1985 (12) TMI 156 - AT - Central Excise

Summary

Issues Involved:
1. Liability for special excise duty on exported petroleum products.
2. Interpretation of the term "without payment of duty" in Rule 13(2).
3. Impact of the Central Excise Laws (Amendment and Validation) Act, 1982.
4. Applicability of the Modi Rubber Limited case.
5. Limitation period for demanding duty.

Detailed Analysis:

1. Liability for Special Excise Duty on Exported Petroleum Products:
The primary issue was whether the Indian Oil Corporation (IOC) was liable to pay special excise duty on petroleum products exported to Nepal under Bond, as per Notification No. 151/81 issued under Rule 13(2) of the Central Excise Rules, 1944. The appellants argued that the term "without payment of duty" in Rule 13(2) should be interpreted to mean exemption from all types of excise duty, including special excise duty. The Department, however, contended that the special excise duty, levied under different Finance Acts, was not covered by this exemption.

2. Interpretation of the Term "without payment of duty" in Rule 13(2):
The Tribunal examined Rule 13(2) and concluded that the provision allowed for the export of goods without the payment of duty, but did not exempt the goods from the liability of duty itself. The bond executed for such exports provided for the collection of duty if the export conditions were not met, indicating that the goods remained dutiable. Thus, the Tribunal held that Rule 13(2) facilitated export without immediate payment of duty but did not exempt the goods from being chargeable to duty.

3. Impact of the Central Excise Laws (Amendment and Validation) Act, 1982:
The Department argued that the 1982 Act, which was passed to counter the Delhi High Court's judgment in the Modi Rubber Limited case, required explicit reference to Finance Acts for exemptions to apply. The Tribunal noted that Section 2(3) of the Act applied to notifications granting exemptions from duty and required specific reference to other enactments for such exemptions to be valid. However, the Tribunal found that Rule 13(2) did not provide for an exemption from duty but allowed for export without payment of duty, thus the provisions of the 1982 Act were not applicable.

4. Applicability of the Modi Rubber Limited Case:
The Tribunal referred to the Delhi High Court's judgment in the Modi Rubber Limited case, which held that exemption notifications should be interpreted to cover all types of excise duty unless explicitly stated otherwise. Applying this ratio, the Tribunal concluded that the term "duty" in Rule 13(2) and the related notification should be interpreted to include all types of excise duty, including special excise duty. Therefore, the IOC was not liable to pay special excise duty on the exported goods.

5. Limitation Period for Demanding Duty:
The appellants argued that even if they were liable for special excise duty, the demands were time-barred as they were made beyond the six-month limitation period prescribed under Section 11A of the Central Excise Act. The Department contended that this issue was not raised earlier and should not be considered at this stage. However, the Tribunal found that the limitation issue was based on admitted facts and had been raised before the Collector (Appeals). Since the exports were made under bond and under the Department's supervision, and there was no allegation of fraud or suppression, the demands should have been made within six months. The Tribunal noted that several demands were made beyond this period and were therefore time-barred.

Conclusion:
The Tribunal allowed the appeals, holding that the appellants were not liable to pay special excise duty on the exported petroleum products, as the term "duty" in Rule 13(2) included all types of excise duty. Additionally, the demands were time-barred as they were made beyond the six-month limitation period. The orders of the lower authorities were set aside, and consequential relief was granted to the appellants.