IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATE: 26.8.2010
CORAM
THE HON'BLE MR.JUSTICE F.M.IBRAHIM KALIFULLA
and
THE HON'BLE MR.JUSTICE M.M.SUNDRESH
W.A.No.103 of 2010
M/s.Tablets India Limited.
No.179, T.H.Road,
Chennai-600 081. .......Petitioner
Versus
1.The Joint Secretary
Ministry of Finance,
Department of Revenue,
4th Floor, Jeevan Deep Building,
Sansad Marg, Parliament Street,
New Delhi-110 001.
2. The Commissioner of Central Excise,
Chennai-1, Commissionerate,
Chennai-600 034. ..... Respondents.
Prayer: Petition filed under under Clause 15 of the letters patent against the order made in W.P.No.30730 of 2003 dated 02.11.2009. For Petitioners : Mr.T.Ramesh
For Respondents : Mr.T.R.Senthil Kumar
Senior Standing Counsel for
Customs and Central Excise
JUDGMENT
(Order of the Court was made by F.M.IBRAHIM KALIFULLA,J.)
The appellant is aggrieved against the order of the learned single Judge dated 02.11.2009 passed in W.P.No.30730 of 2003 in and by which the learned Judge declined to interfere with the orders of the first and second respondents regarding non grant of rebate of Rs.5,54,379/- as per Rule 12(1) (b) of Central Excise Rules, 1944 for the period from May 2000 to March 2001.
2. The appellant is engaged in the manufacture of I.V.Fluids which were periodically being exported by the appellant outside the country. It is claimed that the appellant was operating both under Rule 12(1)(b) and Rule 13 respectively which are relating to export. Under Rule 13, it was permissible for the assesse to clear the final products for export without payment of central excise duty by executing a bond equivalent to the central excise duty payable on such goods exported. As regards the exempted goods or goods cleared at nil rate of duty, as an export benefit, the rebate/refund of duty paid on the inputs which formed part of the exported goods can be granted under Rule 12(1)(b).
3. According to the appellant, they were operating under Rule 12(1)(b), whenever final products were cleared for export which were exempted and which attracted ‘nil rate of duty’. During the period from 4.5.2000 to March 2001, the appellant was stated to have exported such goods. Since during the relevant period, the final products were exempted, the applicable rule was Rule 12(1)(b) and not Rule 13 and therefore, the appellant was entitled for rebate of central excise duty paid on the inputs used for the manufacture of final products exempted which were ultimately exported. By inadvertence during the said period, the appellants stated to have not followed the procedure of clearance applicable to Rule 12(1)(b). Though the factum of export of final products was not in dispute, subsequently, when it was noticed by the appellant, the appellant is stated to have made the claim invoking Rule 12(1)(b) for the rebate for the value of Rs.5,54,379/- in its application dated 24.4.2001. The application was dealt with by the Assistant Commissioner of Central Excise “C” Division- Chennai Commissionerate-1 in Order-in-Original No.14/2001. By order dated 04.09.2001, the claim was rejected. The appellant preferred an appeal in Appeal No.75 of 2001, which was also dismissed by the second respondent by order dated 27.3.2002 in Order in Appeal No.19/02. The appellant preferred a revision before the first respondent and in Order No.147 of 2003 dated 23.7.2003, the revision application having been rejected, the appellant preferred W.P.No.30730 of 2003 for setting aside the above said orders with a further direction to grant a rebate of Rs.5,54,379/- as contemplated under Rule 12(1)(b) for the period from May 2000 to March 2001. The writ petition having been dismissed by order dated 02.11.2009 in W.P.No.30730 of 2003, the appellant has come forward with this appeal.
4. We heard Mr.T.Ramesh learned counsel for the appellant and Mr. T.R.Senthil Kumar learned standing counsel for the respondents.
5. Learned counsel appearing for the appellant after taking us through Rule 12(1)(b) as well as the proviso contained therein as well as Rule 13 of the Central Excise Rules, brought to our notice the Notification Nos.42/94 dated 21.9.1994 and 47/94 dated 22.9.1994 which prescribe the conditions while invoking Rule 12(1)(b) and Rule 13 respectively for making claim for respective benefits. Learned counsel contended that the conditions required to be complied with as per the notification in Notification Nos.42/94 dated 21.9.1994 as well as 47/94 dated 22.9.1994 were identical, that by inadvertence, the appellant being a regular exporter was following the procedure provided under Rule 47/1994 dated 22.9.1994, while at the same time, the factum of export was not in dispute, the Assistant Commissioner committed serious error in not granting rebate by exercising the discretionary power vested under proviso to Rule 12. Learned counsel also contended that the Assistant Commissioner merely proceeded on the footing that non compliance of the procedure prescribed under Notification Nos.42/94 dated 21.9.1994 would ipso facto deprive the appellant of the rebate claimed was patently erroneous which would run contrary to the discretionary power vested with the authority under proviso to Rule 12(1)(b). The learned counsel further contended that for the very same reason, the orders of respondents herein are also liable to be set aside. He also brought to our notice Circular No.144/55/95-CX dated 24.8.1995 by which the Government of India, Ministry of Finance (Department of Revenue) Central Board of Excise &Customs, New Delhi, was delegated the power of satisfaction of Commissioner as to actual exportation of goods as specified in the proviso under Rule 12(1) and sanction of rebate claim to the Assistant Commissioner of Central Excise(refund) and the jurisdictional Assistant Commissioner. He also contended that the Assistant Commissioner cannot be heard to say that he lacks powers prescribed under the proviso to Rule 12(1).
