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PETITIONER:

M/S. HINDUSTAN PETROLEUM CORPORATION LTD.

Vs.

RESPONDENT:

THE COLLECTOR OF CENTRAL EXCISE

DATE OF JUDGMENT27/04/1995

BENCH:

MAJMUDAR S.B. (J)

BENCH:

MAJMUDAR S.B. (J)

SAHAI, R.M. (J)

CITATION:

1995 SCC Supl. (3) 45 JT 1995 (4) 88

1995 SCALE (3)1

ACT:

HEADNOTE:

JUDGMENT:

MAJMUDAR, J.:

1. This group of civil appeals moved by the same appellant

M/s. Hindustan Petroleum Corporation Limited under Section

35(A) of the Central Excises and Salt Act, 1944 (hereinafter

referred to as 'the Act'), against the Union of India and

the concerned authorities raise a common question of law for

our consideration. That question is to the following effect

'whether the appellant who exported the concerned excisable

goods as ship's stores for consumption on board vessels

bound for any foreign ports has to pay on these goods excise

duty as per Rule 13 of the Central Excise Rules or whether

the appellant's goods are liable to pay excise duty as per

Rule 12 of these Rules'.

2. A few relevant introductory facts leading to these

appeals are required to be noted at the outset,

1. Facts leading to Civil Appeal Nos. 2855 and 2856 of

1985

3. The appellants filed a refund claim for a sum of Rs.

18,859.50p being the duty paid by them on Light Diesel Oil

(LDO) supplied as ship's stores for foreign going ships.

The supplies were made on seven different occasions during

the period from 15.2.77 to 20.4.78. The LDO so supplied was

charged to basic excise duty, that is, the duty payable

under the First Schedule to the Act read with any

notification in force at Rs.36.21 per kilo litre at 15

centigrade in terms of Central Excise Notification No.349/77

dated 16.12.77. The refund

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claim was made with respect to Rule 13 of the rules. It is

the case of the appellants that no duty whatsoever was

payable in respect of LDO and Furnace Oil supplied from

bonded stock as ship's stores going to foreign countries in

terms of Central Excise Rule 13. That they are therefore

entitled to refund of excise duty paid on these goods.

4. After holding adjudication proceedings the Assistant

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Collector rejected the claim. According to the Assistant

Collector in the light of various notifications issued in

connection with Rule 12 in respect of such supplies,

additional excise duty was payable at the concessional rates

in terms of Notification No.232/67 dated 9.10.67. In short,

the claim for refund was adjudicated in the light of Rule 12

and not under Rule 13.

5. Aggrieved by this order the appellants went in appeal.

The Appellate Collector turned down the claim of the appel-

lants that the case was governed by Rule 13 without

reference to Rule 12. The appellants' claim for refund in

connection with another item, namely, furnace oil also came

to be rejected by the Assistant Collector and the appeal

regarding the same was also dismissed by the appellate

authority. Under these circumstances, the appellants moved

two further appeals before the Customs, Excise & Gold (Con-

trol) Tribunal (hereinafter referred to as 'the Tribunal').

The Tribunal by its common order dismissed these appeals

following the Delhi High Court's judgment in the case of

Hindustan Aluminium Corporation Lid. v. Superintendent of

Central Excise, Mirzapur and Ors. (1981 - ELT 642). Against

this judgment of the Tribunal the present two appeals are

moved.

II. Facts leading to Civil Appeal Nos.5396 -5398/85:

6. The appellants during the period 7.2.78 to 4.5.78

exported Light Diesel Oil (LDO) and Furnace Oil. According

to the appellants as per Rule 13 of the rules, no duty was

payable on these exports. By an order dated 4.10.78,

Superintendent of Central Excise, Calcutta 11 Division

raised the demand for duty and therefore, the appellants

paid the duty under protest. Thereafter, on 18th May, 1978

the appellants claimed refund of the duty paid under

protest. By orders dated 1.9.78 and 7.9.78, the Assistant

Collector rejected the refund claim of the appellants. The

appellants preferred appeals before the Appellate Collector

who allowed the appeals by order dated 17.3.81 and held that

the refund claims were admissible as per Rule 13 of the

rules.

7. A show cause notice was issued by the Government of

India on 11th September, 1981 as per Section 36(2) of the

Act calling upon the appellants to show cause as to why the

order of the Appellate Collector should not be set aside.

