The main legal point established in the judgment is the interpretation and application of Rule 12 of the Central Excise Rules, 1944, and the notifications issued thereunder, emphasizing the conditions for claiming rebate of duty on exported goods and the discretion of the Collector to allow rebate even if conditions are not fully complied with.

R.BANUMATHI, J.

1. This Writ Appeal arises out of the Order of the learned single Judge dated 3.1.2001 passed in W.P.No.11228 of 1992 allowing the Writ Petition and quashing the order of Maritime Collector and thereby holding that the Respondent is entitled to rebate of Central Excise duty, being the duty paid on the yarn used for making thread.

2. Brief facts are that the Respondent has filed four rebate claims for a sum of Rs.2,03,586.24, Rs.70,647.56, Rs.2,03,586.24 and Rs.2,13,765.55, being the duty paid on the yarn content of thread, exported under AR4A Nos.52/88-89 dated 26.09.1988, 44/88-89 dated 26.8.1988, 58/88-89 dated 09.11.1988 and 72/88-89 dated 08.03.1989 respectively. It was observed that the Respondent received single S.S.Polyester Yarn of 60/1 from M/s.Centenary Mill of Madurai for making S.S.Polyester thread of 60/2. The Polyester thread is exempted from duty vide notification No.53/87 dated 01.03.1987 and these goods alone are exported. After issuing show cause notice dated 6.9.1989 and after personal hearing, the 1st Appellant – Maritime Collector by order in C.No.V/55/18/1/89 dated 28.12.1989 rejected claim of Respondent for rebate of Central Excise duty holding as under:

".... In this case the duty paid S.S.Polyester Yarn has been cleared under GP1 from one factory to another factory and the same has been converted to S.S.Polyester thread and exported under AR4A. The quantity cleared for export from M/s.Madura Coats, Ambasamudram is 6500 Kgs., which involves processing. In fact the Yarn of 60/1 has been converted to S.S.Polyester thread of 60/2 which is exempted from payment of duty.

Hence, as far as Rule 12 and the Notifications issued there under are concerned, the duty on the goods exported only is eligible for rebate and not on the contents of the goods exported. Secondly, the duty paid goods should be directly exported from the factory and not after processing at some other site.

Thirdly, the question here is whether the exporter is eligible for rebate of duty on the goods exported according to the provisions of Rule 12 and not whether the goods can be classified under one heading and considered one and the same."

3. Aggrieved by the order of 1st Appellant in rejecting the rebate claims, the Respondent filed Appeal before the 2nd Appellant- Appellate Authority, who by order dated 3.1.1991 in Appeal No.1/91-M rejected the Appeal No.260/90 (M). As against the same, revision was filed by the Respondent before the Government of India, which was also dismissed on 24.6.1991.

4. Even though the order of 1st Appellant in C.No.V/55/18/1/89 dated 28.12.1989 was unsuccessfully challenged upto the level of revision, again challenging the order of 1st Appellant in C.No.V/55/18/1/89 dated 28.12.1989, the Respondent filed W.P.No.11228 of 1992.

5. The Respondent again filed rebate claim for Rs.49,330.51 being the duty paid on the yarn content of thread exported under AR4A No.31/89-90 dated 22.11.1989. The said claim of Respondent (after issuing show cause notice and personal hearing) was also rejected by the Collector of Central Excise in C.NO.V/55/18/89-E-C dated 11.7.1991. The said order dated 11.7.1991 has also been challenged in the Writ Petition No.11228 of 1992.

6. The Appellants resisted the Writ Petition contending that the proviso (i) to Notification No.197/62 dated 17.11.1962 issued under Rule 12 of Central Excise Rules, 1944 for claiming rebate stipulates that "the goods are exported after payment of duty in cash direct from a factory or a warehouse". Stand of Appellants is that the above condition was not satisfied for the export of thread by the Respondent and the payment of excise duty of yarn by the sister concern of the Respondent is not relevant on the issue and therefore Maritime Collector has rightly rejected the rebate claim of the Respondent.

7. The learned single Judge held that the duty suffered yarn has been twisted into threads and it is the same yarn, which is in the form