  as  to
with what object the legislature has made such a deeming provision.  In  St.
Aubyn v. Attorney-General, 1952 AC 15, 53 : (1951) 2 All ER 473,  498,  Lord
Radcliffe observed thus:

“The word “deemed” is used a great deal in  modern  legislation.   Sometimes
it  is  used  to  impose  for  the  purposes  of  a  statute  an  artificial
construction  of  a  word  or  phrase  that  would  not  otherwise  prevail.
Sometimes it is used to put beyond  doubt  a  particular  construction  that
might otherwise be uncertain. Sometimes it is used to give  a  comprehensive
description that includes what is obvious, what is uncertain  and  what  is,
in the ordinary sense, impossible.”

In our opinion, Section  3A(2)  only  embodies  a  rule  of  evidence  which
command the department to presume certain facts. Such presumptions  are  not
unknown to law.  Section 114[7] of the Indian Evidence Act,  1872  enacts  a
rule of evidence which requires a court to  presume  the  existence  of  any
fact which the Court thinks likely to have  happened  regard  being  had  to
common course of natural events etc.  The presumption created under  Rule  5
is similar to the one contained in illustration (d)[8]  to  Section  114  of
the Evidence Act.

32.   There is a clear distinction  in  law  between  a  legal  fiction  and
presumption[9].  “A distinction commonly taken between the fiction  and  the
legal presumption runs something as follows:  A  fiction  assumes  something
which  is  known  to  be  false;  a  presumption  (whether   conclusive   or
rebuttable) assumes something which may possibly be true.  This  distinction
is regarded as being reinforced, as it were, in the case of  the  rebuttable
presumption because such a presumption assumes  a  fact  which  probably  is
true.”[10] “Presumptions are closely related to legal fictions  …  but  they
operate differently”[11]. “Fictions always conflict  with  reality,  whereas
presumptions  may  prove  to  be  true”[12].   Legal  fictions   create   an
artificial state of affairs by a mandate of the legislature.
“… an assumption  of  fact  deliberately,  lawfully  and  irrebuttably  made
contrary to the facts proven or probable ……. with the object of  bringing  a
particular legal rule into operation … the  assumption  being  permitted  by
law …”

They  compel  everybody  concerned  including  the  courts  to  believe  the
existence of an artificial state of facts contrary  to  the  real  state  of
facts. When a fiction is created by law, it is not open to anybody to  plead
or argue that the artificial state of facts created  by  law  is  not  true,
barring the only possible course if at all  available  is  to  question  the
constitutionality of the fiction.  It is settled  law  that  only  sovereign
legislative bodies can create legal  fictions  but  not  a  subordinate  law
making body.


33.   Whereas  presumptions  are  rules  of  evidence  for  determining  the
existence  or  otherwise  of  certain  facts  in  issue  in  a   litigation.
“Presumptions[13] were inferences which the judges  were  directed  to  draw
from certain states of facts in certain cases, and these  presumptions  were
allowed  a  certain  amount  of  weight  in  the  scale  of  proof;  such  a
presumption and such evidence amounted to full proof, such another  to  half
full, and so on.”[14]  Nothing is brought to our notice to say that  a  non-
sovereign law making body can not make  a  rule  of  evidence  containing  a
presumption. In  our  opinion,  Agricultural  Market  Committee  is  not  an
authority for the proposition  that  a  presumption  cannot  be  created  by
subordinate legislation.

34.   Rules of evidence are the principles of law which command  the  courts
or other bodies whose duty is to determine the  existence  or  otherwise  of
certain facts.  The Anglo saxon legal system recognises that facts could  be
established either by direct or circumstantial evidence.  Presuming  certain
facts, if they are so commanded by law has always  been  recognised  by  our
legal system to be one of the accepted processes for  those  bodies  charged
with the duty of collecting evidence.  Therefore,  law  making  bodies  make
provisions incorporating presumptions wherever they believe it  appropriate.
 But such practices have  well  recognised  qualifications  and  limitation.
Section 114 of the Evidence Act embodies some of  the  basic  principles  of
the law of  presumptions  and  the  limitations  thereon.  Technically,  the
Evidence Act may or may not be applicable to every  body  charged  with  the
responsibility of collecting evidence.    But the principles underlying  the
provisions  do  constitute  valuable  guides.  They  are  based   on   sound
principles of jurisprudence deduced from the observation of  human  conduct,
natural course of events and logic etc.

