Supreme Court of India
STEEL ROLLING MILLS OF BENGAL LTD.versusUNION OF INDIA AND ORS. ETC.
- Citation
- 1992 INSC 278
- Decided
- 14 October 1992
- Disposal
- Dismissed
- Bench
- S RANGANATHAN
Holding
Rebate is admissible only with respect to the excise duty actually paid on the exported finished product at the time of its clearance; duty paid on raw material cannot be claimed unless a specific notification under Rule 12A is issued.
Summary
The appellants, Steel Rolling Mills, purchased iron billets (duty Rs 330/ton) and rolled them into MS flats (duty Rs 120/ton) which were exported. They claimed export rebate at Rs 450/ton, arguing that rebate should cover duty paid on both raw billets and finished flats. The Collector, relying on Notification 197/62 under Rule 12, limited rebate to the duty actually paid on the exported finished product (Rs 120/ton) and demanded repayment of the excess. The CEGAT upheld this view, holding that rebate is permissible only for duty paid on the excisable goods exported, i.e., the finished product, and that no rebate is available on raw material unless a specific notification under Rule 12A exists, which was absent. The Supreme Court affirmed the Tribunal’s order, dismissing the appeals.
Issues considered
- Whether the export rebate under Notification 197/62 (Rule 12) can be claimed on excise duty paid on raw material (billets) used in manufacturing the exported goods.
- Whether the expression ‘duty paid on excisable goods’ in Rule 12 includes duty paid on raw material as well as on the finished product.
- Whether Rule 10’s interpretation of ‘paid’ is applicable to the rebate provision in Rule 12.
- Whether a rebate on raw material is available in the absence of a notification under Rule 12A.
Legislation cited
- Central Excise and Salt Act, 1944s. 3, s. 35-L, s. Item 26AA of First Schedule
- Central Excise Rules, 1944s. Rule 10, s. Rule 12, s. Rule 12A
Subjects
central exciseexport rebateduty paidraw materialfinished goodsRule 12Rule 12ANotification 197/62interpretation of statutory language
Judgment
STEEL ROLLING MILLS OF l:IENGAL LTD. A
v.
UNION OF INDIA AND ORS. ETC.
OCTOBER 14, 1992
(S. RANGANATHAN, V. RAMASWAMI AND B
B.P. JEEVAN REDDY, JJ.]
Central Excises and Salt Act, 1944/Central Excise Rules, 1944:
Sections 3, 35-L, Items 26AA of First Schedule/Ru/es 12, 12-A and C
Notification No. 197162-Rebate on duty paid on the excisable goods ex-
ported-Whether admissiblr on duty paid on the raw material used in the
furnished product.
The appellants were carrying on business as rerollers.of Iron and
steel products. They purchased billets from the stockyard of three major D
steel companies and either rolled or re-rolled these ~illets or got them
rolled by other re-rollers into M.S. Flats (Hoops) and exported them on
payment of central excise duty. The concessional rate of duty levied on
billets 'Was Rs. 330 per metric ton and on Flats Rs. 120 per metric ton.
E
As and when appellants exported the said M.S. Flats (Hoops), they
tiled applications for rebate or duty on the goods so exported claiming foll
rebate of Rs. 450 per metric ton or Flats exported. 25 or such claims were
allowed by the authorities.
Howtver, subsequently, on the ground that excessive rebate had been F
given and that the appellants were not entitled to rebate or duty of Rs. 330
per metric ton paid on the billets or that it was not admissible, the
Collector of Central Excise passed orders demanding return of the exces·
sive amount Involved in 25 claims and reducing the claim for rebate in 21
cases and restricting the rebate to the sum of Rs. 120 per metric ton paid G
on M.S. Flats when the goods were cleared from the factories. On rejection
of the appeals preferred against this order by the Central Board of Excise
and Customs, the appellants preferred appeals to CEGAT.
The Tribunal held that rebate was admissible only In respect or the
central excise duty paid on the finished products and not on the raw H
975
976 SUPREME COURT REPORTS [1992) SUPP. 1 S.C.R.
A material going into the manufacture of finished products and, therefore,
the claim had to he restricted to the actual amount of duty paid at the time
or clearance or the finished products from the factories for export.
'
i-
In the appeals before this court on behalf of the appellants it was
contended that though excise duty at the rate of Rs. 120 per metric ton was
B paid_ on M.S. Flats at the time of the clearance from the factory, the
effective rate of duty on the goods exported was Rs. 450 per metric ton, as
duty at the rate of Rs. 330 per metric ton had been paid on the billets at
the time of actual clearance of the billets from the producing factories, and
that since the billets, which went into the manufacture of finished goods
C exported, had been purchased from the major steel plants, excise duty
should be deemed to have been paid, and that the word 'paid' in the
expression 'the duty paid on excisable goods' should not be given
restricted meaning and may be treated as a reference to whole duty paid
by them on raw material and finished products.
