ORDER
H.R. Syiem, Member (T)
1. By Memorandum dated 1st December, 1981, M/s. Bharat Petroleum Corporation Limited, appeals against the order in appeal No. V-2(6) 132/79/4695 dated 4-6-81 passed by the Collector of Central Excise (Appeals) Bombay, in respect of shipment of superior kerosene (Aviation Turbine Fuel) from Bombay Airport as aircraft stores to foreign bound aircraft under bond under Rule 13 of Central Excise Rules, 1944. In his order, the Assistant Collector says-
In this connection it may be observed that in case of petroleum products including Superior Kerosene (T.I. 7) supplied as aircraft stores under bond under Rule 13 of C. Ex. Rules, 1944, the quantum of duty which is not rebated when goods are cleared on payment of duty under Rule 12 in terms of G.I.’s Notfn. No. 364/77-C.E. dated 30-12-77 should be charged to maintain parity in respect of ultimate and net incidence of duty covered under the two rules. Accordingly Basic duty @ Rs. 23.75 per kilo litre with effect from 30-12-77 and Basic duty at Rs. 23.75 plus Special Excise Duty at 5% of the effective Basic duty w.e.f. 1-3-78 is payable in respect of your supplies of Superior Kerosene (ATF) under bond under Rule 13 of C. Ex. Rules, 1944 to foreign bound aircrafts (sic).
2. He also observed that the classification lists filed by the appellants “effective from 30-12-77 as a result of Government of India’s No 364/77-C.E. dated 30-12-77 and effective from 1-3-78 as a result of budgetary changes, 1978 and imposition of special excise duty equal to 5% of the effective Basic Duty have been approved”. He mentioned also that the special excise duty at 5% became effective from 1-3-78.
3. The Collector (Appeals) rejected the appeals, except for disallowing the demands pertaining to the periods beyond six months from the date of demand holding such demands to be time-barred. He, however, confirmed the demands within six months. He also held that the words “may in like manner be exported” is an expression of great significance and it certainly referred to the provisions of Rule 12 and Rule 12A, and observed that the procedure for export of goods under Rule 13 is prescribed under Chapter IX of Central Excise Rules.
4. Examination of Chapter IX of Central Excise Rules will show that this Chapter is headed-
“EXPORT UNDER CLAIM FOR REBATE OF DUTY OR UNDER BOND”
There seems to be nothing in this Chanter that will support the Collector’Appeal dismissed conclusion. The “demand” raised at the original stage was on the basis that the payment of rebate was to be discounted to the extent given in notification No. 364/77-C.E. This Chapter converns itself mostly with rebate claims. When it deals with export under bond, it is only in Rule 191B, which is Appeal allowed a rule that provides for manufacture in bond of articles from excisable goods on which duty has not been manufacture in bond of articles from excisable goods is a rule that provided for manufacture in bond of articles from excisable goods on which duty has not been paid, and follows the procedure notified by the Central Government from time to time permitting manufacture in bond of such articles and is subject to such conditions and limitations as may be specified. .It cannot deal with the kind of export we have here which is of finished aviation fuel into which no excisable goods went and which as for as we can make out, was not manufactured in bond under Rule 191B under any licence or permission of the Central Government We are afraid, therefore. that Chapter IX cannot help us, even though, as correctly observed Appellate Collector, it is mentioned in Rule 13 as the procedure to be followed. In respect of the bond, we have the statement from the respresentative of M/s Bharat Petroleum that one was executed and was valid at the time of export of the aviation fuel.
5. Much importance was given by the Collector to the words “may in like manner”- he attributes to them the meaning that the manner is the manner written down in Rule 12 and Rule 12A. We are Certain that the manner taken Rule 12 carries the heading: rebate of duty on goods exported and Rule 12A has the heading : rebate of duty on excisable material used in the manufacture of goods which are exported. The one rule deals with rebate that is to say, of duty that has already been paid on the goods exported I is a procedure for the exporter to get a refund of duty on the duty paid goods It will not suit the process of export of goods on which no duty has been paid. Rule 12A is again a rebate of duty on excisable materials. This aviation fuel has no excise duty paid material to account for its manufacture and Rule 12A will not enable any rebate on its export manufacture and therefore,
6. Rule 13 permits export outside India except Nepal and Bhutan without payment of duty from a warehouse or a licensed factory; it follows naturally that the goods will be non-duty paia goods, which is the reason why a bond has to be executed : because if the export does not materialise or is frustrated the revenue must be protected by ensuring that the goods cannot enter home sumption without payment of duty. It bears no relation whatsoever to the payment of rebate contemplated by Rule 12 and Rule 12A because the status of the goods to be exported are so vastly different that while the one may or may not be exported if it is not to become correct because the demand of duty was based on Appeal allowed misconception of the role of the different rules 12, 12A and 13. We have not been able to understand the meaning of the Asssistent Collector’Appeal dismissed observation that the superior kerosene should be charged to maintain parity in respect of ultimate and net incidence of duty. In respect of Notification 364/77-C.E., he confuses payment of rebate as proposed by the Assistant Collector. therefore, no reduction as proposed by the Assistant Collector.
7. The order dated 16th November, 1978 of the Assistant Collector makes no demand of duty. It merely says that the basic duty at Rs.” 23.75 per kilo litre w.e.f. 30-12-77 and basic excise duty at Rs. 23.75+ special excise duty at 5% of the effective basic duty w.e.f. 1-3-78 is payable in respect of the supplies of superior kerosene under bond under Rule 13 of Central Excise Rules to foreign bound aircraft. In the next sentence he explains why he said so. He said that the classification lists filed by the appellants have been approved including the levy of duty and the special excise with different dates of effect. It is clear from this order of the Assistant Collector that he is only correcting the classification list which needed correction. It also appears that this order was not preceded by any notice calling upon M/s. Bharat Petroleum to show cause why duty should not be demanded or recovered. This order of 16th November, 1978 is, therefore, defective, not merely on merits but also because it did not follow the procedure set out by law for demanding and recovering duty thought to be short levied.
8. For the reasons stated above, there is only one conclusion we have to reach and that is that the demand is net sustainable and must be set aside. We order accordingly.