IMPORTANT POINTS
The word ‘or’ occurring in Rule 18 has to be read as ‘and’.
The exporters/appellants are entitled to both the rebates under Rule 18 and not one kind of rebate.

Headnote:(a) Interpretation of statute – External aid – Legislative history – Since 1944 Rules to 2002 Rules Central Government consistently of the opinion that the rebate is to be allowed on both the forms of excise duties, i.e., both on excisable goods as well as on materials used in the manufacture of goods – Hence Rules 18 and 19 of Central Excise Rules, 2002 should be interpreted in accord with this understanding of the rule maker itself. (Para 20)
       (2008) 12 SCC 466 – Relied upon
       (b) Interpretation of statute – Contemporanea expositio (interpreting a statute or any other document by reference to the exposition it has received from contemporary authority) – Rule 18, Central Excise Rules, 2002 – Notification No. 19/2004-CE(NT) dated September 06, 2004 and Notification No. 21/2004-CE(N.T.) dated September 06, 2004 – The two notifications issued to give effect to Rule 18 – Government construing Rule 18 as permitting rebate of excise duty on both counts. (Para 21)
       (1979) 3 SCR 373 – Relied upon
       (c) Interpretation of statute – Rule 18, Central Excise Rules 2002 – Grant of rebate of excuse duty on ‘materials used in the manufacture’ or ‘processing of such goods’ – Word ‘or’ used in Rule 18 can only be read as ‘and’ in view of history of the scheme of the Rules and interpretation given by Central Government – Wherever use 'and'/'or' produces unintelligible or absurd results, Court is entitled to read the word 'or' as 'and' and vice-versa to give effect to the intention of the Legislature which is otherwise quite clear. (Para 24)
       (1968) 1 SCR 463; (1957) 1 SCR 874; (1999) 5 SCC 138; (1959) 1 SCR 848 – Relied upon
       Facts of the case:
       The appellant/assessee, in this appeal, is engaged in the manufacturing of polyester cotton blended yarn and polyester viscose blended yarn and both these products fall under Chapter 55 of the Schedule to the Central Excise Tariff Act, 1985. For manufacture of the aforesaid product, the assessee had used the raw material which was an intermediate product and paid excise duty thereupon. The final products were also cleared on payment of excise duty on those finished products. The assessee had exported these goods on payment of central excise duty in the CENVAT account and, thereafter, filed as many as forty-five rebate claims amounting to Rs. 1,46,90,995/-(Rs. 75,42,487/-+ Rs. 71,48,508/-) in the months of November and December, 2004 respectively. These rebate claims were filed under the provisions of Rule 18 of the Central Excise Rules, 2002.
       The Department issued show cause notice calling upon the assessee to show cause as to why the rebate claimed by the assessee be not rejected as it was contrary to the provisions of Rule 18 of the Rules read with Section 11B of the Act and the Notification issued thereunder, i.e., Notification No. 19/2004-CE(NT) dated September 06, 2004.
       The Deputy Commissioner of Central Excise, Division-II, Nagpur rejected the rebate of duty paid on the final product exported as well as the claim of rebate of duty paid on inputs contained therein.
       The assessee filed appeal before the Commissioner of Central Excise (Appeals), Nagpur who held that in terms of Rule 18 of the Rules, the assessee is entitled to one of the two claims for rebate, i.e., either rebate of duty paid on exported goods or the duty paid on inputs used in the exported goods, and not on both of them. He remitted the case back to the Deputy Commissioner to decide the claim of the assessee after granting personal hearing to the assessee and taking its option as to which of the two claims assessee wanted to prefer.
       As the assessee wanted rebate on both types of excise duties paid, it challenged the order of the Commissioner (Appeals) by filing Revision Application before the Joint Secretary to the Government of India under Section 35EE of the Act. This Revision Application of the assessee was decided in its favour.
       The Department challenged the aforesaid revisional order by filing the writ petition in the High Court. This writ petition has been decided in favour of the Revenue.
       Finding of the Court:
       The exporters/appellants are entitled to both the rebates under Rule 18 and not one kind of rebate.
       Result: Appeals allowed.