D Dismissing the appeals, this Court,
HELD: 1.1. The billets and fiats fall under two entJies in Item 26AA
of the First Schedule to the Central Excises and Salt Act, 1944 and
different rates are also provided. From Rule 12 and the Notification 197/62
E dated 17.11.1962 issued thereunder, it is clear that the rebate is with
respect to the duty 'paid on the excisable goods' exported and to the extent
of the duty actually paid at the time of clearance of those goods from the
factory. The finished product, which was exported, is a distinct and
separate excisable product from that of billets (raw meterial) used in the
manufacture of the same. The rebate is with reference to the actual amount
F of the duty paid at the time of clearance of the finished products from the
factory for export. [980-H; 981 A-El
1.2. The meaning given for the word 'paid' in Rule 10 bas no applica-
tion in interpreting the words 'duty paid on excisable goods' in Rule 12.
Rule 10 deals with 'short levy", whereas Rule 12, deals with rebate on duty
G paid. There cannot be any duty when the duty has not been paid.
[981-H; 982-A]
N.B. Sanjana, Asstt. Collector of Central &cise v. The Elpinstone
Spinning & Weaving Mills Ltd., (1978) 2 E.L.T. 399, distinguished.
H 1.3. In the absence of any notification under Rule 12(A), which
STEEL ROLLING MILLS v. U.0.1. [RAMASWAMI,J.] 977
relates to rebate of duty on excisable materials used In manufacture of A
goods which are exported, the assessee cannot get rebate on the duty paid
on the raw materials used In the manufactured goods under the notlDca-
tlon made under Rule 12. Therefore, It makes no dlfTerence whether the
billets had suffered any duty or not. [982 B·H]
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3074 to B
3116 of 1984.
From the Order dated 5.1.84 of the Customs Excise and Gold
(Control) Appellate Tribunal, New Delhi in Appeal Nos. ED (SB) (T) No.
512/80-B & 2758 to 2799/83-B (Order Nos. 10 to 52/84-B).
c
AND
Civil Appeals Nos. 3368 to 3370 of 1984.
From the Order dated 5.1.84 of the Custo~ Excise and Gold
(Control) Appellate Tribunal, New Delhi in Appeal Nos. ED(SB((T) Nos. D
2834, 2835 and 2836/838. (Order Nos. 53-55 of 1984-B).
M. Chandershekharan and H.K. Purilor the Appellants.
M. Gauri Shankar Murthi and Dileep Tandon fo! the Respondents.
E
The Judgment of the Court was delivered by
V. RAMASWAMI, J, These appeals under Section 35-L of the
Central Excise and Salt Act, 1962 are filed against the orders of the
Customs, Excise and Gold (Control) Appellate Tribuna~ New Delhi F
(CEGAT) in order Nos. 10 to 55/84-B dated 5.1.1984. The appellants at
all material times were carrying on busine$S as re-rollers of iron and steel
products. They purchased billets from the stockyard of Hindustan Steel
Ltd., Mis Tata Iron & Steel Co. Ltd., and Indian Iron and Steel Co. Ltd.
at Calcutta now known as Steel Authority of India Limited and either
rolled these billets or got them rolled by other re-rollers into M.S. Flats G
(Hoops) and exported them on payment of proper central excise duty. The
steel billets fall under Item 26 AA (i) and flats fall under 26 A (iii) of the
First Schedule to the Central Excise and Salt Act, 1944. At all the relevant
times it is stated that the concessional rate of duty levied on billets 'was Rs.
330 per metric ton and on flats Rs. 120 per metric ton. The appellants had H
978 SUPREME COURT REPORTS (1992] SUPP. 1 S.C.R.
A exporterl M.S. Flats (Hoops) of a total quantity of 1168.750 metric tons on
various dates. As and when they exported the said flats they filed applica-
tions for rebate of duty on the goods so exported claiming a total rebate
at the rate of Rs. 450 per metric ton of flats exported on the ground that
they are eligible for the full rebate of excise duty at the rate of Rs. 330 per
B M.T. paid on the billets as also the duty of Rs. 120 per M.T. paid on the
flats exported. 25 of such claims of the appellants for a total amount of Rs.
2,86,096.50 P. were sanctioned. On the ground that they had been given
excessive rebates and that they are not entitled to the rebate of-duty of Rs.
330 per metric ton paid on the billets or that it was inadmissible, 25
C show-cause notices were issued demanding, the repayment of the amount
calculated at Rs. 330 per metric ton equivalent to the duty on billets. In
respect of the remaining 21 claims, notices were issued as to why their
claims to the extent of Rs. 330 per metric ton should not be disallowed.
