1999 (7) TMI 674 - HC - Central Excise

Summary

Issues:
Validity of Rule 13 of the Central Excise Rules challenged for discrimination between physical exports and deemed exports.

Analysis:
The petitioner contested the validity of Rule 13 of the Central Excise Rules, arguing that the rule discriminates against deemed exporters by not providing them with the benefit of exporting excisable goods in bond without paying any duty, a privilege granted to other exporters. The petitioner highlighted that under the Foreign Trade Development and Regulation Act, policies are formulated for import and export, and deemed exports are covered under these policies without any distinction from actual exports. Deemed exports were defined as transactions where goods supplied do not leave the country but contribute to earning or saving foreign exchange. The petitioner faced delays in duty refunds, impacting their business.

The respondent argued that there are distinctions between physical exports and deemed exports, emphasizing that benefits granted to physical exporters are not extended to deemed exporters under various acts like the Income-tax Act and the Central Excise Act. Deemed exporters are eligible for special import licenses to offset disadvantages, and they must claim back terminal excise duty from the commerce industry. A comparison table was presented highlighting differences between physical exports and deemed exports, including aspects like customs procedures, duty exemptions, tax benefits, and additional facilities.

The court deliberated on the matter, emphasizing that Rule 13 empowers the Central Government to permit export of excisable goods without duty payment, focusing on the term "export" specified in the rule. The court noted that deemed exports do not necessitate physical exportation outside India, as clarified in the policy definition. It was concluded that Rule 13 does not provide for exemptions regarding deemed exports, and it is at the discretion of the rule-making authority to grant such exemptions. The court differentiated between exporters and deemed exporters as distinct categories, stating that the principles of Article 14 of the Constitution were not violated. Consequently, the petition was dismissed for lacking merit.