Associated Aluminium Industries … vs Union Of India on 1 January, 1800

Bombay High Court
Associated Aluminium Industries … vs Union Of India on 1 January, 1800
Equivalent citations: 1990 (48) ELT 371 Bom
Bench: S Bharucha


1. The principal argument in this petition is that there is invidious discrimination between manufacturer – exporters following the procedure laid down under Rule 12 of the Central Excise Rules as contrasted with those following the procedure under Rule 13 thereof. It is necessary to advert to these provisions immediately. Under Rule 12 the Central Government may, from time to time, by notification in the Official Gazette, grant rebate of duty paid on excisable goods, if exported outside India, to such extent, and subject to such safeguards, conditions and limitations as regards the class of goods, destination, mode of transport, and other allied matters as may be specified therein. Rule 13 provides that goods, other than those falling under Item Nos. 5 and 12 of the First Schedule to Central Excise and Salt Act, may be exported outside India without payment of duty from warehouse or a licensed factory, provided the export is made in accordance with the procedure set out in Chapter IX if the Rules and the owner enters into a bond in the proper form, with such surety or sufficient security, and under such conditions as the Collector approves, in a sum equal at least to the duty chargeable on the goods, for the due arrival thereof at the place of export and export therefrom and such bond shall not be discharged unless the goods are duly exported or are otherwise accounted for to the satisfaction of the Collector.

2. It is the petitioners case that between October 1976 and October 1988 they manufactured aluminium products and exported the same following the procedure prescribed by Rule 13 and that thereafter, by reason of representations made to them by the Excise authorities, they made such exports following the procedure prescribed by Rule 12. Upon following the procedure prescribed by Rule 12, the petitioners were granted full rebate of the excise duty paid by them.

3. On 11th July 1977 the Assistant Collector of Central Excise, Bombay, served upon the petitioners a notice of demand in the sum of Rs. 1,27,236.06 ps. for excess rebate granted as mentioned therein. On 27th July 1977 the petitioners were served with a notice issued under Rule 10 to show cause why they should not be required to pay the aforesaid amount which was alleged to have been erroneously refunded. On 15th September 1977 the petitioners replied to the show-cause notice. On 4th August 1978 the Assistant Collector fond that the petitioners were not entitled to rebate of the whole of the excise duty which had been paid by them and that they were entitled to rebate only at the rates prescribed in a notification dated 17th May 1969. He, therefore, ordered the petitioners to refund the sum of Rs. 1,20,055.35.

4. The petitioners preferred an appeal which was, on 27th November 1979, dismissed. The petitioners then preferred a revision application to the Central Government. On 11th August 1980 it was rejected. On 2nd April 1981 a letter of demand for the sum of Rs. 1,20,055.35 Ps. was served upon the petitioners.

5. The argument of Mr. Mehta, learned counsel for the petitioners, was that had the petitioners followed the procedure prescribed under Rule 13, that is to say, had they exported the goods under bond, they would been required to pay no excise duty thereon; but having employed the procedure under Rule 12, they became entitled to a rebate only of such portion of the excise duty paid by them as was permitted by the said notification. In this submission, the said notification should, therefore, be struck down.

6. The argument proceeds upon the basis that the procedure under Rule 12 and that under Rule 13 were open to the petitioners. When the petitioners opted to follow the procedure under Rule 12 they knew, or must be deemed to have known, that they would be entitled to rebate only to such extent as the Central Government by notification prescribed, whereas if they had followed the procedure under Rule 13 they would pay no excise duty. There being a choice of procedure, it cannot be said that there was any discrimination.

7. Mr. Mehta said that the petitioners switched from the procedure under Rule 13 to under Rule 12 by reason of the representation made by the Excise authorities. This is disputed. In fact, in the affidavit of the respondents it is said that “the facility to export the goods under the provisions of Rule 13 was admittedly not extended to the products of aluminium.” The order in revision also sets out that it was the petitioners’ own submission that there was no facility for exporting aluminium products under bond at the relevant time. There is no merit in the submission that the petitioners were compelled to utilise the procedure under Rule 12 by the representations of the Excise authorities.

8. Mr. Mehta submitted that the proceedings commenced with the show- cause notice dated 27th July 1977 under Rule 10 had lapsed. Rule 10 as it read on 27th July 1977 was substituted on 6th August 1977. Whereas Rule 10 as it read prior to 6th August 1977 permitted recovery of duty or charges short-levied or short-paid or erroneously refunded within three months of the date on which the duty or charges were paid or refunded, the substituted Rule 10 extended that period to six months. On 16th November 1980 the substituted Rule 10 was removed from the Rules and Section 11A was introduced into the Act. It provided for the recovery of duty not levied or paid or short-levied or short-paid or erroneously refunded within six months from the relevant date. My attention was drawn by Mr. Mehta to the judgment of a Division Bench of the Allahabad High Court in Ajanta Paper Products v. Collector of Central Excise, Kanpur.1982 (10) E. L. T. 201. The learned Judges noted that the amending Act which brought Section 11A on the statute book did not contain any provision to the effect that proceedings pending under Rule 10 on the date on which Section 11A came into effect would treated as proceedings under that section. They, therefore, held that proceedings taken under Rule 10 could not be continued after Section 11A into effect.

9. Mr. Deodhar, learned counsel for the respondents, submitted, and rightly, that the principles of the Allahabad High Court’s decision would not apply to the instant case because the order on the show- cause notice dated 27th July 1977 under Rule 10 had been made on 4th August 1978 at which time Rule 10 was in effect. It could note, therefore, be contended that the proceedings initiated by the show- cause notice under Rule 10 on 27th July 1977 has lapsed.

10. At the time the show-cause notice dated 27th July 1977 under Rule 10 was issued Rule 10 in its original form was in effect. It presrcibed, as aforesaid, the period of three months. The recovery from the petitioners under show-cause notice must, accordingly, be stricted to refunds made within the period of three months before 27th July 1977.

11. With the clarification aforesaid, the petition is dismissed.

There shall be no order as to costs.

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