Collectors Of Central Excise v. New Tobacco Co. (1998) 8 SCC 250

COLLECTORS OF CENTRAL EXCISE V. NEW TOBACCO CO.

ISSUE:

Whether a notification under the Central Excise Act becomes enforceable on the date of its printing in the official Gazette or only when it is made publicly accessible?
Whether the liability to pay differential excise duty be imposed retroactively for the period before a notification is made available to the public?

RULE:

A notification under the Central Excise Act becomes effective only when it is made publicly accessible, ensuring that individuals affected by it have the opportunity to be aware of its provisions.
Principles of natural justice require that laws or notifications imposing obligations or penalties must be effectively communicated to the public to ensure fairness and legal enforceability.

FACTS:

The New Tobacco Company (previously Duncan Tobacco Company), a manufacturer of cigarettes, paid excise duty based on Central Excise Notification No. 30/79, dated March 1, 1979. This notification was periodically amended until it was rescinded by Notification No. 284/82 on November 30, 1982.
Notification No. 284/82 introduced new and higher rates of excise duty but was not immediately available to the public due to delays in dissemination.
Between November 30, 1982, and December 8, 1982, the company cleared 79,456 million cigarettes and paid duty at the earlier rates prescribed under Notification No. 30/79. The company claimed it was unaware of the new notification as it had not been made publicly accessible.
On December 22, 1982, the Assistant Collector of Central Excise issued a Show Cause Notice to the company, demanding payment of the differential duty amounting to the difference between the old and new rates for the period November 30 to December 8, 1982.
The company contended that the new notification became enforceable only on December 8, 1982, when it was made available for public access. They argued that until then, the earlier notification remained applicable.
On April 11, 1983, the Assistant Collector rejected the company’s argument and confirmed the demand for the differential duty.
The company appealed to the Collector of Central Excise (Appeals), who upheld the Assistant Collector’s decision on October 4, 1985.
Dissatisfied, the company further appealed to the Customs, Excise, and Gold (Control) Appellate Tribunal (CEGAT). It argued that under the law and principles of natural justice, a notification must be made available to the public to be considered effective.
In support of its claim, the company presented a letter dated August 2, 1983, from the Controller of Publications, Ministry of Finance, stating that Notification No. 284/82 was made available for sale to the public only on December 8, 1982.
CEGAT, relying on this evidence and earlier judicial precedents, ruled in favor of the company. It held that the notification became enforceable only on December 8, 1982, when it was made available to the public. The Tribunal concluded that the company was not liable to pay the differential duty for the disputed period.
The Collector of Central Excise, representing the government, challenged this decision in the Supreme Court under Section 35L(b) of the Central Excise Act, 1944, contending that a notification becomes effective from the date of its publication in the official Gazette, irrespective of public accessibility.

HELD:

The Supreme Court upheld the decision of the Tribunal in Civil Appeal No. 4569 of 1989, agreeing that a notification becomes effective only when it is made publicly accessible, not merely when it is printed in the Gazette.
The Court emphasized that Section 38 of the Central Excise Act mandates that notifications be published in the official Gazette, but publication requires making them available to the public. Mere printing does not satisfy this requirement.
The Court relied on principles of natural justice, highlighting that laws or notifications imposing obligations or penalties must be effectively communicated to the affected parties to ensure fairness and legal validity.
It was held that the new notification dated November 30, 1982, became enforceable only on December 8, 1982, when it was made publicly available. Hence, the company was not liable to pay differential duty for the period between November 30 and December 8, 1982.
Other appeals concerning similar issues were remitted to lower authorities, including the Assistant Collector of Central Excise, to determine the date when the respective notifications became effective based on public accessibility.
The Court directed that the determination of refunds or liabilities be conducted under Section 11-B of the Central Excise Act, allowing both parties to present additional evidence.
The Court clarified that merely printing a notification in the Gazette without making it available to the public does not constitute effective publication under the law.