2014 (1) TMI 1466 - HC - Central Excise

Rebate under Rule 18 of the Central Excise Rules, 2002 - Simultaneous benefit of rebate on finished goods and inputs used in manufacturing of such goods on export - Whether, the word or used in Rule 18 should be read as and because under Rule 18 of the Central Excise Rules, 2002 - Held that - When we consider Notification No. 21/2004-C.E. (N.T.), dated 6-9-2004, we find that it deals with the rebate of whole of the duty paid on materials i.e. inputs used in the manufacture or processing of export goods. It nowhere lays that on finished goods also, rebate can be claimed. Thus, issuance of two difference notifications makes it clear that both the benefits are not available to be claimed simultaneously, and the words whole of the duty used in the notification has to be understood in the context of materials/inputs used in the manufacture or processing of export/inputs used in the manufacture or processing of export goods, whereas Notification No. 19/2004-C.E. (N.T.) has to be understood with respect to the manufactured/finished goods. Issuance of two separate notifications also indicates that the benefit on both is not available at the same time. Merely by the fact that Form ARE-2 is providing either to claim the rebate on finished goods or on inputs used in manufacture of such goods, it cannot be culled out that the same is available on both i.e. finished goods as well as on the inputs. Merely by preparation of any combined form for both the benefits, the word or cannot be construed as and to be used conjunctively. The statutory Rules 18 and 19 of the Rules of 2002, which have been framed, make it clear that that exemption of duty or rebate is not available on both i.e. inputs as well as finished goods; same is available only on one and such intendment has to be given full effect to - Therefore, decided against assessee.

Summary

Issues Involved:
1. Interpretation of Rule 18 of the Central Excise Rules, 2002.
2. Rebate claims under Rule 18 for duty paid on excisable goods and materials used in their manufacture.
3. Applicability of Rule 19 of the Central Excise Rules, 2002.
4. Validity of the Government of India's orders in dismissing the revision applications.
5. Relevance of Notification Nos. 19/2004-Central Excise (N.T.) and 21/2004-Central Excise (N.T.).

Issue-wise Detailed Analysis:

1. Interpretation of Rule 18 of the Central Excise Rules, 2002:
The primary issue was whether the word "or" in Rule 18 should be interpreted as "and" to allow rebate on both excisable goods and the materials used in their manufacture. The court examined the language of Rule 18, which states: "Rebate of duty. - Where any goods are exported, the Central Government may, by notification, grant rebate of duty paid on such excisable goods or duty paid on materials used in the manufacture or processing of such goods." The court concluded that the rule's plain language indicates that the rebate is available either on the finished goods or the raw materials, but not both simultaneously. The court emphasized that interpreting "or" as "and" would be impermissible and contrary to the clear legislative intent.

2. Rebate Claims Under Rule 18 for Duty Paid on Excisable Goods and Materials Used in Their Manufacture:
The petitioner argued that the rebate should be granted for both the duty paid on inputs and the finished goods under Rule 18. The court, however, found that the adjudicating authority and the Commissioner (Appeals-I) correctly rejected this claim, as Rule 18 does not permit simultaneous rebate on both inputs and finished goods. The court upheld the interpretation that the rebate can only be claimed on one of the two, aligning with the rule's language and intent.

3. Applicability of Rule 19 of the Central Excise Rules, 2002:
The court also considered Rule 19, which allows for the export of excisable goods without payment of duty and the removal of materials without payment of duty for manufacturing export goods. The court noted that Rule 19 provides benefits only for finished goods and not for raw materials, further supporting the interpretation that Rule 18's rebate is not available on both inputs and finished goods. The procedures and stages under Rules 18 and 19 were found to be distinct and not interchangeable.

4. Validity of the Government of India's Orders in Dismissing the Revision Applications:
The court examined the orders passed by the Government of India, Ministry of Finance (Department of Revenue), which dismissed the petitioner's revision applications. The court found no fault in these orders, as the authorities had appropriately interpreted Rule 18 and applied the law correctly by denying the simultaneous rebate on both inputs and finished goods. The court concluded that there was no case for interference with the impugned orders.

5. Relevance of Notification Nos. 19/2004-Central Excise (N.T.) and 21/2004-Central Excise (N.T.):
The petitioner relied on these notifications to support their claim for simultaneous rebate. Notification No. 19/2004-C.E. (N.T.) grants rebate on excisable goods, while Notification No. 21/2004-C.E. (N.T.) grants rebate on materials used in manufacturing export goods. The court found that these notifications do not imply that both rebates can be claimed simultaneously. The issuance of two separate notifications indicates that the benefits are mutually exclusive, reinforcing that the rebate is available either on the finished goods or the inputs, but not both.

Conclusion:
The court dismissed the writ petitions, finding them devoid of merit. The word "or" in Rule 18 cannot be read as "and," and the rebate of duty is available either on the finished goods or the raw materials, not both. The court upheld the validity of the Government of India's orders and clarified the distinct applicability of Rules 18 and 19. The notifications relied upon by the petitioner were found to support the interpretation that simultaneous rebate on both inputs and finished goods is not permissible.