After hearing the appellants the Collector passed the orders demanding
the return ofthe excess amount involved in the 25 show-cause notices and
D reducing the claim for rebate in the remaining 21 cases and restricting the
rebate to the sum of Rs. 120 per metric ton paid on M.S. Flats when the
goods were cleared from the factories. On rejection of the appeals
preferred against these orders by the Central Board of Excise and Customs
the appellants preferred appeals to CEGAT. After a consideration of the
E relevant notifications allowing rebate and the arguments of the appellants,
the Tribunal held that rebate is admissible only in respect of the central
excise duty paid on the finished products and not on the raw material going
into the manufacture of finished products and that therefore the claim has
got to be restricted to the actual amount of duty paid at the time of
F clearance of the finished products from the factory for export. It may
however be mentioned that the Tribunal also expressed a view that the
appellants had not factually proved the payment of excise duty on the
billets purchased by them. Proof of payment was considered particularly in
view of the fact that the duty on iron and steel products were being changed
G or altered or modified very frequently.
In these appeals Mr. Chandrashekharan, the learned senior counsel
appearing for the appellants contended that the rebate of duty paid on the
"excisable goods" on the exportation out of India is admissible to the extent
and subject to the conditions mentioned in Notification No. 197/62 dated
H
STEEL ROLLING MILLS v. U.0.1. [RAMASWAMI, J.] 'J79
17.11.1962. Though excise duty at the rate of Rs. 120 per metric ton on A
M.S. Flats were paid at the time of the clearance from the factory the
effective rate of duty on the goods exported was Rs. 450 per metric ton as
duty at the rate of Rs. 330 per metric ton have been paid on the billets at
the time of actual clearance of the billets from the producing factories. He
further contended since the billets which went into the manufacture of B
finished goods exported having purchased from the major steel plants,
above referred to, excise duty shall be deemed to have been paid. He also
contended that the appellants produced the invoices showing the payment
of central excise duty on the billets at the appropriate rate before the
Collector but the Collector wrongly refused these documents and also
wrongly held that they do not establish payment of duty. C
Rule 12 of the Central Excise Rules, 1944 provides that "the Central
Government may, from time to time, by notification in the Official Gazette,
grant rebate of duty paid on excisable goods, if exported outside India, to
such extent, and subject to such safeguards, conditions and limitations as D
regards the class of goods, destination, mode of transport, and other allied
matters as may be specified therein ... " In exercise of this power Notifica-
tion No. 197/62 dated 17.11.1962 was published. The relevant portion of
the Notification is extracted below:
"Procedure for grant of rebate of the excise duty paid on E
excisable goods and exported out of India. In exercise of
the powers conferred by Rule 12 of the Central Excise
Rules, 1944, as in force in India and as applied to the State
of Pondicherry, the Central Government is pleased to
direct that, in supersession of the Notifications of the F
Government of India in the Ministry of Finance (Depart·
ment,of Revenue) No. 10-Central Excises, dated the 5th
April, 1949, No. 45 Central Excise, dated the 5th April,
1949 and No. 47/54, Central Excises, dated the !st Novem·
ber, 1954, rebate of the duty paid on the excisable goods
specified in the Table annexed hereto shall, on their G
exportation out of India, or the State of Pondicherry, as
the case may be, to the destinations mentioned in column
3 thereof, be made to the extent and subject to the con-
ditions and limitations, if any, set out in the corresponding
entries in columns 4 and 5: H
980 SUPREME COURT REPORTS [1992] SUPP.1 S.C.R.
A Provided that-
(i) expect as otherwise provided in the said Table or
permitted by the Central Board of Revenue by general or
special order, the goods are exported after payment of
duty in cash direct from a factory or a warehouse;
B
(ii)xxx
(iii) the amount of duty paid on the goods to be exported
and the date of payment thereof, are established, from
C Central Excise records, to the satisfaction of the Collec-
tor ....n
"Table
Sr. Excisable Destination Extent Limitation and
No. goods of conditions pertaining to
D rebate particular excisable
goods
xxx
7A Iron or steel Any country or the Tbe rebate specified in
products falling territory outside whole column 4 shall not
E under Item No. the India apply to any article in
26AA of the excluding Nepal, respect of which rebate
First Schedule Bhutan and of duty is allowed under
to the Central Sikkim. the First Schedule to
Excises and the Customs and
Salt Act, 1944. Central Excise Duties
F
Export Drawback
(General) Rules, 1960
or under the Notifi-
cation of Govt. of India
in the Ministry of
G Finance (Department of
Revenue) No. 215/62
Central Excises, dated
xxx" the 15th Dec., 1%2.
