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2013 (3) TMI 209 - CGOVT - Central ExciseRebate - The conditions of the Notification No. 46/94-C.E. (N.T.) allowed rebate of duty only to certain foreign countries having land frontiers with India. These countries do not include Nepal. Hence it appeared to revenue that the supply of ATF to Nepal bound Flight should be on payment of appropriate rate of duty i.e. 16% ad valorem. Held that - A harmonious reading of the above notification and the executive instructions issued would reveal that through statutorily rebate of duty is not admissible on exports of mineral oil in a country or territory with common land frontier with India the said rebate was allowed under executive instructions. The Commissioner of Central Excise, Delhi vide C. No. 111-11(1)PR/98/130 dated 4-3-1999 has also reported that rebate of duty on export of ATF is paid, as per prescribed rates, for all international flights including flights to Nepal. - Decision in the case of INDIAN OIL CORPORATION LTD. Versus UNION OF INDIA 2011 (7) TMI 778 - BOMBAY HIGH COURT followed - Decided in favor of assessee.
Issues Involved:
1. Eligibility for rebate of duty on Aviation Turbine Fuel (ATF) supplied to Nepal-bound flights. 2. Applicability of administrative instructions versus statutory notifications. 3. Imposition of penalties and the requirement of mens rea. Issue-wise Detailed Analysis: 1. Eligibility for Rebate of Duty on ATF Supplied to Nepal-bound Flights: The primary issue revolves around whether the appellants, M/s. Indian Oil Corporation Limited, are entitled to a rebate of duty on ATF supplied to Nepal-bound flights. The appellants argued that rebate was admissible under Notification No. 46/94-C.E. (N.T.), dated 22-9-1994, and Notification No. 40/2001-C.E. (N.T.), dated 26-6-2001. They contended that ATF supplied to Royal Nepal Airways is against freely convertible currency and should be treated on par with other international airlines, thus making them eligible for rebate. However, the Commissioner of Central Excise (Appeals) rejected this argument, stating that the statutory provisions under Notification No. 46/94-C.E. (N.T.) did not include Nepal in the list of countries eligible for rebate. The Commissioner emphasized that the rebate of duty paid on mineral oil products exported as stores to aircrafts on foreign run to Nepal is not permissible under the said notification. 2. Applicability of Administrative Instructions versus Statutory Notifications: The appellants relied heavily on administrative instructions issued by the Government of India, which extended the rebate of duty to countries like Afghanistan, Nepal, Tibet, and Bhutan, despite these countries not being included in the statutory notifications. They cited various administrative instructions and supplementary instructions from the C.B.E. & C. Excise Manual, arguing that these instructions should have retrospective effect and be binding on the Department. The Government of India, in its revisional capacity, initially upheld the statutory notifications but was later directed by the Bombay High Court to consider the administrative instructions. The High Court emphasized the need for consistency in the Government's determinations and remitted the proceedings back for fresh consideration, highlighting the validity of the administrative instructions. 3. Imposition of Penalties and Requirement of Mens Rea: The appellants argued against the imposition of penalties, asserting that the presence of mens rea (intent to evade duty) is a mandatory requirement for penalties. They claimed that their actions were not backed by any ulterior motive or mala fide intention to evade duty. The Commissioner (Appeals) initially imposed penalties, but the appellants contended that this was incorrect as there was no evidence of intent to evade duty. The Government, upon reconsideration, did not find any new grounds from the Department to uphold the penalties and noted the Department's failure to reinforce their contentions legally. Final Judgment: The Government, adhering to the principles of judicial discipline and following the directions of the Bombay High Court, set aside the impugned orders. The Government directed the original authority to sanction the rebate claims in terms of the administrative instructions and the High Court's order, provided the rebate claims are otherwise in order. The revision applications were disposed of accordingly, with the Government expressing dissatisfaction with the Department's representative for not providing any substantial new arguments or written replies to support their case.
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