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TMI Blog2014 (1) TMI 1216X X X X Extracts X X X X X X X X Extracts X X X X ..... as it is known in the trade but Quilt Cover/Shell without any stuffing therein. The party themselves have admitted that there is no stuffing inside the said so called shell/cover. The Quilt/Rajais in India or abroad is known as such only with stuffings of feather/cotton/polyester inside two layers of fabrics stitched together from all sides. Quilt shell/cover cannot be called as quilt until it is stuffed with the stuffing materials which can be feather/cotton/polyester fibre. Description Quilt (Rajais) therefore does not cover Quilt Shell/Cover which is a component of Quilt. Since the rebate is allowed only in respect of Quilt (Rajais) only, and not on Quilt Shell/Cover, party is not entitled to rebate in terms of Rule 191A read with Notification/Declaration issued by Central Board of Excise and Customs in this regard. There is no other Notification/Declaration of C.B.E.C. under which the rebate claim under Rule 191A could be allowed to Quilt Shell/Cover - Decided against assessee. - WP (C) 1477/1998 - - - Dated:- 10-1-2014 - Sanjiv Khanna And Sanjeev Sachdeva,JJ. For the Petitioners : Mr. Satvik Varma with Mr. Rohan Sharma and Mr. Saurab Seth, Advocates. For the Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 191A. The said Rue 191A provides for procedure for export of articles under rebate of duty on the excisable goods used in the manufacture and packing. In terms of sub-rule 1 of Rule 191A, the Central Board of Excise and Customs have declared Cotton Quilts (Rajais) in respect of which the rebate of duty on the Excisable contents thereof shall be allowed. In the present case, what has been exported is scourd quilt cover as described in Form AR5s on which refund has been claimed. The shipping Bills relevant to the rebate claims in question described the goods as 100% cotton Fabrics Millmade scoured feather proof quilt covers double stitched. In the relevant contract copy produced by the assessee, the description of the goods exported reads as 100% Cotton Made in India Scoured Feather Proof Silicon Finish Piped Seam Quilt Shells . The similar description appears in few shipping bills also. The party vide their letter dt. 24.08.95 accepts that the goods are Quilt Shells. At the time of personal hearing I have been shown a sample of Quilt Shell which had a small opening at one side through which the feathers or cotton can be pumped in the said shell. There was no stuffing in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned order, has held that Cotton Quilt (Rajais) was the notified article eligible for Rule 191A benefit whereas under Rule 191B the articles covered were Cotton Quilt including Quilt Covers. He held that Rule 191A and Rule 191B were slightly different in their applicability and procedure. Under Rule 191A, duty paid materials are received into factory for further manufacture and upon export, claims of Central Excise duty paid on such materials and packing materials used are settled but under Rule 191B, the articles meant for export are not only manufactured under bond but the excisable goods required for manufacture of such articles are also obtained under bond. 12. He held that Rule 191A and Rule 191B could not be equated on the same footing as Rules 12 13 of the Central Excise Rules, 1944, as contended by the petitioner placing reliance on the decision of the Supreme Court in the case HINDUSTAN PETROLEUM CORPORATION LTD. VS. COLLECTOR OF CENTRAL EXCISE, 1995 (77) E.L.T 256 (SC). 13. The petitioner has assailed the said order in this petition. 14. Learned counsel for the petitioner did not press his submission that what was exported was in fact Cotton Quilt and not Quilt C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be favourbly approved. 17. To understand the controversy, it would be appropriate to extract the relevant notifications. 18. Rule 191A as applicable stipulated as under:- Rule 191A. Procedure for export out of India of articles under rebate of duty on (the excisable goods used in their manufacture and packing) (1) The Central Board of Excise and Customs shall, from time to time, declare the articles to which this procedure shall apply. (2) Any manufacturer desiring to export any articles under claim for refund of duty paid on (the excisable goods used in the manufacture and packing thereof) shall apply in writing in the form in Appendix A to the Collector, giving inter alia the following information:- (a) Particulars of premises along with a ground plan in duplicate, showing the main sections of manufacturing and packing departments, store-rooms for storage of duty-paid excisable goods and for storage of manufactured articles; (b) a list of the articles proposed to be manufactured along with their description and manufacturing formulae with particular reference to the quantity or proportion in which the excisable goods are actually used, as well as the quality and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r also. (7) In order to be eligible for the concession, the manufacturer shall obtain the excisable goods to be utilized as ingredients or raw materials in the manufacture and packing of the product intended for export direct from a registered factory or registered factories, approved by the Collector, and in which the excisable goods are produced. All such goods shall be conveyed from the manufacturing factory to the receiving factory within three months from the date of payment of duty thereon or such extended period as the Collector may allow for reasons to be recorded in writing and all such goods shall be accompanied by a copy of the A.R.1 or gate pass or like document evidencing the payment of duty on the quantity so removed and conveyed. The manufacturer may, with the prior permission of the Collector, procure excisable goods from open market provided they are in mill packed condition and their identity with the duty paying documents can be established. The goods so obtained shall be stored in a storeroom, the key to which shall remain in the personal custody of the applicant or his Manager and the applicant or his Manager shall maintain accounts in the form in