The appellants gave reply to the show cause notice on

14.10.81. Thereafter, the proceedings were transferred to

the Tribunal. The Tribunal by its common order dated 2.5.85

disposed of the review proceedings by setting aside the

order of the Appellate Collector and restoring the order of

the Assistant Collector. That is how the present appeals

are filed by the appellants against the order of the

Tribunal dated 2.5.85.

Ill. Facts leading to Civil Appeal Nos.971-72/ 86:

8. The appellants supplied Light Die-

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sel Oil (LDO) and furnace oil during the period 26.12.77 to

22.8.78 from their bonded tanks in bunkers to foreign going

vessels. According to the appellants the said export of the

aforesaid oil was covered by Rule 13 of the rules. On

29.4.78 the appellants paid the duty under protest because

of the demand of the Superintendent, Central Excise,

Calcutta 11 Division. Thereafter, on 5.4.79 the appellants

preferred refund claims for the duty paid under protest.

The Assistant Collector of Central Excise, Calcutta II

Division by order dated 8.9.90 rejected the refund claims.

The appellants preferred two appeals being Nos. 1524 & 1525

of 198 1, against the adjudication order of the Assistant

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Collector to the Appellate Collector. The Appellate

Collector by order dated 6.11.81 allowed the claim of the

appellants. The Appellate Collector held that the refund

claims were admissible as per Rule 13 of the rules. On 27th

August, 1982, respondent no. 1, Govt. of India issued a show

cause notice under Section 36(2) of the Act calling upon the

appellants to show cause why the order of the Appellate Col-

lector should not be set aside. The appellants filed their

reply to the show cause notice on 29th September, 1982. The

said proceedings were transferred to the Tribunal and were

registered as Appeal No.ED(SB)(T) 1470/82-C. The said

appeal was allowed by the Tribunal on 19.2.85. The order of

the Appellate Collector was set aside and the order of the

Assistant Collector was restored. That is how the

appellants preferred these appeals under Section 35(2) of

the Act against the said decision of the Tribunal.

IV. Facts leading to Civil Appeal Nos.417696/86

9. The appellants supplied Aviation Turbine Fuel (ATF)

during the period from 1. 1.78 to 30.6.81 from bonded stock

to foreign bound aircraft from the Palam depot. The above

said supplies were made under Rule 13 of the rules'.

According to the appellants no excise duty was payable on

these goods. However, the duty was paid under protest. The

appellants filed twenty-one claims for refund of duty paid

during that period. The Assistant Collector of Central

Excise, MOD-1, New Delhi by separate orders dated

17.10.84/18.1.84 rejected the refund claims. The appellants

preferred appeals before the Appellate Collector, Central

Excise, New Delhi during the period from 1979 and 1982. The

appellants' twenty-one appeals against the Assistant

Collector's orders were also dismissed by the Appellate

Collector by orders dated 23.7.84 and 21.8.84. The ap-

pellants preferred 21 revision applications against the

Appellate Collector's orders. The Govt. of India rejected

these revision applications on 19.3.85 and that is why the

appellants preferred Special Leave Petitions against the

impugned judgment and order of the Tribunal in twenty- one

revision applications. Having been granted leave to appeal

under Article 136 of the Constitution by this Court, these

appeals are registered as civil appeals.

10.Mr. Soli J. Sorabjee, learned counsel appearing for the

appellants, vehemently contended that the appellants are not

liable to pay excise duty on goods which are exported

outside India from a warehouse or registered factory. That

as per Rule 13 of the rules such export can be made without

payment of duty on the goods directly exported from bonded

warehouse or registered factory. That Rule 13 is

independent of Rule 12 which deals with only rebate of duty

on excise duty paid

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goods which are subsequently exported outside India. That

in all these cases, therefore, the duty paid under protest

by the appellants was liable to be refunded. It was

submitted by Shri Sorabjee, learned senior counsel for the

appellants, that in the case of Indian Aluminium Company

Limited v. Union of India (1988 (36) E.L.T. 435) the High

Court of Calcutta has taken the view that Rule 13 is

independent of Rule 12 and a manufacturer exporter who has

followed the provisions of Rule 13 was not liable to pay any

duty on such goods and that the decision to the contrary

rendered by Delhi High Court was rightly dissented from by

the Calcutta High Court. In short, placing reliance on the

said decision it was submitted that the appeals should be

allowed. The learned standing counsel for revenue, on the

other hand contended that the view propounded by the Delhi

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High Court in Hindustan Aluminium Corporation Ltd. v.

