2014 (5) TMI 60 - HC - Central Excise

Denial of rebate claim - Alteration in statutory order by executive order - Held that - By means of Circular in question, Central Board of Excise and Customs has revised the procedure, which was to be followed in respect to acceptance of proof of exports, though the procedure was already prescribed in Notification dated 6.9.2004 and, therefore, the question of revising procedure for such proof touching upon the matter already covered by Notification dated 6.9.2004 does not arise for the reason that an executive order, laying down something otherwise than what is prescribed in the Notification would not be permissible in law. It is well established that an executive order cannot prevail over the statutory rules. Mere executive decision cannot authorize the authorities concerned to do something which is not otherwise permitted under statutory rules. It is well settled that an executive order cannot prevail over statutory rules - Decided in favour of assessee.

Summary

Issues:
Denial of rebate on export of goods based on executive order restrictions.

Analysis:
The petitioner was denied rebate on export of goods due to restrictions imposed by an executive order, Circular No. 354/70/97-CX dated 13.11.1997. The petitioner argued that the statutory order, Notification No. 19/2004-C.E. (N.T.) dated 6.9.2004, did not contain such limitations. It was contended that an executive order could not modify a statutory provision. The respondents justified their actions by stating that the Central Government has the authority to issue binding Circulars. However, the court emphasized that an executive order cannot alter statutory rules.

The court highlighted that the Circular issued by the Central Board of Excise and Customs revised the procedure for proof of exports, which was already prescribed in the Notification dated 6.9.2004. It was reiterated that an executive order cannot override statutory rules. The court cited legal precedents to support this principle, emphasizing that executive orders should not conflict with statutory rules.

Referring to previous judgments, the court reiterated that statutory rules cannot be overridden by executive orders. It was emphasized that until rules are formally amended following the prescribed procedure, they must be adhered to. The court held that the impugned orders in the writ petition were unsustainable in light of the legal principles discussed.

Consequently, the court allowed the writ petition, quashed the impugned order dated 9.9.2011, and directed the respondent to re-consider the petitioner's claim for rebate in central excise based on the Notification dated 6.9.2004, disregarding the Circular dated 13.11.1997.