Appendix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the Assistant Collector of Central Excise concerned having jurisdiction over the factory before the expiry of the period specified in sub-section (1) of Section 11-B of the Act. (10) After due verification (***), the Assistant Collector may sanction the refund. (10A) If the goods are not exported, or the proof of export thereof is not furnished to the satisfaction of the Collector of Central Excise, in the manner and within the prescribed time-limit, the Collector may in his discretion disallow the whole or any part of the claim for such rebate. (11) The manufacturer shall maintain accounts in the form in Appendix C showing the quantities of duty paid excisable goods received and used in the manufacture and packing of the articles. The account of the article manufactured and exported shall also be maintained in the form in Appendix D . (12) The concession may at any time be withdrawn by the Collector if a breach of this procedure is committed by the manufacturer, his agent or any person employed by him in the factory. In the event of such a breach, the Collector may also (***) confiscate the excisable goods or the manufactured articles in stock at the factory. (13) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following matters:- (a) the supervision by officers of Excise over the manufacture in bond and the payment of fees for such supervision; (b) the security to be furnished for the due observance of the conditions and limitations specified in this notification. (4) Where a notification is issued under sub-rule (2) in relation to any excisable goods, the owner of such goods may with the permission of the Collector remove them from the pace of production or manufacturer or storage, without payment of duty. 4A. The Collector may, by special order and subject to such conditions and limitation as may be specified by the Collector, permit a manufacturer to remove the article manufactured under the provisions of this rule to the premises of another person for completion of certain manufacturing process and to bring back such articles to his factory without payment of duty or to permit the manufacturer to remove, without payment of duty such article to the premises of another assessee for completion of certain manufacturing process and allow the article to be removed by the manufacturer for export under the provisions of this rule from the premises of such assessee to whom such ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose, and every such certificate of registration shall specify- (a) the description of the excisable goods and the articles to be manufactured therefrom; (b) the formula of manufacture of the articles, stating the quantity of each of the excisable goods per unit of each such articles; (c) the conditions under which any operation of manufacture in bond may be carried on; and (d) the registration number allotted to the manufacturer. (3) The manufacture shall, immediately and change is made in the particulars required under conditions 2(b), intimate the change to the Collector. (4) The manufacturer shall enter into a bond in the form hereto annexed with the Collector to the extent of twice the amount of excise duty payable on the non-duty paid excisable goods required by him during any month for manufacture of such articles and on the articles proposed to be manufactured during that month. (5) The manufacture shall apply to the officer of the Central Excise as may be authorized by the Collector, hereinafter referred to as the proper officer, in writing every time he desired to obtain excisable goods required for the manufacture of such articles from the place of manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended to be cleared for export; or (b) be allowed, on payment of appropriate duty; to be used again for manufacture, where the goods are intended to be cleared for home consumption) (iii) where it belongs to such class or category of waste or by product as the Central Government may, from time to time, by order specify for the purpose, be cleared from the bond without payment of duty, for being used in the manufacture of the class or category of goods as may be specified in the said order, subject to the procedure which the Central Government may specify in this behalf, in the said order being followed; or (iv) on application by the manufacturer and if found unfit for further use or not worth the duty payable thereon, be destroyed in the presence of the proper officer, the duty payable thereon being remitted. (10) The Collector may at his discretion permit in each individual case clearance of any or all such articles for home consumption, on payment of excise duty leviable both on such articles and on the excisable goods used in the manufacture thereof in the same manner as excisable goods intended for home consumption are cleared from the place of their production or manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kages and each such packages shall be marked conspicuously with the words For export Ex-Bond and shall also be sealed. Such sealed packages shall be stored under double lock. NOTE- In case the premises where such articles for export are manufactured in a separate independent portion of the manufactory, it shall not be necessary to provide separate rooms for such manufactured articles or for the materials used therein. In the case of smoking mixtures it shall be sufficient if the whole manufactory is kept under excise supervision and locked by double locks during non-working hours. (15) Any waste arising from the processes of manufacture in bond of such articles shall be treated as follows:- (i.) If the manufacturer so desires, he may be allowed, to re-use the waste in the manufacture of the same article from which the waste results subject to the account being maintained to the satisfaction of the Collector. (ii.) If it is shown to the satisfaction of the collector that such waste has arisen solely from imported tobacco it may be allowed to be cleared on payment of import duty at the appropriate rate. (iii.) On a request from the manufacturer if the waste is found unfit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en paid but a bond has been furnished. The Collector has been empowered to permit the manufacturer of excisable good in bonded conditions. In case of fulfillment of the conditions, the exporter is permitted to manufacture the finished products without payment of excise on the excisable inputs. The conditions stipulated in the said Rules and the notifications there under relate to receipt of excisable inputs in a bonded area and the movement of the excisable goods and the manufacturing process under strict vigil and supervision of the custom authorities. 