1998 (9) TMI 169 - AT - Central Excise

Summary

Issues:
1. Interpretation of the word "bond" under Central Excise Rules.
2. Refund claim for customs duty charged on reimportation of goods.
3. Applicability of Clause (c) of Section 20 of the Customs Act, 1962.
4. Consideration of Madras High Court judgment in similar cases.
5. Potential evasion of Central Excise Duty.
6. Charging of duty on goods cleared from non-duty paid stock.

Analysis:

1. The case involved the interpretation of the word "bond" under Central Excise Rules, specifically in the context of goods reimported within three years of exportation. The respondents contended that no duty should be chargeable on goods exported under Central Excise Bond, seeking a refund of the customs duty charged upon reimportation.

2. The refund claim was initially rejected by the Assistant Collector of Customs (Refund), leading to an appeal by the respondents. The lower appellate authority granted the benefit to the respondents, criticizing the Assistant Collector's order for lacking a proper discussion on the interpretation of the word "bond" and not distinguishing relevant judgments.

3. The Revenue appealed this decision, arguing that the expression 'bond' in Clause (c) of Section 20 of the Customs Act should encompass both customs and excise bonds. The Revenue contended that no customs bond would cover the waiver of excise duty on materials used in manufacturing exported goods, emphasizing the potential for widespread evasion of Central Excise Duty if the respondents' interpretation was accepted.

4. The respondents relied on the judgment of the Madras High Court, arguing that the lower appellate authority rightfully considered the Bombay High Court judgment and should be upheld. However, the Tribunal noted that the Madras High Court judgment was delivered due to the lack of convincing reasoning from the Government's Counsel, suggesting it was more of a concession than a well-founded legal interpretation.

5. The Tribunal agreed with the Revenue's reasoning, emphasizing that interpreting the law to prevent tax evasion is crucial. They concluded that duty was correctly charged on reimportation to avoid circumvention of Central Excise Duty, supporting the Revenue's stance to prevent potential large-scale evasion through the export-reimport process.

6. Additionally, the Tribunal addressed the issue of goods cleared from non-duty paid stock, agreeing with the respondents that no second duty should be charged on goods for which excise duty had already been paid. They directed that if such goods were cleared from the factory with a second excise duty levy, the respondents should be entitled to a refund as per the legal principle that duty should not be charged twice on the same goods.

In conclusion, the Tribunal allowed the appeal of the Revenue, setting aside the lower authority's decision and providing directions regarding the charging of duty on goods cleared from non-duty paid stock.