Superintendent of Central Excise, Mirzapur and Ors. (supra)

is a correct view and the decision rendered by Calcutta High

Court does not lay down correct law. That the Tribunal was

Justified in rejecting all these claims of the appellants

following the decision of the Delhi High Court.

11.In view of these rival contentions, it becomes clear that

the fate of these proceedings hinges round the correct

interpretation of Rules 12 and 13 of the rules. These rules

are part and parcel of the Central Excise Rules, 1944 made

by the Central Government in exercise of its powers

conferred by Section 36(2) of the Act. It will be

appropriate to reproduce Rules 12 and 13 as they existed on

the statute book at the material time for resolving the con-

troversy between the parties.

"Rule 12. Rebate of duty on goods exported, -

(1) The Central Government may, from time to

time, by notification in the Official Gazette,

grant rebate of duty paid on excisable goods,

if exported outside India, to such extent, and

subject to such safeguards, conditions and

limitations as regards the class of goods,

destination, mode of transport, and other al-

lied matters as may be specified therein.

Provided that if the Collector is satisfied

that the goods have in fact been exported, he

may, for reasons to be recorded in writing,

allow the whole or any part of the claim for

such rebate even if all or any of the

conditions laid down in any notification

issued under this rule have not been complied

with.

Explanation. - For the purposes of this rule

the term "Collector" includes the Collector of

Central Excise at Madras, Bombay, Calcutta and

Cochin and the Collector of Central Excise in

whose territorial jurisdiction the airport or

port of Visakhapatnam, Kakinada,

Jamnagar, Mangalore, Bhavnagar, Veraval, Por-

bandar, Rameswaram, Tuticorin, Kandla,

Cuddalore,Okha, Nagapatinam, Pondicherry and

Paradip is located.

(2) Where the Central Government does not

grant under sub-rule(1) either wholly or

partially and rebate of duty paid on excisable

goods exported to a country outside India, it

may, in order to promote exports or fulfil

obligations arising out of any treaty entered

into between India and the Government of that

country provide for payment to the Government

of that country an amount not exceeding the

duty of excise paid on such goods which are

exported out of India to that country.

13. Export wider bond of goods on which duty

has not been paid. - Goods other than salt,

vegetable non-essential oils, and

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tea all varieties except package tea under

T.C.(2) made from duty paid loose tea, may in

like manner be exported without payment of

duty from a warehouse or a licensed factory,

provided that export is made in accordance

with the procedure set out in the relevant

provisions of Chapter IX of these Rules and

the owner enters into a bond in the proper

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Form, with such surety or sufficient security,

and under such conditions as the Collector ap-

proves, in a sum equal at least to the duty

chargeable on the goods, for the due arrival

thereof at the place of export and their

export therefrom wider Customs or Postal

supervision as the case may be, within the

period prescribed for goods exported under

Rule 12; and such bond shall not be discharged

unless -the goods are duly exported, to

satisfaction of the Collector, within the time

allowed for such export, or are otherwise

accounted for to the satisfaction of such

officer; nor untill the full duty due upon any

deficiency of goods, not so accounted for, has

been paid.

Explanation. - For the purpose of this rule as

well as rule 14, 14A and 14B, (i) the term

"Collector" includes the Collectors of Central

Excise at Bombay, Madras and Calcutta and (ii)

the term 'goods' includes excisable goods used

in the manufacture of the goods which are

exported."

12. A mere look at Rule 12 shows that it will cover those

excisable goods which have already been subjected to payment

of excise duty but which are subsequently exported outside

India. On proof of fulfilment of conditions laid down by

Rule 12, the concerned exporter of such goods will be able

to get rebate as per the terms and conditions laid down by

the notification issued by Central Govt. under sub-rule (1)

