Slotco Steel Products Pvt Ltd & Anr v. Union of India & Anr

order as to costs.

CHIEF JUSTICE

AUGUST 11, 2011

SANJIV KHANNA, J kapil

* IN THE HIGH COURT OF DELHI AT NEW DELHI Date of Decision: 11th August, 2011 + W.P.(C) 5786/2011 SLOTCO STEEL PRODUCTS PVT LTD & ANR ..... Petitioners Through Mr.Sidharth Luthra, Sr.Advocate with Ms.Arundhati Katju, Adv. versus UNION OF INDIA & ANR ..... Respondents Through Mr.Himanshu Bajaj, Adv. R-1 Mr.Satish Kumar, Adv. R-2 CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE SANJIV KHANNA 1. Whether reporters of the local papers be allowed to see the judgment? Yes 2. To be referred to the Reporter or not? Yes 3. Whether the judgment should be reported in the Digest? Yes DIPAK MISRA, CJ By this writ petition preferred under Article 226 of the Constitution of India, the petitioners have prayed for declaring the second proviso to Rule 4(3) of the Central Excise (Compounding of Offences) Rules, 2005 (for short ‗the 2005 Rules') as ultra vires the Central Excise Act, 1944 (for brevity ‗the Act') as it runs counter to the provisions of the Act and also as it plays foul of Article 14 of the Constitution of India. 2. We have heard Mr.Sidharth Luthra, learned senior counsel along with Ms.Arundhati Katju, learned counsel for the petitioner, Mr.Himanshu Bajaj and Mr.Satish Kumar, learned counsel for the respondents No.1 and 2 respectively. 3. It is submitted by Mr.Luthra, learned senior counsel that the proviso to the Rule in question runs counter to the language employed in Section 9A(2) of the Act and also travels beyond the rule making power as enshrined under Section 37(2)(id) of the Act. It is his submission that by incorporating such a provision by way of an amendment in the Rules in 2007, the right to appeal of the petitioner under Section 35G of the Act stands frustrated and once a statutory right of appeal is provided in an enactment, the same cannot be defeated by envisaging such conditions, as has been done in the Rule in question. It is also highlighted by him that the concept of compounding has a different connotation under the Code of Criminal Procedure and in a criminal case an accused at best can be convicted and burdened with fine but for the purpose of compounding, the rule making authority has imposed such conditions which are really rigorous and, therefore, it frustrates the concept of reasonableness, which offends Article 14 of the Constitution of India. 4. Learned counsel for the respondents have submitted that the challenge is absolutely baseless and does not deserve acceptation. 5. To appreciate the submissions put forth by Mr.Luthra, it is apposite to refer to Section 9A of the Act. It reads as follows: - ―9A. Certain offences to be non-cognisable. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (5 of 1898), offences under section 9 shall be deemed to be non- cognizable within the meaning of that Code. (2) Any offence under this Chapter may, either before or after the institution of prosecution, be compounded by the Chief Commissioner of Central Excise on payment, by the person accused of the offence to the Central Government, of such compounding amount as may be prescribed. Provided that nothing contained in this sub-section shall apply to – (a) a person who has been allowed to compound once in respect of any of the offences under the provisions of clause (a), (b), (bb), (bbb), (bbbb) or (c) of sub-section (1) of section 9; (b) a person who has been accused of committing an offence under this Act which is also an offence under the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985); (c) a person who has been allowed to compound once in respect of any offence under this Chapter for goods of value exceeding rupees one crore; (d) a person who has been convicted by the court under this Act on or after the 30th day of December, 2005.‖ 6. Section 37, which confers power on the Central Government to make rules in sub-section (1) clearly postulates the Central Government may make rules to carry into effect the purposes of this Act. Section 37(2)(id) lays the following po