TMI Blog2005 (11) TMI 440X X X X Extracts X X X X X X X X Extracts X X X X ..... ecution of bond, when used for the purposes of manufacture or processing of final products which are exported, the exporter must export the goods only under Rule 19(1) of the Rules is not borne out by the provisions of the Rules. It is not disputed that the original notification issued by CBEC under sub-rule (3) of Rule 19 of the Rules on 26th June, 2001 and made effective from 1st July, 2001 has been operating without any difficulty and nothing has been brought on record to show why the impugned amendment became necessary. At the cost of repetition it requires to be stated that nothing has been brought on record nor has the learned counsel been in a position to point out as to how and in what circumstances an exporter can claim double benefit. The power to issue notification under Rule 18 of the Rules is available with the Central Government while power under Rule 19(3) of the Rules is available with the CBEC. The Board is a creature of the statute and cannot go beyond the powers granted under the statute. If the Central Government has, in its wisdom, provided for granting rebate upon fulfillment of certain conditions and subject to certain procedural safeguards, CBEC cannot be pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llectively; D) An ex-parte ad-interim relief in terms of para (C) above may kindly be granted; E) Any other further relief as may be deemed fit in the facts and circumstances of the case may also please be granted; 2. After the petition was admitted vide order dated 11th March, 2005 the same was taken up for hearing as regards interim relief. However, as no order was made Civil Application No.3025 of 2005 came to be moved by the petitioner. The said Civil Application was rejected vide order dated 3rd May, 2005. The petitioner thereupon approached the Apex Court and vide order dated 5th September, 2005 the matter came to be dismissed. However, the Apex Court granted the petitioner leave to file one more Civil Application seeking expeditious disposal of the Special Civil Application with the observation that the High Court may preferably dispose of the matter within a period of three months. Accordingly, the petitioner moved Civil Application No.8501 of 2005 which came to be granted vide order dated 7th October, 2005 with consent of the parties. It is in the aforesaid circumstances that this petition is taken up for final hearing and disposal today. 3. The petitioner is a proprietary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... qua one or the other sub-rule and claims rebate under Rule 18 qua the final products the provisions, as they stand, permit such a course of action. But by virtue of the Amendment Notification dated 3rd June, 2005 the option available with an exporter is taken away and the exporter who opts to remove the inputs without payment of duty is forced to export the final products also without payment of duty, even though the exporter is entitled to claim rebate under Rule 18 in relation to the duty paid on such final products. He, therefore, urged that the said Amendment Notification be struck down as going beyond the provisions of Rule 19 of the Rules. 6. An incidental submission was made by referring to Rule 5 of the CENVAT Credit Rules, 2004 (CENVAT Rules) to contend that in a case where an input is used in the final product which is cleared for export under bond CENVAT Credit in respect of the input so used is to be allowed to be utilized by the manufacturer towards payment of excise duty on any final product cleared for export or home consumption. Thus, the submission was that by virtue of the Amendment Notification even this provision was being rendered nugatory or redundant. He, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Government may, by notification, grant rebate of duty paid on such excisable goods or duty paid on materials used in the manufacture or processing of such goods and the rebate shall be subject to such conditions or limitations, if any, and fulfillment of such procedure, as may be specified in the notification. Explanation. - Export includes goods shipped as provision or stores for use on board a ship proceeding to a foreign port or supplied to a foreign going aircraft. Rule 19. Export without payment of duty.-- (1) Any excisable goods may be exported without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, as may be approved by the Commissioner. (2) Any material may be removed without payment of duty from a factory of the producer nor the manufacturer or the warehouse or any other premises, for use in the manufacture or processing of goods which are exported, as may be approved by the Commissioner. (3) The export under sub-rule (1) or subrule (2) shall be subject to such conditions, safeguards and procedure as may be specified by notification by the Board. 10. Rule 18 of the Rules stipulates that where any goods are export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch final products were procured without payment of duty. There is no rationale for such course of action apart from the fact that, as stated hereinbefore, the relevant Rules do not envisage any such requirement. The statement made on oath in the affidavit-in-reply by respondent No.2 that in such an eventuality an exporter would get double benefit is not supported by a plain reading of the provisions of the Rules. Nor has anything been brought on record to substantiate the aforesaid averment. It remains a bald averment not supported by any evidence on record. 14. There is one more reason. As can be seen from reading of sub-rule (1) and Rule (2) of Rule 19 of the Rules the opening portion grants an option to the exporter by virtue of the language used. In sub-rule (1) it is stated Any excisable goods may be exported , and in subrule (2) it is stated Any material may be removed . Therefore, the exporter has an option to export the final products without payment of duty or use inputs which are procured without payment of duty in the manufacture or processing of goods which are to be exported. At the other end, the later portion of sub-rules (1) and (2) of Rule 19 of the Rules grants d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Rule 5 of the CENVAT Rules. This position becomes amply clear when one reads the later portion of Rule 5 of the CENVAT Rules which stipulates and where for any reason such adjustment is not possible, the manufacturer shall be allowed refund of such amount subject to the conditions, safeguards, etc. as may be notified. In these circumstances, the entire action of issuing the Notification appears to be misdirected as the same is revenue neutral. In case of an exporter who cannot claim rebate under Rule 18 of the Rules he would become entitled to claim refund under Rule 5 of the CENVAT Rules. The learned counsel for the respondent authorities was not in a position to dispute this position when his attention was invited to the same. 18. In the circumstances, the impugned Notification being Notification No.10/2004-CE(NT) dated 3rd June, 2004 is bad in law for the aforestated reasons, namely, it is not in consonance with the principal provisions, namely, Rules 18 and 19 of the Rules, and it is, even otherwise, Revenue neutral. The CBEC cannot exercise power under Rule 19 of the Rules to negate a notification issued by the Central Government under Rule 18 of the Rules. The same is, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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