1988 (5) TMI 43 - HC - Central Excise

Summary

Issues Involved:
1. Maintainability of the writ petition.
2. Interpretation of Rule 12 and Rule 13 of the Central Excise Rules.
3. Legality of the show cause-cum-demand notice.
4. Application of the principle of promissory estoppel.

Issue-wise Detailed Analysis:

1. Maintainability of the Writ Petition:
The respondents raised a preliminary objection regarding the maintainability of the writ petition, arguing that the petitioners should have exhausted other statutory remedies provided by the Central Excises and Salt Act before invoking the writ jurisdiction of the High Court. However, the court noted that it is well-settled that courts have jurisdiction to interfere with a show cause notice at the stage of its issuance if the notice is shown to have been issued palpably without any authority of law (State of Uttar Pradesh v. Brahm Dutt Sharma [1987) 2 Sec 179)]).

2. Interpretation of Rule 12 and Rule 13 of the Central Excise Rules:
The main controversy centered on the proper interpretation of Rule 13 vis-a-vis Rule 12 of the Central Excise Rules. Rule 12 relates to the rebate of duty on goods exported, whereas Rule 13 pertains to the export under bond of goods on which duty has not been paid. The court analyzed both rules in detail:
- Rule 12: The Central Government may grant a rebate of duty paid on excisable goods if exported outside India. Goods are cleared first on payment of duty, and thereafter, a rebate is claimed.
- Rule 13: Goods may be exported without payment of duty from a warehouse or a licensed factory, provided that export is made in accordance with the procedure set out in Chapter IX of the Rules. The bond executed under Rule 13 is for ensuring proper exportation of goods, not for securing payment of unpaid duty.

The court found that Rule 13 is independent of Rule 12 and does not require any notification for granting a rebate. The bond under Rule 13 stands as security for proper exportation, not for post-exportation payment of duty. The court disagreed with the Delhi High Court's interpretation in Hindustan Aluminium Corporation's case, which suggested that Rule 13 is supplementary to Rule 12.

3. Legality of the Show Cause-Cum-Demand Notice:
The petitioners challenged the show cause-cum-demand notice, arguing that no duty is leviable on goods exported under Rule 13. The court found that the show cause notice was based on an executive order interpreting Rule 13 contrary to its real intent and purpose. The court held that a statutory rule cannot be explained or interpreted contrary to its normal connotation by an executive order. Therefore, the show cause notice was without any legal basis and bad in law.

4. Application of the Principle of Promissory Estoppel:
The petitioners contended that the Central Excise authorities had allowed them in the past to export Aluminium goods under Rule 13 without charging any excise duty, and the subsequent claim for unrebatable duty was barred by the principle of promissory estoppel. The court noted that the claim for duty had no legal basis and was ex-facie bad in law. Therefore, the principle of promissory estoppel was not applicable in this case.

Conclusion:
The court concluded that since the petitioner exported the goods in terms of Rule 13 of the Central Excise Rules, which permits such exportation free from levy of any excise duty, the claim for such duty was not sustainable. Consequently, the impugned show cause notices and all consequential orders were quashed. The rule was made absolute with no order for costs.