1980 (11) TMI 49 - HC - Central Excise

Warehousing - Exported goods - Liability to duty - Rebates - Interpretation - Limitation - Show Cause Notice - Penal provision - Criteria for

Summary

Issues Involved:
1. Liability of excise duty on goods exported under bond.
2. Competency to realize arrears due prior to six months from the issue of the show cause notice.
3. Validity of the show cause notice without specifying the exact amount.

Issue-wise Detailed Analysis:

1. Liability of Excise Duty on Goods Exported Under Bond:
The central issue is whether goods exported under bond are liable to excise duty or are totally exempt. The petitioner argued that goods exported under Rule 13 are exempt from excise duty, while the respondents contended that only a rebate as per the notification dated 17-5-1969 is applicable.

- Legal Provisions Involved:
- Section 3 of the Central Excises and Salt Act, 1944: Provides for the levy and collection of excise duties.
- Rule 7 of the Central Excise Rules, 1944: Provides for the recovery of duty.
- Rule 8: Empowers the Central Government to authorize exemptions from duty.
- Rule 9: Prohibits removal of excisable goods without payment of duty but allows export under bond.
- Rule 12: Provides for a rebate of duty paid on goods exported outside India.
- Rule 13: Allows export without payment of duty under bond.
- Rule 14: Permits the Collector to allow export under bond.

- Court's Interpretation:
The court held that Rule 13 is procedural and does not confer a substantive right to exemption from excise duty. The substantive right for rebate is found in Rule 12 read with the notification dated 17-5-1969. The court rejected the argument that Rules 12 and 13 are independent and cannot be read together. It was emphasized that the facility to export under bond under Rule 13 does not equate to total exemption from duty. The court found no logical reason for differential treatment between goods exported under bond and those not under bond.

2. Competency to Realize Arrears Due Prior to Six Months from the Issue of the Show Cause Notice:
The petitioner challenged the competency to realize arrears due prior to six months from the issue of the show cause notice dated 31-10-1979, arguing that it is time-barred under Rule 10.

- Legal Provisions Involved:
- Rule 10 of the Central Excise Rules, 1944: Provides for the recovery of duty not paid within six months from the relevant date.

- Court's Interpretation:
The court agreed with the petitioner that any demand for duty for goods cleared for export from the warehouse prior to 30-4-1979 (six months before the notice date) is barred by limitation under Rule 10. The court directed the respondents not to recover duty for the period prior to 30-4-1979. However, the court clarified that this does not affect proceedings related to bonds already furnished by the petitioner.

3. Validity of the Show Cause Notice Without Specifying the Exact Amount:
The petitioner argued that the show cause notice is invalid as it did not specify the exact amount of duty demanded, which is required under Rule 10.

- Court's Interpretation:
The court found that while it would have been better to specify the exact amount, the notice broadly indicated the differential duty between the Central Excise duty leviable under Tariff Item 27 and the rebate under the notification dated 17-5-1969. The court held that this was sufficient compliance with Rule 10. The court rejected the argument that the absence of a specified amount makes the notice void, emphasizing that the purpose of the notice is to indicate the amount demanded, and the petitioner could request the exact amount if needed.

Conclusion:
The court dismissed the petitioner's claim for total exemption from excise duty on goods exported under bond, holding that the petitioner is only entitled to a rebate as per the notification dated 17-5-1969. The court also ruled that demands for duty prior to 30-4-1979 are time-barred, and the show cause notice, despite not specifying the exact amount, was valid. The petition was disposed of with no order as to costs.