Grasim Industries Ltd vs Uoi And Ors
2010 Latest Caselaw 2895 Del

            THE HIGH COURT OF DELHI AT NEW DELHI
%                                     Judgment delivered on: 02.06.2010

+           WP(C) 3899/2010

GRASIM INDUSTRIES LTD                                          ... Petitioner

                                     - versus -

UOI AND ORS                                                    ... Respondents

Advocates who appeared in this case:-

For the Petitioner : Mr M. P. Devnath with Mr Abhishek Anand For the Respondent : Mr B. V. Niren with Ms Akriti Gandotra for R-1.

Mr Mukesh Anand with Mr Shailesh Tiwari for R-2 & 3.

CORAM:-

HON'BLE MR JUSTICE BADAR DURREZ AHMED HON'BLE MR JUSTICE V.K. JAIN

1. Whether Reporters of local papers may be allowed to see the judgment ?

2. To be referred to the Reporter or not ?

3. Whether the judgment should be reported in Digest ?

BADAR DURREZ AHMED, J (ORAL)

CM 7824/2010

Allowed subject to all just exceptions.

WP(C) 3899/2010 & CM 7823/2010

1. This writ petition is directed against the order dated 01.12.2009

issued by the Joint Secretary, Government of India under Section 35EE of

the Central Excise Act, 1944 (hereinafter referred to as "the said Act"). The

petitioner had claimed rebate in respect of central excise duty paid on raw

materials as well as in respect of central excise duty paid on the final

products. The petitioner's claim in respect of the rebate qua final products

has been allowed by the authorities below. However, the rebate in respect

of duty paid on raw materials has been disallowed. It is because of this that

the petitioner is before us by way of this writ petition.

2. The petitioner manufactures man-made fabrics as well as

polyester/ viscose blended yarn falling under Chapter 55 of the Schedule to

the Central Excise Tariff Act, 1985. For the purposes of manufacturing the

said final products, the petitioner employs duty paid inputs as well as other

inputs. The duty paid inputs include polyester staple and viscose staple

fibre as well as other packing materials and consumables. The products

manufactured by the petitioner are cleared for home consumption as well as

for exports. In this petition, we are only concerned with the products which

are exported on payment of duty under claim of rebate. The petitioner had

filed as many as 15 rebate claims covering the period from 2005 to 2006.

As aforesaid, the rebate claims were allowed in part inasmuch as the rebate

claims qua the duty paid on final products were allowed. The rebate claims

which were denied amounted to Rs 26,11,788/- being the aggregated

disallowance in respect of all the 15 claims.

3. Rule 18 of the Central Excise Rules, 2002 (hereinafter referred

to as "the said Rules") reads as under :-

"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."

A plain reading of the aforesaid Rule indicates that the Central Government

has power to grant rebate and that too by notification in respect of duty paid

on excisable goods which are exported „or‟ on duty paid on materials used

in the manufacture or processing of such goods. In pursuance of the said

Rule 18, the Central Government issued notification No. 21/2004-CE(NT)

dated 06.09.2004 for rebate on inputs and notification No. 19/2004-CE(NT)

dated 06.09.2004 for rebate on finished excisable goods. The plea of the

petitioner throughout has been that the Central Government having issued

both the notifications and the petitioner having complied with the

conditions stipulated in the notifications, it was entitled to the grant of

rebate under both the notifications.

4. The stand taken by the revenue, however, has been that the grant

of rebate of duty paid could be availed either on the duty paid on excisable

goods or on the duty paid on the materials used in the manufacture or

processing of such goods and not both. The stand of the revenue has also

been that the notifications are only machinery provisions implementing the

principles laid down in Rule 18 of the said Rules. Thus, even where a case

falls for grant of rebate under both the notifications, the same cannot be

granted because the rule itself prescribes that the grant of rebate shall be

made on duty paid on excisable goods "or" on duty paid on materials used

in the manufacturing or processing of such goods.

5. The Assistant Commissioner passed orders in respect of the

rebate claims rejecting the rebate claims in respect of both raw materials as

well as finished products. When the petitioner went in appeal before the

Commissioner of Central Excise (Appeals), he gave part relief to the

petitioners in the sense that he allowed the rebate claim in respect of the

duty paid on final products but rejected the claim in respect of the duty paid

on raw materials. It is thereafter that the petitioner approached the

Government of India under Section 35EE by way of revision. The

impugned order has been passed in those revisions applications.

6. We have heard the counsel for the petitioner as also the counsel

appearing on behalf of the respondents who were present on advance notice.

We find that the Government of India in its revisional order had placed

reliance on a decision of the Bombay High Court, Nagpur Bench in the case

of CEE, Nagpur v. Indorama Textiles Ltd: 2006(200) E.L.T 3 (Bom.).

The Bombay High Court observed in paragraph 18 of the said decision that

in principle the Government had 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 internally competitive

and, therefore, the 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 framed whereby rebate of duty paid either on

excisable goods, which are exported, or on inputs is provided. The Bombay

High Court clearly read the provisions of Rule 18 as prescribing an "either -

or" situation meaning thereby that the word "or" appearing in Rule 18

should be read as it is and should not be read as "and" as suggested by the

learned counsel for the petitioner. In paragraph 20 of the said decision, the

Bombay High Court observed that if the word "or" is read as "and", it

would be wholly inconsistent with the intention of the Legislature as well as

object of Rule 18 of the said rules. The Bombay High Court clearly held

that 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 said Rules itself.

7. The Government of India, in exercising its revisional power

under Section 35EE, has correctly followed the decision of the Bombay

High Court in coming to the view that the petitioner was not entitled to

rebate of duty paid on raw materials after it had already been granted rebate

in respect of duty paid on finished products. We agree with the view taken

by the Bombay High Court and consequently, we see no fault in the

impugned order.

The writ petition is dismissed.

BADAR DURREZ AHMED, J

V.K. JAIN, J JUNE 02, 2010 SR