Emergency power of the Central Government under Central Excise Tariff Act, 1985 to increase the duty :

The Tariff Act with its two schedules is an Act of Parliament and can be amended only by Parliament. This is usually done through the Finance Bill in the Annual Budget . Any increase in the duties proposed in the Finance Bill will have immediate effect (from the midnight of the Budget Day). Any decrease will have effect only after the bill is enacted. However, the Government has the power to grant exemption from the whole or part of the duty, by notification as per Section 5A of the Central Excise Act, 1944. So whenever duty is reduced in the Budget, it is normally given effect to by an exemption notification.

Generally, the Government increases the duty only through the Finance Bill. However, as per Section 3 of the Central Excise Tariff Act, the Government also has emergency powers to increase the duty by amending the rates in the First and Second Schedules, subject to certain conditions. This is only an emergency power and is rarely used. Section 3 of CETA provides that:

Where, in respect of any goods, the Central Government is satisfied that the duty leviable thereon under section 3 of the Central Excise Act, 1944 should be increased and that circumstances exist which render it necessary to take immediate action, the Central Government may, by notification in the Official Gazette, direct an amendment of the First Schedule and the Second Schedule to be made so as to substitute for the rate of duty specified in the First Schedule and the Second Schedule in respect of such goods, –

(i) in a case where the rate of duty as specified in the First Schedule and the Second Schedule as in force immediately before the issue of such notification is nil, a rate of duty not exceeding fifty per cent ad valorem expressed in any form or method;

(ii) in any other case, a rate of duty which shall not be more than twice the rate of duty specified in respect of such goods in the First Schedule and the Second schedule as in force immediately before the issue of the said notification.

However, the Central Government shall not issue any notification for substituting the rate of duty in respect of any goods as specified by an earlier notification issued under these provisions by the Government before such earlier notification has been approved with or without modifications.

“Form or method”, in relation to a rate of duty of excise, means the basis, namely, valuation, weight, number, length, area, volume or other measure with reference to which the duty may be levied.

Every notification under the above provisions shall be laid before each House of Parliament, if it is sitting, as soon as may be after the issue of the notification. However, if the Parliament is not sitting the notification shall be placed within seven days of its re-assembly. The Central Government shall seek the approval of Parliament to the notification by a resolution moved within a period of fifteen days beginning with the day on which the notification is so laid before the House of the People. However, if the Parliament makes any modification in the notification or directs that the notification should cease to have effect, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be, but without prejudice to the validity of anything previously done thereunder.

It has been clarified that any notification issued under the above provisions including any such notification approved or modified may be rescinded by the Central Government at any time by notification in the Official Gazette.