22. Comparison of Rule 191A with Rule 191B and the respective notifications issued there under clearly show that both the rules operate in a completely different scenario and contemplate different situations. Rule 191A really operates in a field where the exporter of manufactured goods uses excisable inputs on which excise duty has been paid for the purpose of manufacture of the finished goods. The exporter on submitting proof of export of the finished products is permitted a rebate/refund of the excise duty paid on the excisable inputs of the finished products. For the exporter to avail of the said benefit, the exporter has to fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not mentioned in the entry to Schedule to Rule 191A clearly, the case of the petitioner is not covered under the entry to Rule 191A. In view of the fact that the goods of the petitioner is not covered in the entry to Schedule to Rule 191A, the petitioner is clearly not entitled to rebate/refund of the excise duty on the inputs used in the manufacture of quilt covers. 28. The reliance of the petitioner to the judgment of the Supreme Court in HINDUSTAN PETROLEUM CORPORATION LTD. (SUPRA) does not advance the case of the petitioner in view of the fact that the Supreme Court has noticed in the said judgment in Para 15 that a common procedure had been provided under Chapter IX both for claim of rebate of duty on export of goods as envisaged by Rule 12 and also under the bond executed under Rule 13 in connection with export of excisable goods and the Supreme Court has noticed as under:- 15. In our view the aforesaid decision of Delhi High Court correctly laid down the scheme of Rules 12 and 13 in the light of other relevant rules holding the field at the relevant time. All that Rule 13 provides for is a facility given to the concerned manufacturer of excisable goods of not paying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst cleared from factory gate on payment of full duty, it will have to bear a reduced excise duty as per the notification on proof of export while the same commodity if placed in a bonded warehouse and then exported may get totally exempted from duty. If say for such a sewing machine the excise duty is Rs. 100 per machine, and on proof of export if 20% rebate is to be available then proof of export of such machine after payment of Rs. 100 excise duty would entitle the exporter to get refund of Rs. 20 and such machine may have to bear the excise duty of Rs. 80. While if the same sewing machine which otherwise is liable to pay Rs. 100 excise duty is placed in a bonded warehouse by availing the facility of deferred payment of duty under bond as per Rule 13 and if Rule 13 is to be read independently of Rule 12, then export of such a machine from bonded warehouse would entitle the exporter to claim full exemption of Rs. 100 by way of duty on the same machine. Thus a person who first pays excise duty and then exports the commodity would pay Rs. 80 by way of reduced duty, while a person who enjoys the facility of non-payment of duty at the stage of taking out the commodity from bonded war ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be borne by the concerned commodity, whether it is exported from a bonded warehouse or from open market has to be the same to avoid any inequitable result, the difference in phraseology employed by these rules cannot have any impact on the true construction of these rules. This should be for the simple reason that ultimately the exact burden of the excise duty to be borne by an exported commodity will have to be governed by the notification issued under Rule 12. Equally unjustified is the reasoning adopted by the Calcutta High Court in Para 14 of the report that as per Rule 13 the export is made from bonded warehouse and therefore manufacturer may not cam profit which he may cam if first the goods are cleared on payment of excise duty and then they are exported. In our view this distinction is without any real difference. It has to be kept in view that if the excisable goods are first cleared for home consumption and then exported within the time prescribed under Rule 12, refund would be claimed by the exporter who may not be the manufacturer of such commodity. Such a manufacturer when he sells the goods for home consumption may get profit out of the transaction but ultimately t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case may be. The Calcutta High Court is also in error in taking the view that the words "in the like manner be exported" as found in Rule 13 deal with the procedure for export, as the procedure is already provided in the same rule by making an express provision that such an export will be made in accordance with the procedure laid down in Chapter IX of these rules. Consequently, the meaning assigned to the phrase, "may in the like manner be exported" by the Calcutta High Court as found in Rule 13 would on the reasoning of the High Court become tantologous. It must therefore be held that when the rule 13 refers to the export to be made in the like manner, it would necessarily mean subject to the same conditions and requirements as laid down by the preceding Rule 12 which refers to the same topic, namely, export of excisable commodities and excise duty payable on them whether the manufacturer of articles has exported them after payment of duty or before payment of duty would make no difference on these aspects. The Calcutta High Court has found fault with the reasoning of the Delhi High Court in Hindustan Aluminium Corporation Limited v. Superintendent, Central Excise (supra) by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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