35.   Presumptions are of two kinds, rebuttable and  irrebuttable.  Normally
any  presumption  is  rebuttable   unless   the   legislature   creates   an
irrebuttable  presumption.   It  is  a  different  question  –  whether   an
irrebuttable presumption could be  created  by  a  non-sovereign  law-making
body? That question has not been argued before us and, therefore, we do  not
examine that proposition.

36.   Under the scheme of THE ACT, the actual quantum of  production  of  an
industry (manufacturer) is one of the essential factors for determining  the
tax liability of the manufacturer.  Both Section 3A(2) and Rule 5 deal  with
the procedure for the determination  of  the  quantum  of  production  of  a
factory producing NOTIFIED GOODS.  To determine the exact quantum  of  goods
produced by any manufacturer, there are various possible ways:
1.    Constant manual observation or  account  keeping  is  the  most  basic
process by which the quantum of goods manufactured could be determined;

2.    Adoption of a statistical measure  for  establishing  the  quantum  of
goods:

      The statistical method could be based on the  consumption  factors  of
either the raw material required for the production  of  the  goods  or  the
quantum  of  electrical  or  other  energy  utilized  by  the  industry  for
manufacturing the goods etc.; and

3.    By drawing an appropriate presumption having regard to  the  technical
data relating to the machinery employed by the manufacturer etc.






37.   Section 3A of THE ACT authorises the  Government  to  make  rules  for
determining the ACP of the manufacturers.  It further declares that the  ACP
so determined “shall be deemed to be the annual production of such goods  by
such factory”.  In other words, sub-section  (2)  commands  that  a  factory
whose ACP is determined in accordance with the rules  made  thereunder  must
be believed to produce the same quantum of goods equal to the ACP for  every
succeeding year.  The question is – whether such  a  declaration  creates  a
legal fiction or only a presumption (rule of evidence)?

38.    We  have  already  noticed  that  by  definition  a  “fiction  always
conflicts with the reality whereas presumption may be proved  to  be  true”.
It therefore follows that  there  is  no  possibility  of  a  fiction  being
rebutted by evidence.  The belief flowing from Section 3A(2)  regarding  the
annual production of a manufacturer could be rebutted by adducing  evidence.
 Section 3A(4) provides for  such  rebuttal.   Therefore,  in  our  opinion,
Section 3A(2) embodies only a rule of evidence (presumption)  but  does  not
create a legal fiction.  The language employed by the  draftsman  is  likely
to mislead to a conclusion that a fiction is created.  But  on  a  true  and
proper construction of the entire Section 3A the  only  possible  conclusion
is that Section 3A(2) embodies only a presumption (rule of evidence).

39.   Under  the  Scheme  of  the  RULES  OF  1997,  the  first  four  rules
stipulated the procedure for determining the ACP  of  the  manufacturers  of
the class to which the appellants belong,  by  adopting  the  third  of  the
abovementioned three procedures (mentioned in para 36 supra).  The  lawmaker
was conscious of the fact that the actual  quantum  of  goods  that  can  be
manufactured in a factory does not solely depend on the ACP of the  factory.
 It depends upon a number of  other  variable  factors  too.   For  example,
though the machinery employed by a manufacturer has the  technical  capacity
to produce a certain quantum (maximum  production)  of  goods,  in  a  given
interval of time, the  manufacturer  may  not  always  achieve  the  maximum
production because of the non-availability of either  the  requisite  energy
to operate the factory or finance  or  raw-material  etc.   The  first  four
rules of  the  RULE  OF  1997  create  a  scheme  of  evidence  by  which  a
presumption (based on the  technical  specification  of  the  manufacturers’
machinery) of the possibility of a certain quantum of production  is  to  be
made.  However, the  lawmaker  visualized  that  in  certain  cases  such  a
process may lead to a conclusion that the ACP  of  a  manufacturer  is  less
than  the  actual  production  that  was  achieved  by  employing  the  same
machinery at an earlier point of time - a conclusion inconsistent  with  the
established factual data.  Therefore, it is stipulated under Rule 5 that  in
such circumstances the ACP of the factory must be “deemed to be”  equivalent
to the actual production achieved in the financial year prior to the  coming
into force the RULES OF 1997. Rule 5 recognises the possibility of an  error
in arriving at the  ACP  by  applying  the  formula  contained  in  Rule  3.
Because the formula itself is based on certain assumptions. Therefore,  Rule
5 provides that the determination of the ACP made  in  accordance  with  the
procedure contained in Rule 3 is liable for correction  in  some  cases,  in
the circumstances indicated therein.

