2010 (3) TMI 349 - HC - Central Excise

Export to Nepal- Exemption- The petitioner is an exporter. It exports parts of the machine to jute mills in Nepal. He says that he is entitled to central excise duty exemption He had been granted such exemption during similar exports from April, 2003 to August 2007 All of a sudden, by a letter dated 7th September, 2007, the Central Excise Department declared that it was not entitled to such exemption. Held that- Now, under an exemption notification No. 52, as amended by the exemption notification No. 52C, goods required by a jute mill for making jute textiles are exempted from central excise duty on fulfillment of Condition No. 4. Condition No. 4 is that the exemption would be allowed if a central excise officer of a particular rank is satisfied that the exports are meant for a jute mill for making jute textiles. Writ application is allowed accordingly.

Summary

Issues:
1. Interpretation of central excise duty exemption for exports to Nepal.
2. Determination of whether export to Nepal is considered a central excise home consumption clearance.
3. Application of exemption notification No. 52 for goods exported to a jute mill for making jute textiles.

Analysis:
The petitioner, an exporter of machine parts to jute mills in Nepal, claimed central excise duty exemption for such exports. The Central Excise Department initially granted this exemption from April 2003 to August 2007. However, in a sudden turn of events, the Department declared through a letter dated 7th September 2007 that the exemption was not applicable to exports to Nepal or other countries, contrary to the petitioner's understanding. The Court had to determine whether exports to Nepal should be treated as central excise home consumption clearances and if the exemption under the Central Excise Act applied to such exports.

The Court referred to a circular issued by the Central Board of Excise and Customs, which clarified the procedure for export to Nepal. The circular specified that exports to Nepal should be treated as central excise home consumption clearances, subject to the same assessment of duty as goods for domestic consumption. Additionally, notification No. 8/2003-CE stated that clearances for export to Bhutan and Nepal were included in clearances for home consumption. Therefore, based on these provisions, the Court concluded that export to Nepal should indeed be treated as a central excise home consumption clearance.

Regarding the application of exemption notification No. 52 for goods exported to a jute mill for making jute textiles, the Court highlighted Condition No. 4 of the notification. This condition required satisfaction from a central excise officer of a specific rank that the exports were intended for a jute mill for making jute textiles. As the petitioner's exports met this condition, the Court found the Department's decision to revoke the exemption erroneous. Consequently, the Court allowed the writ application, directing the respondent authorities to permit the petitioner to export machine parts and other goods to jute mills in Nepal, provided Condition No. 4 was satisfied.

In conclusion, the Court's judgment clarified the treatment of exports to Nepal under central excise laws, upheld the applicability of the exemption notification for goods exported to jute mills, and rectified the Department's erroneous decision by granting relief to the petitioner for their exports to Nepal.