@JUDGMENTTAG-ORDER
1. With the consent of both the parties, the matter is heard for final disposal. This writ petition is directed against an order of the Central Government passed on revisional jurisdiction u/s 35EE of the Central Excise Act, 1944. The Central Government - revisional authority set aside the order of the Commissioner of Central Excise dated 26-2-2010.
2. The petitioner (hereinafter referred to as the ''assessee'') manufactures and exports desk diaries through merchant exporter against form C.T.I. without payment of duty. It claimed refund of duty paid on excisable inputs used in the manufacture of the final product and other diaries. The rebate was granted in terms of the interpretation accepted by the concerned authorities of the DEPB Scheme which in turn relied upon the scheme itself launched on 1-4-1997. The authorities accepted the assessee''s stand. This view which culminated in the opinion and order of the Commissioner of appeals was challenged in the revisional proceedings by the Central Government.
3. Before the revisional authority it was contended by the Central Government that the DEPB Scheme did not cover excisable inputs and that its intention was to grant relief to the exporter to the extent of the duties paid for the purpose of manufacture of the final product. The Central Government had relied upon the terms of the DEPB and Rule 19 of the Central Excise Rules in this regard. The assessee in the writ petition relied upon the decision of the Bombay High Court in
9.1. The plain reading of above said rules, makes it clear that for claiming rebate of duty paid on excisable goods or duty paid on materials used in the manufacture or processing of such goods, the provision of Rule 18 of Central Excise Rules, 2002 r/w Notification No. 19/2004-C.E. (N.T.) or 21/2004-C.E. (N.T.), both dated 6-9-2004 are to be followed. At the same time, if the exporter does not want to export goods under claim of rebate under Rule 18 ibid, he has the facility of exporting goods under bond without payment of duty under Rule 19 of Central Excise Rules, 2002.
9.2. The exporter has to choose a scheme carefully whichever is beneficial to him. Once he has decided to avail the benefit of particular scheme, he has to work within the parameters of said scheme and comply with the relevant statutory provisions. There are different notification issued under both Rules 18/19 ibid prescribing the conditions and procedure to be followed for availing the said scheme. In this case applicant has exported goods under Rule 19 ibid which does not allow any benefit of rebate claim. In case said rebate claim is allowed, it would amount to amalgamation of two different schemes provided under different rules, which is not permissible under the rules. While working under Rule 19, applicant is entitled to procure duty fee materials under sub-rule (2) of said rule. Applicant did not prefer to avail said facility.
9.3. Government is of considered opinion that is the instant case goods were exported under the provisions of Rule 19 of Central Excise Rules, 2002 and therefore the benefit of rebate claim under Rule 18 ibid is not admissible in this case.
4. It is argued that the revisional authority fell into error in ignoring Rule 18. Learned counsel contended that when the final product is exempted from payment of duty, the intention of the policy maker was to extend relief uniformly to the exporter who uses either excisable goods or imported goods. The DEPB scheme could not be construed in a manner so as to discriminate between an exporter by denying the benefit to him who use domestically manufactured inputs which had suffered excise duty and on the other hand grant benefit to an exporter who uses imported inputs. Learned counsel emphasises that this intention was brought vividly by the Bombay High Court in Indorama Textiles Ltd. (supra).
5. Learned counsel for the Revenue resisted the proceedings and submitted that the concerned Rule in this regard which was correctly relied upon by the revisional authority was Rule 19. Learned counsel also emphasises that the phraseology adopted by the scheme did not mention excisable inputs at all and what was intended to be conferred as benefit of drawback was specific, i.e. imported inputs used for export of final products.
6. The provisions of the DEPB which are relevant for discussion in this case are extracted below:
4.1. DEPB scheme was announced on 1-4-1997 and is presently valid till 30-6-2011. This is an export promotion scheme that envisages grant of DEPB CREDIT ENTITLEMENT to an exporter at the time of export at an ad valorem rate notified by DGFT, in relation to FOB value of the export product. The DGFT have so far notified DEPB rates for nearly 2700 export products, which are based on the computation of basic customs duty suffered by the exporters on the inputs listed in the SION applicable to the export product. The crucial feature of the DEPB scheme is that all the inputs listed in the SION are deemed to have been imported and to have suffered Customs duties. DEPB rates are finalized by the DEPB Committee, chaired by Additional DGFT and including representative from Ministry of Finance. The DEPB scheme is operationalised vide Notification No. 97/2009-Cus. dated 11-9-2009.
4.2. The normal validity period of a DEPB scrip is 12 months and DGFT authority who issues the scrip is empowered to grant revalidation. These scrips are for a certain amount of DEPB credit and can be utilized for adjusting customs duties (Basic or CVD) against import of any products, without the necessity of any co-relation between the export product and the import goods.