of Rule 12. So far as Rule 13 is concerned, other excisable

goods mentioned in the rule may in the like manner meaning

thereby as prescribed by Rule 12, can be exported without

payment of duty from warehouse or licensed factory, provided

that export is made in accordance with the procedure set out

in the relevant provisions of Chapter IX of these Rules and

the owner enters into a bond in the proper form, with such

surety or sufficient security under such conditions in the

sum equivalent to that chargeable on the goods for the due

arrival at the port of the export. And such bond shall not

be discharged unless the goods are duly exported to the

satisfaction of the Collector. It therefore, appears clear

that Rules 12 and 13 deal with excisable goods which are

exported from the country of their manufacture to outside

countries. If the excisable goods are exported after

payment of duty they may cam refund as per notification laid

down by Rule 12. While if these excisable goods are found

in bonded warehouse covered by bond to pay excisable duty

payable thereon, in case they are exported as laid down by

Rule 13 they may cam exemption from payment of duty in the

same manner as laid down by Rule 12. Therefore, both these

rules are complementary to each other and cover the same

topic of payment of appropriate excise duty on excisable

goods which arc exported outside India. In case of Rule 12

the duty is to be paid first and on satisfying the condition

of notification and proof of export appropriate refund can

be earned in the light of the notification. While in case

of Rule 13 no duty shall be paid in the first instance and

on proof of export as laid down by Rule 13 the respondents

cannot demand any duty on those goods, in excess of what is

permissible. But if the proof of export is not available as

required by Rule 13, full duty will have to be paid on these

goods. However, so far as liability to pay excise duty

under Rule 13 is concerned,

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it will have to be linked up with Rule 12, because that rule

deals with rebate of duty paid on excisable goods

manufactured in India which have ultimately been exported

outside India. It is also pertinent to note that even for

applicability of Rule 13 the excisable goods stored in the

bonded warehouse have to be exported in the like manner

meaning thereby under similar circumstances as mentioned in

Rule 12 which is immediately preceding Rule 13 and which

deals with similar special concessional payment of duty on

excisable goods manufactured in India and which are

ultimately exported and which bring foreign exchange to the

country. It is not as if under Rule 13 excisable goods

which are subjected to export directly from the warehouse of

licensed factory do not incur any excise duty. That is

contra indicated by the requirement of Rule 13 itself

calling upon the exporter to enter into a bond for payment

of requisite full duty in case the situation arises for the

same and that bond is not to be discharged and the

obligation under the bond has to continue for the benefit of

revenue till proof of export is made available to the

satisfaction of the Collector. The appellants' contention

that Rule 13 is independent of Rule 12, therefore, cannot be

accepted.

13. This very view was taken by the Delhi High Court in the

case of Hindustan Aluminium Corporation Lid. v. Superin-

tendent of Excise, Mirzapur and Ors. (supra). An identical

question was posed for consideration of the Delhi High

Court. It was answered by the Division Bench of the Delhi

High Court speaking through Sachar, J. The Delhi High Court

held that the quantum of duty or rebate has to be determined

in the light of the notification issued under Rule 12.

Under Rule 13 without first payment of duty goods can be

exported but that does not mean that the goods are not

liable to pay duty. Since Rule 13 contemplates release of

goods under bond the petitioner can claim postponement of

payment of duty but cannot claim total exemption. Referring

to Rule 9 and Rule 140 of the rules it was held that though

Rule 9 provided that no excisable goods shall be removed

from where they are manufactured without payment of duty,

Rule 13 allows such removal for export without payment of

duty. Rule 140 empowers the Collector to approve a private

warehouse for storage of excisable goods on which duty has

not been paid and also empowers that he may require the

licensed warehouse holder to execute bond to pay the duty on

goods when necessary. Reliance was also placed on Rule 47

which enables the manufacturer to provide store room or

other place of storage at his premises for depositing goods

manufactured on the same premises without payment of duty.

Such store room or place has to be approved by the

Collector. Of course, in such a case the manufacturer has

to enter into a bond for payment as mentioned in Rule 48.

Referring to Rule 13 it was observed that as per the said

rule goods can be exported without payment of duty from a

warehouse or a licensed factory, provided the owner enters

into a bond as contemplated therein. It is possible both

for the manufacturer or any other owner to enter into a bond

under Rule 13. Even under Rule 140 the warehouse to which

goods may be removed without payment of duty, may not

necessarily belong to the manufacturer. Reliance was also

placed on the provision of Rule 13 to the effect that goods

without payment of duty can be exported as per the

provisions of Chapter IX of the rules which would include

Rule 185.

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Therefore, the conditions laid down by notification issued

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on 17.5.69 under Rule 12 will automatically be applicable to

goods exported under Rule 13. It was also observed that it

was not as if goods exported under Rule 13 were exempted

from payment of excise duty. In para 14 of the report it

was observed that the facility of removing without payment

of duty cannot be equated with a substantive right of ex-

emption from payment of duty as was the contention of Mr.

Sorabjee. Rule 8 empowers the Central Government by

notification in the Official Gazette to exempt subject to

such conditions as may be specified in the notification

excisable goods from the whole or any part of duty leviable

thereon. It was not the case of the appellants that there

was any notification issued exempting the goods exported un-

der a bond under Rule 13 from payment of duty.

