2006 (5) TMI 8 - HC - Central Excise

Central Excise Export (1) Assessee can claim rebate only on duty paid one item not on both items simultaneously (2) Entitlement for grant of rebate on duty paid goods

Summary

Issues Involved:
1. Entitlement to Rebate Claims under Rule 18 of the Central Excise Rules, 2002.
2. Interpretation of the word "or" in Rule 18 of the 2002 Rules.
3. Relevance of old Central Excise Rules and Notifications.
4. Relationship between Rule 18 and Rule 19 of the Central Excise Rules, 2002.

Detailed Analysis:

1. Entitlement to Rebate Claims under Rule 18 of the Central Excise Rules, 2002:
The respondent filed 45 rebate claims totaling Rs. 1,46,90,995/- for exports made in 2004, including duty paid on both finished goods and raw materials. The Deputy Commissioner rejected these claims, and the Commissioner of Central Excise (Appeals) allowed a rebate on either the finished goods or the raw materials, not both. The Joint Secretary, however, allowed the rebate on both. The court emphasized that Rule 18 of the 2002 Rules, which came into force on March 1, 2002, governs the entitlement and does not permit simultaneous claims for rebate on both finished goods and raw materials.

2. Interpretation of the word "or" in Rule 18 of the 2002 Rules:
The petitioners argued that the word "or" in Rule 18 is conjunctive, meaning the assessee must choose between claiming a rebate on finished goods or raw materials, not both. The court agreed, stating that the language of Rule 18 is clear, unambiguous, and intended to provide a rebate on either the excisable goods or the materials used in their manufacture, not both. The court rejected the respondent's argument that "or" should be read as "and," citing that such an interpretation would be inconsistent with the legislative intent and purpose of the rule.

3. Relevance of old Central Excise Rules and Notifications:
The court noted that Rule 12 of the Central Excise Rules, 1944, and the Central Excise Rules, 2001, were superseded by the 2002 Rules. Therefore, the old rules and notifications are irrelevant for determining the rebate entitlement after March 1, 2002. The court criticized the revisional authority for relying on outdated rules and notifications, emphasizing that the rebate claims must be assessed based on the 2002 Rules and the notifications issued under them.

4. Relationship between Rule 18 and Rule 19 of the Central Excise Rules, 2002:
The respondent argued that Rules 18 and 19 should be read as complementary, allowing for equitable results. Rule 19 allows for the export of goods without payment of duty and procurement of inputs without duty. The court, however, clarified that Rule 18 deals with rebates after duty has been paid, while Rule 19 provides for duty exemption at the outset. These rules operate in different contexts and cannot be equated. Therefore, the court concluded that Rule 18 does not permit simultaneous rebates on both finished goods and raw materials.

Conclusion:
The court quashed the revisional authority's order and remanded the matter to the competent authority to decide the rebate claim for either the exported goods or the materials used in their manufacture, but not both. The court upheld the appellate order dated March 15, 2005, which allowed a rebate on one of the items, confirming it as just and proper.