40.   But the  benefit  of  Section  3A(4)  i.e.  the  right  to  rebut  the
presumption regarding the annual production is  denied  to  a  sub-class  of
manufacturers falling under Rule 96ZP(3)) who are also a part  of  a  larger
class falling under the Scheme of Rule 96ZP of  the  Central  Excise  Rules,
1944.




41.   But for the declaration of sub-rule (3)  of  Rule  96ZP,  an  assessee
whose ACP is determined in accordance with the Rule 3 of the RULES  of  1997
would be entitled under sub-section (4) of Section 3A of THE  ACT,  to  seek
the determination of his actual production and the tax liability thereon.

42.   The determination of the ACP is a one time affair.   It  appears  from
the factors indicated in the Rule 3 that the ACP would remain  unaltered  so
long as there is no change in the machinery  employed  and  the  ‘number  of
utilized hours” of the machinery  remains  constant.   But  the  “number  of
utilized hours”  could  vary  from  time  to  time  depending  upon  various
factors, such as, the availability of  electric  power,  capital  or  labour
etc.   Such  variations  could  result  in  a  situation  that  the   actual
production of the factory for any given interval of time is  less  than  the
ACP.  Therefore, it is declared under Section  3A(4)  that  an  assessee  is
entitled to seek determination of the actual production of  his  factory  if
it is less than the ACP.

43.   In our opinion, such an opportunity provided under Section 3A(4) is  a
recurring opportunity available to the  assessee  from  time  to  time.   We
reach this conclusion in view  of  the  language  of  sub-section  (4)  more
particularly “the Commissioner of  Central  Excise  shall  …  determine  the
amount of duty payable  by  the  assessee  with  reference  to  such  actual
production  at  the  rate  specified  under  Section  3”.   Obviously,   the
determination of amount of duty payable by the assessee is not  a  one  time
affair.  Such a determination is to be made periodically.    Therefore,  the
opportunity of placing evidence for the establishment of  actual  production
for a period relevant for the assessment must be available to  the  assessee
from time to time.

44.   Whether such a statutory  right  is  in  any  way  curtailed  by  Rule
96ZP(3) of the Rules of 1944 is required to be examined.   Rule  96ZP(3)  is
relevant in the context of the assessment of duty for  those  assessees  who
choose to opt for the payment of the excise duty on a  monthly  basis.   The
duty payable by such assessees would be  Rs.300  x  ACP  in  metric  tonnes.
Rule 96ZP(3) stipulates  that  an  assessee  seeking  to  avail  the  scheme
(concessional  rate  of  duty)  under  Rule  96ZP(3)  is  required  to  make
application in the prescribed format.  The Rule is silent  about  the  point
of time at which such an application is required to be made.   But  sub-rule
(3) stipulates the time within which the duty is required to be paid,  i.e.,
in the “beginning of each month” and “latest by the tenth of each month”.

45.   Whether an assessee who chooses once to pay  duty  in  terms  of  Rule
96ZP(3) can be compelled to pay duty calculated in accordance with the  said
rule for all times to come without any regard to the actual  production?  is
a question which requires examination.

46.   It is possible that in a given case an assessee choosing  at  a  given
point of time to make payment of duty on monthly basis calculated  in  terms
of sub-rule (3) but a few  months  later  (for  that  matter  even  a  month
later), for various legitimate reasons,  production  may  fall  considerably
below the ACP (of the assessees factory).  It is  possible,  in  some  cases
there can be total cessation  of  the  manufacturing  activity  for  reasons
beyond the control of the assessee.  If the option exercised by an  assessee
under Rule 96ZP(3) is held to be good for eternity it would  not  only  lead
to illogical consequences but also  to  an  unconstitutional  collection  of
taxes without there being a taxable event.  We do not see anything  in  Rule
which prevents the assessee from opting out of the Scheme of Rule 96ZP(3).

