2010 (2) TMI 547 - HC - Central Excise

Rebate in respect of the exports rebate is entitlement to the unit availing exemption for period 8-12-2006 to 17-9-2007 Rebate is granted till 7-12-2006 Circular dated 8-12-2006 clarifying that duty paid being refunded to unit availing such exemption rebte not payable Circulr dated 8-12-2006 nullifying effect of Notification No. 19/2004-C.E (NT), dated 17-9-2007 placing bar on rebate in such cases Notification not mentoring any retrospective applicability and such application not legally permissible Vested right of petitioner to claim rebate not affected for impugned period despite retrospevtive amendment by finance act, 2008 covering period from 1-3-2002 to 7-12-2006 Rebate admissible for impugned period Rule 18 of C.E Rules, 2002.

Issues Involved:
1. Constitutionality of Section-87 of the Finance Act, 2008.
2. Validity of Circulars dated 8-12-2006 and 3-4-2007.
3. Entitlement to rebate for exports made between 8-12-2006 and 17-9-2007.
4. Retrospective application of amendments to Rule-18 of the Central Excise Rules, 2002.

Issue-wise Detailed Analysis:

1. Constitutionality of Section-87 of the Finance Act, 2008:
The petitioners initially challenged the constitutionality of Section-87 of the Finance Act, 2008, arguing it was ultra vires Articles 14, 19(1)(g), and 265 of the Constitution of India due to the cut-off date of 7-12-2006. However, during the proceedings, the petitioners did not press this challenge.

2. Validity of Circulars dated 8-12-2006 and 3-4-2007:
The petitioners contended that the Circulars dated 8-12-2006 and 3-4-2007 were invalid as they sought to deny the rebate on the ground that the goods exported were not considered duty paid due to the area-based exemption. The court observed that these circulars attempted to nullify the effect of Notification No. 19/2004-C.E. (N.T.), dated 6-9-2004, which was not permissible. The court cited the Supreme Court's decision in Sandur Micro Circuits Ltd., stating that a circular cannot take away the effect of statutorily issued notifications.

3. Entitlement to Rebate for Exports Made Between 8-12-2006 and 17-9-2007:
The petitioners argued that they were entitled to a rebate under Rule-18 of the Central Excise Rules, 2002, for exports made between 8-12-2006 and 17-9-2007. The court noted that the petitioners had been receiving rebates until the issuance of the circular on 8-12-2006. The court found that the denial of rebates based on the circulars was unjustified and that the petitioners were entitled to rebates as per the unamended Rule-18.

4. Retrospective Application of Amendments to Rule-18 of the Central Excise Rules, 2002:
The petitioners contended that the amendment to Rule-18 made on 17-9-2007 could not have retrospective effect. The court agreed, stating that the amendment did not and could not have retrospective effect. The court also examined Section-88 of the Finance Act, 2008, which sought to retrospectively amend Rule-18 from 1-3-2002 to 7-12-2006. The court held that despite this amendment, the petitioners' right to claim rebates for exports made after 8-12-2006 until 17-9-2007 remained valid and enforceable.

Conclusion:
The court concluded that the petitioners could not be denied the benefit of rebates for the exports made during the period from 8-12-2006 to 17-9-2007. The court directed the respondents to grant the rebates forthwith. The petitions were allowed to this extent, and the rule was made absolute without any order as to costs. A stay on the implementation of the judgment was granted for four weeks to allow the respondents to approach a higher forum.

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