4.3. The DEPB scrip and/or the items imported against it are freely transferable. Import against DEPB scrips is allowed at the port specified in the DEPB which is the port from where exports have been made. Imports from a port other than the port of export are also allowed under Telegraphic Release Advice (TRA) facility as per the terms and conditions of the notification issued by Department of Revenue.
4.4. No duty drawback is allowed on exports made under DEPB scheme. However, in cases where CVD is paid in cash on imported inputs, or where indigenous duty paid inputs, not specified in SION, are used in the manufacture of export product, Brand Rate of Duty Drawback is admissible provided Cenvat credit in respect of such duty incidence is not availed.
7. The relevant rules i.e. Rule 18 of the Central Excise Rules and Rule 19 are as follows:-
Rule 18. Rebate of duty. - Where any goods are exported, the Central 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 or 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 sub-rule (2) shall be subject to such conditions, safeguards and procedure as may be specified by notification by the Board.
8. Whilst facially the DEPB Scheme and particularly Para. 4.1 might be suggestive of the intent to confer the benefit only to exporters to use imported inputs, the larger intention of giving the benefit of duty drawback so as to level the ultimate amended cost of export products in the international market cannot be lost sight of. This is what weighed with the Bombay High Court in Indorama Textiles Ltd. (supra), which supported its reasoning by the language adopted in Rule 18 which specifically talks of ''rebate of duty paid on such excisable goods or duty paid on materials used in the manufacture or processing of such goods''. This is what the Bombay High Court had to say in Indorama Textiles Ltd. (supra).
18. As per settled principles of statutory interpretation, if language of the statute or rule is clear, free from ambiguity and capable of conveying the purpose for which such rule is evolved and objective to be achieved, the Courts are required to interpret rule on the basis of language used in such rule. It is no doubt true that in principle, the Government has accepted that goods, which are exported from India, should be relieved of domestic levies in order to promote export of domestic products from India and to make them internationally competitive and, therefore, intention of the Legislature was to grant some concession on duty paid on excisable goods or inputs and in order to achieve this objective, Rule 18 was evolved whereby rebate of duty paid either on excisable goods, which are exported, or on inputs is provided. The intention of the Legislature was not to grant rebate of duty paid on exported goods as well as on inputs used in such goods simultaneously, which is evident from the language used in Rule 18 of the 2002 Rules. If the intention of the Legislature was to grant rebate of duty paid on excisable goods as well as on material used in the manufacture or processing of such goods, in that event, there was no propriety to ask the assessee first to pay excise duty on these goods when the Department has to refund the same in the form of rebate to the assessee. On the other hand, keeping in view the object to promote export of domestic products, the Legislature wanted to give some concession by way of rebate of duty paid on the excisable goods or on material used in manufacture or processing of such goods and not on both simultaneously. The language used in Rule 18 of the 2002 Rules is loud, clear, completely unambiguous and also capable of conveying the purpose for which Rule is evolved. After taking into consideration these vital aspects of the Rule, we are of the considered view that the rebate provided in Rule 18 of the 2002 Rules is only on duty paid on one of the items, i.e. either on excisable goods or on material used in manufacture or processing of such goods and, therefore, assessee is not entitled to claim rebate on both the items simultaneously.
19. In order to consider the purport of Rule 18 of the 2002 Rules, Notification Nos. 19/2004 dated 6-9-2004 issued by the Central Government are relevant. These two notifications are issued in exercise of power conferred by Rule 18 of the 2002 Rules for grant of rebate of duty on the excisable goods exported as well as grant of rebate of duty paid on the materials used in the manufacture or processing of such excisable goods respectively. These two notifications pertain to grant of rebate of duty paid on two different items. It is, therefore, evident that these two separate and distinct notifications issued by the Central Government are consistent with the scheme of Rule 18 of the 2002 Rules to grant rebate of duly only on one item. However, the option is with the assessee. In other words, if the assessee is entitled to get rebate of duty paid on both the items, there was no necessity for the Central Government to issue two separate notifications requiring assessee to claim rebate separately on the duty paid on excisable goods and on inputs.
9. This Court concurs with the view taken by the Bombay High Court that the benefit intended to be conferred upon the exporters was irrespective of the source from which they obtain the inputs i.e. imported products or locally manufactured goods which had suffered excise duty. Any other interpretation would not stand to reason and it would certainly result in unintended discrimination.
10. For the above reasons, this Court is of the opinion that the impugned order cannot be sustained and thus it is hereby set aside. The respondents are directed to confirm the directions contained in the order made by the Commissioner dated 26-2-2010 and process or credit rebate of duty as the case may be, within ten weeks from today. Rule is made absolute.