47.   After availing the scheme for a month by paying the duty  in  advance,
if the assessee ends up in a situation of not  being  able  to  produce  the
quantum of goods equivalent to 1/12 of his  ACP,  we  see  no  reason  which
compels the assessee to continue the availment of concessional rate of  duty
(for the next month) on a quantum  of  production  which  he  is  unable  to
achieve.  In our opinion the assessee  must  have  an  option  to  make  the
payment of duty in accordance with Rule 96ZP(1) at a higher rate but on  the
actual production. For those assessees who chose to pay the duty  at  higher
rate in accordance with  sub-rule  (1)  the  benefit  of  section  3A(4)  is
available. The rule does not  bar  it.  However  the  question  remains  how
frequently the assessee is entitled to exercise such an option;  whether  it
is annual or monthly is a matter which requires a further examination.

48.   It is argued by the learned counsel for the respondent in view of  the
two judgments of this Court reported in Commissioner  of  Central  Excise  &
Customs v. Venus Castings (P) Ltd., (2000) 4  SCC  206,  Union  of  India  &
Others v. Supreme Steels and General Mills & Others, (2001) 9 SCC  645,  the
question regarding the vires of sub-rule (3) of Rule  96ZP  of  the  Central
Excise Rules, 1944 is no more res-integra.  It  is  also  submitted  by  the
respondent that this Court has already declared that the assessee who  makes
a choice once to avail the scheme under sub-rule (3) cannot go back  on  his
choice[15].

49.   In both the abovementioned cases, this Court  was  dealing  with  Rule
96ZO(3) of the Central Excise  Rules,  1944.   Neither  the  vires  of  Rule
96ZP(3) nor its interpretation  actually  fell  for  consideration  of  this
Court in either of the abovementioned cases.  However,  in  Venus  Castings,
at para 9, a reference was made to Rule 96ZP and this  Court  observed  that
“Rules  96ZO  and  96ZP  provide  for  procedure  to  be  followed  by   the
manufacturer of ingots and billets and hot re-rolled products  respectively.
 The scheme envisaged under these provisions is identical”.


50.   With utmost respect to the learned Judges, we  find  it  difficult  to
accept the finding that the scheme of both the Rules  is  identical.   There
are broad similarities between the Rules but they are not identical  and  we
shall point out and deal with the difference later.

51.   In Venus Castings, this Court held that both the abovementioned  Rules
contain scheme of “two alternative procedures to be adopted  at  the  option
of the assessee”  and  concluded  that  “the  manufacturers,  if  they  have
availed the procedure under Rule 96ZO(3) at their option, cannot  claim  the
benefit of determination of production capacity under Section 3A(4)  of  the
Act which is specifically excluded”.
“11. … What can be seen is that the charge under the Section is  clearly  on
production of the goods but the  measure  of  tax  is  dependent  on  either
actual production of goods or on some other basis.   The  incidence  of  tax
is, therefore,  on  the  production  of  goods.   It  cannot  be  said  that
collection of tax based on the annual furnace capacity is not  relatable  to
the production of goods and does not carry  the  purpose  of  the  Act.   In
holding whether a relevant rule to be ultra vires it  becomes  necessary  to
take into consideration the purpose of the enactment as  a  whole,  starting
from the preamble to the last provision thereto. If the entire enactment  is
read as a whole indicates the purpose and that purpose  is  carried  out  by
the rules, the same cannot be stated to be ultra vires of the provisions  of
the enactment.  Therefore, it is made clear that the manufacturers, if  they
have availed of the procedure under Rule 96ZO(3)  at  their  option,  cannot
claim the benefit of determination  of  production  capacity  under  Section
3A(4) of the Act which is specifically excluded.”


Two things are required to be noticed  from  the  above.   This  Court  made
references to Rule 96ZP in the earlier paragraphs of the judgment  but  when
it came to the conclusion, it only dealt with  Rule  96ZO(3)  but  not  Rule
96ZP(3). Secondly,  Section  3A(4)  of  THE  ACT  does  not  deal  with  the
determination of the production capacity of  the  factory.   It  only  deals
with the right  of  the  assessee  to  establish  that  notwithstanding  the
determination of the ACP, the actual production achieved is  less  than  the
ACP determined.  The Court concluded “that if the entire enactment  is  read
as a whole indicates the purpose and that purpose  is  carried  out  by  the
Rules, the same cannot be stated to be ultra vires of the provisions of  the
enactment.”


52.   With respect, we are of the opinion that such a statement of  law  has
no basis either in precedent or on any settled principles of  interpretation
of statutes.  On the other hand, it is in conflict with a long settled  line
of authorities that subordinate legislation which is in  conflict  with  the
parent enactment is unsustainable[16].