14. Repelling the arguments of the learned counsel for the

petitioner that reference in Rule 13 to the provision

regarding the goods being exported in the like manner refers

to only the procedure for export as contemplated by Rule 12

and had nothing to do with the rate of excisable duty

prescribed under notification issued under Rule 12, it was

observed that procedure for exporting such goods. was

already laid down by Chapter IX of the rules and it was

expressly mentioned in Rule 13. Therefore the phrase 'may

in the like manner be exported' as found in Rule 13 has a

clear linkage with the liability to pay duty as laid down by

Rule 12 and accordingly the contention of the appellants

before the Delhi High Court that Rule 13 was independent of

Rule 12 was rejected and it was held that even goods ex-

ported from bonded warehouse under Rule 13 under a bond will

have to bear duty to the extent indicated by notification

issued under Rule 12 as applicable at the relevant time.

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 excise duty when such goods are taken out of

bonded warehouse or licensed factory under a bond duly

executed under Rule 13 which defers payment of excise duty

but at the same time guarantees to the revenue payment of

full excise duty thereon if they arc not ultimately ex-

ported. Thus the liability to pay excise duty does not

vanish and the goods do not become totally exempt from

payment of excise duty as the charge of the duty attaches

moment they are manufactured as laid down by the Act. When

we turn to Chapter IX of the rules we find that it deals

with export under rebate of duty or under bond. Thus a

common procedure has been provided under Chapter IX, both

for the claim for rebate of duty on export of goods as

envisaged by Rule 12 and also under bond executed under Rule

13 in connection with export of excisable goods. As per

rule 13 exporter of excise goods on which duty had not been

paid has also to follow the same procedure under Chapter IX

as has to be followed for exports under Rule 12. Thus an

exporter of excisable goods on which duty is not paid in the

first instance but which are covered under the bond duly

executed in favour of the revenue by the owner of the goods

has also to follow the procedure of Rule 185 found in

Chapter IX. All that Rule 13

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therefore seeks to do is that it provides for the facility

of deferred payment of excise duty and what will be the

extent of duty ultimately payable on such goods covered by

bond executed under Rule 13 will have to be determined

independently of Rule 13 and that is the reason why the

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liability to pay excise on such goods has to be ascertained

before discharging the liability under the bond and for that

purpose linkage with Rule 12 become relevant as per the

phrase "may in the like manner be exported" as found in Rule

13. If Rules 12 & 13 arc not read in conjunction with each

other an anomalous and also discriminatory result will

follow. This can be demonstrated by taking a simple

example.

16. If an excisable commodity like Sewing Machine is

exported from a bonded warehouse under Rule 13 under a bond

it may not have to bear excise duty till it is exported.

But if the same commodity namely, sewing machine is cleared

ex-factory gate on payment of full excise duty and

thereafter it is exported and if it is covered by a

notification under Rule 12(1) granting rebate then only

because the same commodity is first 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

warehouse and getting it exported would enjoy on the same

commodity total exemption from duty when it is otherwise

liable to bear the same rate of excise duty. Such a result

would be discriminatory and arbitrary. To avoid such an

anomalous result Rule 13 will have to be read in conjunction

with Rule 12 and as complementary to Rule 12. If Rule 13 is

read independently of Rule 12 as contended by senior

standing counsel for appellants, Sh. Sorabjee an exporter

of such a sewing machine who is prompt in paying full duty

of Rs. 100/- and then exports it will have to suffer as he

will have to pay Rs.80/- as duty ultimately but one who does

not pay duty shall in the first instance after satisfying

conditions of Rule 13 will pay nil duty. It would put

premium on non- payment of duty and result in treating

equals inequally. On the other hand an equitable result

would follow if Rules 12 and 13 are read as complementary to

each other dealing as they do with the same subject of

remission of duty on export of excisable goods. It is

obvious that interpretation of these rules must be made in

such a manner as to avoid inequitable result and to ensure

an equitable result. According to us the view taken by the

Delhi High Court is quite justified and

100

unexceptionable as it avoids such an inequitable result. On

the contrary, the view expressed by Calcutta High Court in

the -case of Indian Aluminium Company Limited v. Union of

India (supra) wherein it is held that Rule 13 is to be

applied independently of Rule 12, would obviously result in

the aforesaid inequitable consequences which can not be

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countenanced, Turning to the Division Bench judgment of the

