2014 (1) TMI 1216 - HC - Central Excise

Rejection of the rebate claim - Export of quilt cover - Revenue rejected rebate claim holding that list of the products appended to notification issued under Rule 191A, the entry at serial No.17 was only Cotton Quilts and there was no entry of Quilt Cover - Held that - what has been exported is scourd quilt cover as described in Form AR5s on which refund has been claimed. The shipping Bills relevant to the rebate claims in question described the goods as 100% cotton Fabrics Millmade scoured feather proof quilt covers double stitched. In the relevant contract copy produced by the assessee, the description of the goods exported reads as 100% Cotton Made in India Scoured Feather Proof Silicon Finish Piped Seam Quilt Shells . At the time of personal hearing I have been shown a sample of Quilt Shell which had a small opening at one side through which the feathers or cotton can be pumped in the said shell. There was no stuffing in the said Quilt Shell/Cover. Thus it is abundantly clear that what has been exported is not the Quilt (Rajais) as it is known in the trade but Quilt Cover/Shell without any stuffing therein. The party themselves have admitted that there is no stuffing inside the said so called shell/cover. The Quilt/Rajais in India or abroad is known as such only with stuffings of feather/cotton/polyester inside two layers of fabrics stitched together from all sides. Quilt shell/cover cannot be called as quilt until it is stuffed with the stuffing materials which can be feather/cotton/polyester fibre. Description Quilt (Rajais) therefore does not cover Quilt Shell/Cover which is a component of Quilt. Since the rebate is allowed only in respect of Quilt (Rajais) only, and not on Quilt Shell/Cover, party is not entitled to rebate in terms of Rule 191A read with Notification/Declaration issued by Central Board of Excise and Customs in this regard. There is no other Notification/Declaration of C.B.E.C. under which the rebate claim under Rule 191A could be allowed to Quilt Shell/Cover - Decided against assessee.

Summary

Issues Involved:
1. Quashing of the order dated 04.11.1997 rejecting the revision application.
2. Rejection of the rebate claim of Rs. 2,18,694.64 under Rule 191A.
3. Distinction between Rule 191A and Rule 191B of the Central Excise Rules, 1944.
4. Applicability of the Doctrine of Promissory Estoppel and legitimate expectation.

Issue-wise Detailed Analysis:

1. Quashing of the order dated 04.11.1997 rejecting the revision application:
The petitioner sought to quash the order passed by the Joint Secretary to the Government of India, which rejected their revision application under Section 35EE of the Central Excise Salt Act, 1944. The revision application was against the order of the Commissioner (Appeals), Mumbai, which had upheld the rejection of the rebate claim by the Assistant Commissioner of Central Excise.

2. Rejection of the rebate claim of Rs. 2,18,694.64 under Rule 191A:
The petitioner claimed a rebate under Rule 191A for the excise duty paid on cotton fabrics used in the manufacture of quilt covers exported between May 1994 and September 1994. The Assistant Commissioner issued a show cause notice stating that "Cotton Quilts" were covered under the notification, not "Quilt Covers." The Assistant Commissioner rejected the rebate claim, noting that the exported goods were quilt covers and not quilts, as per the notification under Rule 191A. The Commissioner (Appeals) upheld this decision, stating that the notification under Rule 191A specifically mentioned "Cotton Quilts (Rajais)" and not quilt covers.

3. Distinction between Rule 191A and Rule 191B of the Central Excise Rules, 1944:
The petitioner argued that the notification under Rule 191B included "Cotton Quilts including Quilt Covers" and that the same principle should apply to Rule 191A. However, the court noted that Rule 191A and Rule 191B are distinct and operate in different scenarios. Rule 191A deals with the rebate of duty on excisable goods used in the manufacture of exported articles, requiring prior approval and verification. In contrast, Rule 191B allows for the manufacture of articles in bond without paying excise duty, subject to stringent conditions and supervision. The court emphasized that the entries in the notifications under Rule 191A and Rule 191B are not synonymous or interchangeable.

4. Applicability of the Doctrine of Promissory Estoppel and legitimate expectation:
The petitioner contended that the Doctrine of Promissory Estoppel and legitimate expectation should apply, as they had previously received benefits under Rule 191A for exporting quilt covers. The court rejected this argument, stating that these doctrines do not apply where the estoppel or expectation is contrary to law or rules. Since quilt covers were not covered under the notification for Rule 191A, the petitioner was not entitled to the rebate.

Conclusion:
The court dismissed the writ petition, finding no merit in the arguments presented by the petitioner. The court upheld the rejection of the rebate claim under Rule 191A, distinguishing it from Rule 191B, and ruled out the applicability of the Doctrine of Promissory Estoppel and legitimate expectation in this case.