53.   The decision in Supreme Steels  was  rendered  by  a  Bench  of  three
learned Judges.  The vires of Rule 96ZO was directly  in  issue  in  Supreme
Steels[17].   This  Court  in  Venus  Castings  noted[18]  that  “in   these
proceedings the validity of the provisions of the Rules is not in  challenge
but  only  their  interpretation  and  application  have  to  be  examined”.
However, the learned Judges in Supreme Steels opined  that  the  controversy
was finally settled by the judgment of this Court in Venus Castings.

54.   Apart from the various problems noticed by us  in  the  abovementioned
two judgments, there are marked differences in the language  employed  under
Rule 96ZP(3) and the scheme appears to be different  from  the  one  adopted
under the scheme of Rule 96ZO(3).



55.   Rule 96ZO deals with levy, assessment and collection  of  excise  duty
on the manufacture of non-alloy steel ingots  and  billets.   Duty  on  such
goods is payable at the rate of Rs.750/- per metric  tonne.    Sub-rule  (3)
prescribes levy and collection of a lump sum of  Rs.5  lakhs  per  month  in
cases of those manufacturers who have a  total  furnace  capacity  of  three
metric tonnes installed in  their  factories.  However,  such  a  scheme  is
available at the option of the assessee. In other words, a manufacturer  has
a choice to make a lump sum payment  of  Rs.5  lakhs,  irrespective  of  his
actual production for that month, in two instalments instead of  paying  the
duty at the rate of Rs.750/- per metric tonne of the  actual  production  of
the manufacturer.  Whether the capacity of three metric tonnes in  the  said
sub-rule is the capacity of the factory per day or per month  or  per  annum
is not very clear from the language of the Rule.  The  expression  does  not
appear to be defined under the Rules.



56.   Coming to Rule 96ZP(3), it also provides an  option  to  the  assessee
falling under the Rule to pay the duty at the concessional  rate  of  Rs.300
per metric tonne contrary to the liability of the assessees who do  not  opt
to avail the procedure under sub-rule (3) to pay Rs.400  per  metric  tonne.
But both the classes of  assessees  are  required  to  pay  the  total  duty
calculated on the ACP of the factory.  While those who  choose  to  pay  the
lower rate of tax under sub-rule (3) pay the tax every month and  those  who
do not opt to avail the scheme under sub-rule (3) are required  to  pay  tax
long after duty actually falls due as indicated under sub-rule (1) and (2).



57.   The only similarity between Rules 96ZO(3) and  96ZP(3)  is  that  both
the Rules seek to eliminate the  benefit  of  the  procedure  under  Section
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
under Rules 96ZO and 96ZP.






58.   Therefore, we find it  difficult  to  accept  the  submission  of  the
respondent that the issue is covered by  the  judgments  of  this  Court  in
Venus Castings  and  Supreme  Steels.   In  our  opinion,  for  the  reasons
mentioned above, these two judgments require a  further  examination.  Apart
from that, these  judgments  did  not  deal  with  vires  of  Rule  96ZP(3).
However, in view of the fact that Supreme Steels is a decision  rendered  by
a Bench of three learned Judges, we deem it appropriate  that  the  question
of law be settled by a Bench of an  appropriate  strength.   We,  therefore,
direct the Registry to place the matter before Hon’ble the Chief Justice  of
India for further orders.

                                    ….....................................J.
                                                       (J. CHELAMESWAR)




                                            …….  ………….....................J.
                                                     (ABHAY MANOHAR SAPRE)
New Delhi
March 24, 2017

-----------------------
[1]    Section 3 insofar as it is relevant for the purpose of this  judgment
read at the relevant point of time:

1     “Section 3. Duties specified in the  First  Schedule  and  the  Second
Schedule to the Central Excise Tariff Act, 1985 to  be  levied.-  (1)  There
shall be levied and collected in such manner as may be prescribed, -


      a duty of  excise  on  all  excisable  goods  which  are  produced  or
manufactured in India as, and at the rates, set forth in the First  Schedule
to the Central Excise Tariff Act, 1985;”

[2]    Ins. By Act  18  of  2008,  sec.  79  (w.e.f.  10-5-2008).    Earlier
section 3A was inserted by Act 81 of 1956.  sec. 2 (w.e.f.  22-12-1956)  and
was omitted by Act 58 of 1960, sec. 2 and Sch.  I  (w.e.f.  26-12-1960)  and
was again inserted by Act 26 of 1997, sec. 81  (w.e.f.  14-5-1997)  and  was
amended by Act 10 of 2000, sec. 93 (w.e.f. 1-4-2000) and was  again  omitted
by Act 14 of 2001, sec. 121 (w.e.f. 11-5-2001).