Calcutta High Court, we find that the Calcutta High Court

has placed emphasis on the words used in these rules,

namely, "rebate on duty of excise paid" as found in Rule 12

as contra distinguished from the words used in Rule 13 to

the effect "export under bond of commodities on which duties

have not been paid". In our view if the common scheme of

both these rules is appreciated in its proper perspective,

mere difference of phraseology contained in these rules

regarding the time and mode of payment of excise duty would

pale into insignificance. It is true as observed by

Calcutta High Court that Rule 12 talks of a notification,

while Rule 13 does not refer to any notification. But once,

it is kept in view that the burden of duty which has 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 arc 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 the burden of the excise duty

paid by him on the cleared commodity will be passed on to

the purchaser and such a purchaser if he exports the

commodity within the time limit prescribed by Rule 12 can

claim refund of duty paid to the extent permissible under

the notification issued under Rule 12. Therefore, the

benefit of such exporter is only to the extent of the lessor

duty which he ultimately pays while in case of Rule 13 If

the manufacturer directly exports the commodity he directly

gets the benefit which he will have no occasion to pass on

to the foreign imported buyer. He will load the export

price to the extent of the duty which ultimately the

exported commodity is to bear. In either case the burden of

duty borne by the exporter under Rule 13 or the manufacturer

of goods cleared for home consumption would be nil as he

would pass on the burden to the foreign importer under Rule

13 or to the purchaser for home consumption under Rule 12

who may cam in his turn rebate on duty paid if goods are

exported as per Rule 12. Thus the duty of excise will have

no real impact on the extent of profit earned by the

manufacturer on goods cleared for home consumption or on

goods exported. Profit on such goods will be the

101

difference between market price in home or foreign market

and the cost price. In home market the margin may be less

as excise duty will form part of cost. In foreign market it

may be more if goods are exported under Rule 13 without

payment of duty. Consequently, it is not possible to agree

with the view of the Calcutta High Court that because under

Rule 12 the manufacturer earns more profit by selling in

local market for home consumption, the exporter under Rule

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12 may bear a larger burden of excise duty as compared to

the exporter, manufacturer of the same type of goods under

Rule 13. Similarly, it is not possible to appreciate the

reasoning adopted by the Calcutta High Court in para 28 of

the report to the effect that under Rule 13 what is sought

to be secured is the proper exportation of goods and not

duty to be borne by the exporter. It has to be kept in view

that excise duties have nothing to do with the exports as

such or with the charging of custom duty on export. They

are only concerned with charging and recovery of excise

duties which are attached to the manufacture of the goods

and their clearance either for borne consumption or for

export as 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 require-

ments 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 taking

the view that the Delhi High Court had wrongly assumed that

the exported goods are not exempted from payment of excise

duty under Rule 8 and that the provisions of Section 37 of

the Act were overlooked by the High Court. Now it cannot be

gainsaid that no exemption notification covering the goods

in question is issued under Rule 8. So far as Section 37 is

concerned, all that it provides is that the Central Govt.

may make rules for providing exemption in whole or part from

duties imposed by the Act. In this connection, it is

necessary to note that the Central Excise rules are made by

the Central Govt. in exercise of its powers under Section

37. Rule 8 relating to exemption is also a part and parcel

of these rules and it has a linkage with Section 37 of the

rules. Rule 13 has nothing to do with exemption as wrongly

assumed by the Calcutta High Court. If Rule 13 was dealing

with total exemption from payment of excise duty on

excisable goods exported from bonded warehouse, there would

have been no occasion for the rule making authority for

providing execution of bonds for covering the entire duty

payable on such excisable goods. Even apart from all these

reasons, it is obvious that the con-

102

clusion to which the Calcutta High Court reached that Rule

12 is independent of Rule 13 would result in an anomalous

and discriminatory situation as already discussed earlier

such an interpretation cannot be countenanced on the touch

stone of Article 14 of the Constitution of India. It must

there be held that the decision of Calcutta High Court

cannot be treated to be laying down correct law. On the

contrary as seen earlier the decision of the Delhi High

Court in Hindustan Aluminium Corporation Lid. v.

Superintendent, Central Excise has correctly interpreted

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Rules 12 and 13. The Tribunal was therefore right in

following the 'decision of Delhi High Court and coming to

its conclusion in that light. In the result these appeals

fail and are dismissed. In the facts and circumstances of

the case there will be no order as to costs.

106