We have already noticed that billets and flats fall under two different
H entries in Item 26 AA of the First Schedule to the Central Excise and Salt
STEEL ROLLING MILLS v. U.0.1. [RAMASWAMl,J.] 981
Act, 1944 and different rates are also provided. It may be seen from Rule A
12 and the Notification 197/62 that the rebate is with respect to the duty
"paid on the excisable goods" exported and the rebate is to the extent of
the duty actually paid at the time of clearance of those goods from the
factory. The finished product which was exported is a distinct and separate
excisable product from that of billets (raw material) used in the manufac- B
ture of the same. Under the Notification No. 153n7 dated 18.6.1977 issued
under Rule 8 where products mentioned in the table to the Notification
are made from the semi-finished steel on which duty at the appropriate
rate has already been paid, the duty specified in the corresponding entry
in column 3 of the said table shall be reduced by Rs. 330 per metric ton.
Serial No. 4(a) in the Table to this Notification shows that the rate of duty C
at that time on the flats now in question was Rs. 450 per metric ton. But
in view of the proviso the actual rate of duty payable on M.S. Flats was
fJXed at Rs. 120 per metric ton. However, this in our view does not mean
that the finished products are not different excisable commodity or that the
duty paid on the excisable commodity exported include the duty paid on D
billets or that the effective rate was Rs. 450 per metric ton. On the other
hand the Notification being one under Rule 8 M.S. Flats shall be deemed
to have been 11 exemptcd1' from payment of part of the duty leviable, thereby
clearly establishing that M.S. flats is a completely different excisable
product and the rate of duty payable was Rs. 120 per metric ton. The
rebate is with referenee to the actual amount of the duty paid at the time E
of clearance of the finished products from the factory for export.
Though under the Notification 197/62 the rebate is of "the duty paid
on the excisable goods", the learned counsel for the appellant argued that
the word 'paid' shall not be given a restricted meaning and may be treated F
as a reference to whole duty paid both on raw material and finished
products. In this connection he referred to the decision in N.B. Sanjana,
Asstt. Collector of Central Excise v. The Elpinstone Spinning & Weaving Mills
Ltd. (1978) 2 E.L.T. 399. In this decision in interpreting the e~J>ression
"short levied" and "paid" in Rule 10 as it stood prior to 6.8.77, this Court
held that in the context in which the word "paid" is used in Rule 10 the G
proper interpretation to be placed on the expression 'paid' or "ought to
have been paid". We have no doubt that the meaning given for the word
'paid' in Rule 10 has no application in interpreting the words "duty paid
on excisable goods" in Rule 12. Rule 10 deals with 'short levy' and,
therefore, it was argued that the Rule will not apply to a case where it was H
982 SUPREME COURT REPORTS [1992] SUPP. 1 S.C.R.
A a case of nil assessment. Repelling this contention this Court held that the
expression "short levy" will include nil levy and the word 'paid' in the
context R,ule 10 would also include "ought to have been paid". Rule 12 on
the other hand deals with rebate of duty paid. There cannot be any rebate
when duty has not been paid.
B We may also note Rule 12A in this connection. That Rule relates to
rebate of duty on excisatle materials used in the manufacture of goods
which are exported. Sub Rule 2 of this Rule reads:
"Rule 12A (2) Where it appears to the Central Govern·
c menl that, in the case of goods of any class or description
manufactured, in, and· exported from, India or the State
of Pondicherry, or shipped as provisions or stores for use
on board a ship proceeding to a foreign port, a rebate
should be allowed of duties of excise chargeable under
the Act in respect of any material of a class or description
D
used in the manufacture of such goods, the Central
Government may, by notification in the Official Gazette,
direct that a rebate shall be allowed in respect of such
goods subject to such conditions and limitations as regards
the class and description of goods, class and description
E of materials used for ihe manufacture thereof, destination,
mode of transport, and other allied matters as may he
specified in the notification:
· Provided that no such rebate of duty in respect of ex-
F cisable materials Used in the. manufacture of goods ex-
ported out of India shall be allowed, if the exporter avails
of drawback allowed under the Customs and Central
Excise Duties Export Drawback (General) Rules, 1960, in
respect of such duty."
G The learned counsel had not relied on any notification issued under this
Rule for claiming rebate on the duty paid on the raw materials used in the
manufacture goods exported. In the absence of any Notification under Rule
12A the assessee cannot get that relief under the Notification made under
Rule 12. In this view it make no difference whether the billets had suffered
H any duty or not.
STEEL ROLLING MILLS v. U.0.1. (RAMASWAMI, J.] 983
In the result, there are no grounds to interfere with the orders of the A
Tribunal and accordingly these appeals fail and are dismissed but there
will be no orders as to costs.
N.P.V. Appeals dismissed.
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