[3]    Rule  96ZP(1)   A  manufacturer  of  non-alloy  steel  hot  re-rolled
products falling under  sub-heading  Nos.  ……………  of  the  Schedule  to  the
Central Excise  Tariff  Act,  1985  (5  of  1986),  shall  debit  an  amount
calculated at the rate of  Rs.  400/-  per  metric  tonne  at  the  time  of
clearance of ….products ….from his factory ….subject to the  condition  that
the total amount of duty liability shall  be  calculated  and  paid  in  the
following manner :-

[4]    Rule 96ZP(3)   Notwithstanding anything contained elsewhere in  these
rules, a manufacturer may, in the beginning of each month from  1st  day  of
September, 1997 to the 31st day of March, 1998 or any other financial  year,
as the case may be, and latest by  the  tenth  of  each  month,  pay  a  sum
equivalent to one-twelfth of the amount calculated at the rate  of  Rs.300/-
multiplied by the annual capacity in metric tonnes, as determined under sub-
rule  (3)  of  rule  3  of  the  Hot  Re-rolling   Mills   Annual   Capacity
Determination Rules, 1997, and the amount so paid  shall  be  deemed  to  be
full and final discharge of his duty liability for the period from  the  1st
day of September, 1997 to  the  31st  day  of  March,  1998,  or  any  other
financial year, as the case may  be,  subject  to  the  condition  that  the
manufacturer shall not avail of the benefit, if any, under  the  proviso  to
sub-section (3) or under sub-section (4) of the section 3A  of  the  Central
Excise Act, 1944 (1 of 1944).
[5]     Rule 5 was challenged on the following grounds: - (Written
Submissions of the appellant)

      A .   Section 3A (2) deems  the  annual  production  capacity  as  the
actual production and the  manufacturer  has  to  pay  duty  on  the  annual
production capacity without reference to actual production.

      But Rule 5 introduces a further deeming that  the  1996-97  production
shall be deemed to be actual production if the 1996-97 production is  higher
than the production capacity determined as per rule 3.

      A subordinate legislation cannot introduce  a  deeming  provision  and
that too contrary to the deeming provision in the plenary legislation.   The
statutory presumption under Section 3A is of a limited character  and  being
a fiscal legislation has to be strictly construed  in  the  sense  that  any
factory  which  is  not  contemplated  by  the  Act  cannot  be  taken  into
consideration to raise a presumption for levy  of  excise  duty.    Being  a
delegated legislation  the  delegate  which  has  been  authorised  to  make
subsidiary rules has to work within the scope of the Act or the policy  laid
thereunder.  The delegate under the grab of making  rules  cannot  legislate
on the field covered by the Act and has to restrict itself to  the  mode  of
implementation of the Act”.  The creation of the legal fiction under Rule  5
is beyond scope of the legislative policy to levy  excise  duty  on  certain
notified goods on the capacity of production determined  under  the  formula
specified in  rule  3.   Such  legal  fiction  can  be  created  only  by  a
legislature and not by a delegate in exercise of rule  making  power.   Also
Section 3A  (2)  only  authorises  the  Central  government  to  make  rules
providing for determination of the annual capacity  of  production  or  such
factor relevant to the annual capacity  of  production.  The  section  3A(2)
does not authorize the Central government to create  further  legal  fiction
on the annual capacity of production which is exclusively within the  domain
of the legislature.   Thus the legal fiction created in rule 5 that in  case
the annual capacity determined by the formula in sub rule 3  of  rule  3  in
respect of a mill, is less than the actual production  of  the  mill  during
the financial year 1996-97, then the annual capacity so determined shall  be
deemed to be  equal  to  the  actual  production  of  the  mill  during  the
financial year 1996-97 is beyond the scope of the delegate and is  therefore
liable to be declared  ultra  vires,  arbitrary  violative  of  article  14,
unconstitutional and bad in law.

      Reference may be made to (1997) 5 SCC 516
[6]    The relevance of the financial year 1996-97 in  the  context  of  the
RULES is that the RULES are made and brought into  force  with  effect  from
the 1st of August, 1997.  The financial  year  1996-1997  is  the  financial
year immediately preceding the making of the RULES of 1997.

