1996 (4) TMI 119 - SC - Central Excise

Whether the rice shelling plant was a part of a 100% export oriented unit is wholly immaterial while considering in the present case whether Oswal Agro could export non-basmati rice? Whether the industrial licence could be amended so as to incorporate a specific condition requiring the export of edible rice bran oil? Held that - Oswal Agro is under an obligation to pay the difference between the actual export price and the minimum export price fixed by the Appellant in respect of non-basmati rice exported by it in view of the interim orders which had been passed by the High Court and this court permitting such export. According to the appellant taking into consideration the total quantity of rice exported by Oswal Agro between April 1991 and March 1992 when the minimum export price was fixed at the rate of US 231 per MT and between April 1992 and March 1993 when the minimum export price fixed was US 270 per M.T. the total amount payable by Oswal Agro would come to US 24, 54, 644 at the current foreign exchange rate. We accordingly direct this amount to be paid by Oswal Agro to the appellant within a period of four weeks from the date of this judgment. The perusal of the Notification in question indicates that the effective rate of excise duty on clearance of goods from 100% export oriented unit to domestic tariff area would stand reduced if the goods so manufactured are allowed to be sold in India . Oswal Agro never took permission of the authorities concerned to sell the rice bran oil in India. It is only by virtue of interim orders which were passed by the Punjab 19, 75, 15, 192.97/- as calculated by the appellant. In addition thereto Oswal Agro is also liable to pay interest @ 18% as calculated by the appellant herein which comes to 12, 55, 09, 088.00/-. It is hereby directed that Oswal Agro shall pay this amount of duty and interest within eight weeks from the date of this judgment and it shall also pay to the appellant herein as well as to the Union of India one set of costs which are quantified at 50, 000/-.

Summary

Issues Involved:
1. Export of non-basmati rice.
2. Obligation to export edible rice bran oil.
3. Amendment of industrial license.
4. Payment of excise duty on rice bran oil sold domestically.

Detailed Analysis:

1. Export of Non-Basmati Rice:
The primary issue was whether Oswal Agro, a 100% export-oriented unit, could export non-basmati rice without restrictions. The Delhi High Court had allowed Oswal Agro to export non-basmati rice without adhering to the minimum export price fixed by the Agricultural and Processed Food Products Export Development Authority (APEDA). The Supreme Court held that Oswal Agro could not legally export non-basmati rice without proper authorization and at a price below the minimum fixed by APEDA. The Court clarified that Clause 15(j) of the Export (Control) Order, 1988, which saved certain export-oriented units from trade restrictions, applied only to the products specifically approved for export under the industrial license, not to any product manufactured by the unit. The Court also noted that Oswal Agro had exported over 87,000 MT of non-basmati rice at a price lower than the minimum price fixed by APEDA, violating the law. Consequently, Oswal Agro was directed to pay the difference between the actual export price and the minimum price fixed by APEDA, amounting to US $24,54,644.

2. Obligation to Export Edible Rice Bran Oil:
The issue was whether Oswal Agro was obliged to export edible rice bran oil produced by it. The Supreme Court examined the industrial license and related correspondence, noting that Oswal Agro had initially undertaken to export edible rice bran oil if permitted by the Government. The Court found that the amendment to the industrial license on 18th May 1987, which included a condition to export edible rice bran oil, was valid. Oswal Agro had not protested this amendment and had accepted other amendments. Therefore, the Court held that Oswal Agro was obliged to export the edible rice bran oil and was not entitled to sell it in the domestic market.

3. Amendment of Industrial License:
The Court addressed whether the Government could amend the industrial license to include a condition requiring the export of edible rice bran oil. The Court referred to Rule 16 of "The Registration and Licensing of Industrial Undertakings Rules, 1952," which allows for the variation or amendment of licenses. The Court found that the amendment made on 18th May 1987, was based on Oswal Agro's undertaking to export edible rice bran oil and was within the Government's authority. The Court concluded that the amendment was valid and binding on Oswal Agro.

4. Payment of Excise Duty on Rice Bran Oil Sold Domestically:
The issue was whether Oswal Agro was liable to pay excise duty on edible rice bran oil sold in the domestic market. The Court noted that under Section 3 of the Central Excises and Salt Act, 1944, excise duty was payable on goods produced by a 100% export-oriented unit and sold domestically. The Court found that Oswal Agro had obtained an interim order from the Punjab and Haryana High Court allowing it to sell rice bran oil domestically without paying excise duty, which was contrary to statutory provisions. The Court held that Oswal Agro was liable to pay the full amount of excise duty, amounting to Rs. 19,75,55,192.97, and interest at 18% per annum, totaling Rs. 12,55,09,088.40. Oswal Agro was directed to pay this amount within eight weeks.

Conclusion:
Oswal Agro was directed to pay the difference between the actual export price and the minimum export price for non-basmati rice, totaling US $24,54,644. Additionally, Oswal Agro was ordered to pay Rs. 19,75,55,192.97 in excise duty and Rs. 12,55,09,088.40 in interest for the rice bran oil sold domestically. The Court emphasized that Oswal Agro had violated the law and obtained undue advantages through interim orders, and thus was liable to make the necessary payments.