2018 (11) TMI 914 - HC - Central Excise

Rebate Claim - Gutkha - N/N. 19/04-CE - Held that - The notification No.19/04-CE by Rule 2 prescribes the conditions and limitations for availing excise rebate; Para 3 of that notification elaborates the procedure prescribed - Pan masala and gutkha were apparently not covered in the first instance by notification 19/04-CE. The Revenue therefore, included in the list of items that could claim rebate, pan masala and gutkha, through Notification No.32/08-CE. The conditions for availing such rebate were spelt out as well in Clauses (i) to (viii). Clause (ix) stated that the procedure prescribed in Notification No.18/2004 would be applicable mutatis mutandis. It is not in dispute that these conditions were complied with. The Government of NCT could not have banned the export of sale as is understood in the Customs enactment parlance. This is for the simple reason that the legislative competence and concurrently, the co-extensive executive power, to deal with the subject matter of customs or international transactions are not with the State or the Union Territory but that of the Central Government or Parliament, as the case may be. This Court is of the opinion that the impugned order of the Revisional Authority as well as the order of the appellate authority which it confirms, cannot be sustained - petition allowed.

Summary

Issues:
Challenge to Revisional Authority's order under Section 35EE of Central Excise Act for quashing the impugned order and order in appeal by Commissioner of Central Excise (Appeals).

Analysis:
1. Claim for Excise Rebate: The petitioner claimed excise rebate for exporting Gutkha based on Notification No.32/2008 listing Gutkha under tariff item 2403 99 90. The Assistant Commissioner granted the rebate, but the Commissioner of Central Excise reversed it citing a prohibition notification by the Government of NCT of Delhi on manufacture, sale, storage, transportation, display, or distribution of Gutkha within Delhi.

2. Revisional Authority's Decision: The Central Government, as the Revisional Authority, upheld the Commissioner's decision, stating that the Gutkha consignments were cleared after the Delhi Government's ban came into effect, making the rebate inapplicable due to the prohibition on goods under any law.

3. Legal Arguments: The petitioner argued that the rebate conditions under Rule 18 of Central Excise Rules should not be affected by extraneous factors like the Delhi Government's prohibition notification. They contended that the ban within Delhi did not extend to export transactions.

4. Court's Interpretation: The Court analyzed the prohibition notification and ruled that it aimed to prohibit sale-related activities within Delhi, not export transactions. It emphasized that the State lacked authority to ban exports, as customs matters fall under Central Government jurisdiction. Upholding the revisional order would lead to contradictory outcomes, where Gutkha is not banned for export by the Central Government but would be under the State's interpretation.

5. Judgment: Consequently, the Court quashed the Revisional Authority's order and the appellate authority's decision, restoring the original order granting the excise rebate to the petitioner. The Court held that the ban did not apply to export transactions and that the State's prohibition notification could not restrict exports, thereby allowing the petitioner's claim for excise rebate.

This detailed analysis of the judgment highlights the key legal arguments, authorities' decisions, and the Court's interpretation leading to the final judgment in favor of the petitioner.