1 [7]  Section 114. Court may presume existence of certain acts:- The  court
may presume the existence of  any  fact  which  it  thinks  likely  to  have
happened, regard being had to the common course  of  natural  events,  human
conduct and public and private business, in their relation to the  facts  of
the particular case.

[8]    Illustration (d) – That a thing or state of  things  which  has  been
shown to be in existence within a period  shorter  than  that  within  which
such things or  state  of  things  usually  cease  to  exist,  is  still  in
existence.
[9]
      [10] Nandlal Wasudeo Badwaik   v.  Lata  Nandlal  Badwaik  &  Another,
(2014) 2 SCC 576. “We  must  understand  the  distinction  between  a  legal
fiction and the presumption of a fact.  Legal fiction assumes  existence  of
a fact which may not  really  exist.   However,  a  presumption  of  a  fact
depends on  satisfaction  of  certain  circumstances.   Those  circumstances
logically would lead to the fact sought to be presumed.  Section 112 of  the
Evidence Act does not create a legal fiction but provides for  presumption.”
  (Para 18)
[11]   Fullet, L.L., Legal Fictions, Illinois Law Review (Vol. XXV No.4,
December 1930)
[12]     Del  Mar,   Maksymilian,   Legal   Fictions   and   Legal   Change,
International Journal of Law in Context (2013)
[13]   Vermeer-Künzli, Annemarieke,  As If: The Legal Fiction in  Diplomatic
Protection, European Journal of International Law (2007)

[14]   Presumptions are of four kinds according to English law.
      1.    Conclusive presumptions.  These are rare, but when they occur
they provide that certain modes of proof shall not be liable to
contradiction.
      2.    Presumptions which affect the ordinary rule as to the burden  of
proof that he who affirms must prove.  He who affirms that  a  man  is  dead
must usually prove it, but if he shows that the man has not  been  heard  of
for seven years, he shifts the burden of proof on his adversary.
      3.    There are  certain  presumptions  which,  though  liable  to  be
rebutted, are regarded by English law as  being  something  more  than  mere
maxims, though it is by no means easy to say how much more.  An instance  of
such a presumption is to be found in the  rule  that  recent  possession  of
stolen goods unexplained raises a presumption that the possessor  is  either
the thief or a receiver.
      4.    Bare presumptions of fact, which are nothing  but  arguments  to
which the Court attaches whatever value it pleases.
[15]    Stephen,  James  Fitzjames,   The  Indian  Evidence  Act   With   An
Introduction on the Principles of  Judicial  Evidence,  (Calcutta,  Thacker,
Spink & Co.) Chapter IV p. 132
[16]   Union of India & Others v. Supreme Steels and General Mills &
Others, (2001) 9 SCC 645,
      “Para 3.  .. The manufacturer cannot opt twice  during  one  financial
year first choosing to pay in accordance with sub-rule 3 of  Rule  96ZO  and
thereafter to switch over to actual production basis under Section 3A(4)  of
the Act, in case it is less than the duty payable under sub-rule 3  of  Rule
96ZO.  The said sub rule  is  quite  clear  that  the  option  under  it  is
available subject to the condition that once having opted  for  it,  benefit
if any under sub-s. (4) of Section 3A of the Central Excise Act, 1944  shall
not be available. …”

[17]   Hukam Chand Etc. v. Union of India & Others, AIR 1972 SC 2427 :
(1972) 2 SCC 601,
         Para 8   …….The  underlying  principle  is  that  unlike  Sovereign
Legislature which has power to  enact  laws  with  retrospective  operation,
authority vested with the power of making  subordinate  legislation  has  to
act within the limits of its power and cannot  transgress  the  same.    The
initial difference between subordinate  legislation  and  the  statute  laws
lies in the fact that a subordinate law making body is bound  by  the  terms
of its delegated or derived authority and that court of law,  as  a  general
rule, will not give effect to the rules, thus made,  unless  satisfied  that
all the conditions  precedent  to  the  validity  of  the  rules  have  been
fulfilled (see Craies on Statute Law, p. 297, Sixth Edition).

      Also See: Godde Venkateswara Rao v. Government  of  Andhra  Pradesh  &
Others, AIR 1966 SC 828, para 10
[18]
      [19] Vires of Rule 96ZO of the Central  Excise  Rules  has  also  been
challenged on the ground that it is inconsistent with the provisions of  the
Act.                              - Para 1
[20]   In para 7

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.