Judgment

A.K. Sikri, J.

In all these appeals, the basic question of law which arises for consideration is as to whether or not the manufacturer/exporter is entitled to rebate of the excise duty paid both on the inputs and on the manufactured product, when excise duty is paid on a manufactured product and also on the inputs which have gone into manufacturing the product and such manufactured product is exported?

2) We may point out at the outset that, as per the scheme provided by the relevant Rules framed under the Central Excise Act, 1944 (hereinafter referred to as the 'Act') two options are admissible in respect of exemption from excise duty which is to be given when the goods manufactured are meant for export and are actually exported. A manufacturer/exporter can either export the said goods without payment of duty by executing a bond to the effect that goods are meant for export and would be actually exported and also undertakes to satisfy other stipulated conditions, to earn the exemption from payment on excise duty. Other option is to pay the duty on intermediate products and/or final products and thereafter claiming rebate from the Government once the goods are actually exported. When the manufacturer/exporter exercises first option, admittedly no duty is to be paid either on intermediate products or on final products. However, the dispute has arisen when second option is executed. In such a case, the Department has taken the stand that as per the relevant rules, the rebate is admissible in respect of one duty alone, i.e., either on the duty paid excisable goods or duty paid on materials used in the manufacture or processing of such goods but not on both the final as well as intermediate products. The authorities below, as would be noticed, in all these cases have accepted the version of the Revenue. Therefore, in these four appeals, assessees are the appellants.

3) After giving the aforesaid preliminary background thereby putting the issue in perspective, that has arisen for consideration we may take note of the factual background. For the purpose of convenience, it would be sufficient if we traverse through the facts that emerge from Civil Appeal No. 1978 of 2007.

The appellant/assessee, in this appeal, is engaged in the manufacturing of polyester cotton blended yarn and polyester viscose blended yarn and both these products fall under Chapter 55 of the Schedule to the Central Excise Tariff Act, 1985. For manufacture of the aforesaid product, the assessee had used the raw material which was an intermediate product and paid excise duty thereupon. The final products were also cleared on payment of excise duty on those finished products. The assessee had exported these goods on payment of central excise duty in the CENVAT account and, thereafter, filed as many as forty-five rebate claims amounting to Rs. 1,46,90,995/-(Rs. 75,42,487/-+ Rs. 71,48,508/-) in the months of November and December, 2004 respectively. These rebate claims were filed under the provisions of Rule 18 of the Central Excise Rules, 2002 (hereinafter referred to as the 'Rules').

4) On receipt of the aforesaid rebate claims, the Department issued show cause notice dated January 11, 2005 whereby the assessee was called upon to show cause as to why the rebate claimed by the assessee be not rejected as it was contrary to the provisions of Rule 18 of the Rules read with Section 11B of the Act and the Notification issued thereunder, i.e., Notification No. 19/2004-CE(NT) dated September 06, 2004. After considering the reply that was given by the assessee, the Deputy Commissioner of Central Excise, Division-II, Nagpur rejected the rebate of duty paid on the final product exported as well as the claim of rebate of duty paid on inputs contained therein by passing Order-in-original dated January 28, 2005. Aggrieved by this order, the assessee filed the appeal before the Commissioner of Central Excise (Appeals), Nagpur. This appeal was decided by orders dated March 15, 2

Click Here to Read the rest of this document

2015 Supreme(SC) 941

IMPORTANT POINTSThe word ‘or’ occurring in Rule 18 has to be read as ‘and’.The exporters/appellants are entitled to both the rebates under Rule 18 and not one kind of rebate.

Cases Referred (6)

IMPORTANT POINTS
The word ‘or’ occurring in Rule 18 has to be read as ‘and’.
The exporters/appellants are entitled to both the rebates under Rule 18 and not one kind of rebate.