6. As against the above submission, Mr.T.R.Senthil Kumar learned standing counsel for the respondents only contended that had this power delegated to Assistant Commissioner been brought to notice, there would have been no scope at all for passing the order of rejection dated 04.09.2001. The learned standing counsel would only contend that since the power vested with the Assistant Commissioner by way of delegation as early as 1995 has been brought out, the Assistant Commissioner can be directed to pass appropriate orders for grant of rebate since the factum of export is not in controversy
7. Having heard the learned counsel for the respective parties and having perused the above materials placed before this Court, we are convinced that the appellant is entitled for rebate applied for. As rightly pointed out by the learned counsel for the appellant once the Assistant Commissioner was vested with the powers which were available to the Commissioner by virtue of the delegation made in the circular dated 24.8.1995, there was no impediment for the Assistant Commissioner to have exercised the discretionary power vested in him under proviso Rule 12(1). A perusal of the order-in-original dated 04.9.2001 would disclose that in no part of the order, the Assistant Commissioner has doubted the factum of export of final products carried out by the appellant during the period from May 2000 to March 2001. In fact the counsel appearing on behalf of the appellant before him brought to the notice of the Assistant Commissioner, discretionary power vested in him that in the event of factum of export he being satisfied with the goods have been exported even if all or any of the conditions laid down in the notifications were not complied with, the claim can be sanctioned. Inspite of the appellant having brought the said position to the notice of the Original Authority, unfortunately the Assistant Commissioner merely proceeded on the footing that the procedures were not duly complied with. For better appreciation of the appellant’s case, it would be worthwhile to read the proviso to Rule 12(1) which reads as follows:
“Provided that if the Commissioner of Central Excise or as the case may be Maritime Commissioner of Central Excise is satisfied that the goods have in fact been exported, he may, for reasons to be recorded in writing, allow, the whole or any part of the claim for such rebate, even if all or any of the conditions laid down in any notification issued under this rule have not been complied with.”
8. When we refer to the conditions prescribed in Notification Nos.42/94 dated 21.9.1994 and 47/94 dated 22.9.1994, we find that the requirement in substance to be fulfilled by the manufacturer was that he should file a declaration with the Collector of Central Excise having jurisdiction over the factory of manufacturer describing the finished goods proposed to be manufactured along with the rate of duty leviable and the manufacturing formula shall refer to quantity or proportion in which the materials are actually used as well as the quantity. The declaration should also contain the tariff classification, the amount of Excise duty paid/leviable on the materials so used both in words and figures in relation to the finished goods to be exported. As a matter of practice, the appellant being a regular exporter was stated to have been following the prescribed declaration available to Rule 13. Nevertheless, having regard to the fact that the conditions to be complied with under Notification Nos.42/94 and 47/94 was in substratum identical and when the factum of export was not in dispute, we are at a loss to understand as to why the Assistant Commissioner failed to exercise the discretionary power vested in him under the proviso to Rule 12(1) while considering the appellant’s claim for rebate applied under Rule 12(1)(b) of the Central Excise Rules. Therefore, it is not the case of the authority that there was any other lapse or willful omission committed by the appellant in making the claim or that the factum of export was not proved. In this circumstances, when once the competent authority viz., the Assistant Commissioner was satisfied with the factum of export that the final products made by the appellant, his failure to exercise the discretionary power vested in him in the absence of any other valid reasons cannot be sustained. For the very same reason, the orders of the Appellate Authority viz., the second respondent as well as the Revisional Authority viz., the first respondent, who have also failed to examine the said position cannot be justified. Therefore, the orders impugned in the writ petition as well as the Order-in-Original No.14/2001 dated 04.09.2001 are liable to be set aside and accordingly, the same are set aside. We therefore, direct the Assistant Commissioner of Central Excise “C” Division, Chennai Commissionerate-I to revive the appellant’s application dated 24.4.2001 for claiming rebate under Rule 12(1)(b) for the sum of Rs.5,54,379/- along with interest applicable as per rules and pass orders in the light of the observation contained in this order expeditiously, preferably within four weeks from the date of receipt of a copy of this order.
9. Writ Appeal and the writ petition are allowed and the order of the learned Judge is set aside.
Index : yes (F.M.I.K.J) (M.M.S.J.) Internet: yes 26 .08.2010. kua To 1.The Joint Secretary Ministry of Finance, Department of Revenue, 4th Floor, Jeevan Deep Building, Sansad Marg, Parliament Street, New Delhi-110 001. 2. The Commissioner of Central Excise, Chennai-1, Commissionerate, Chennai-600 034. F.M.IBRAHIM KALIFULLA,J, and M.M.SUNDRESH,J. kua W.A.No.103 of 2010 26.08.2010.