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International Tractors Ltd. v. Commissioner of Central Excise & Service Tax - (High Court of Delhi) (13 Jul 2017)

A party cannot be allowed to avail of both exemptions, when clear intention is to permit only one exemption



In facts of present case, Petitioner is a manufacturer of various models of tractors. Tractors which are so manufactured, are sold both in domestic market and are also exported. Present petition involves models of tractors exported by Petitioner during period 2006 to 2008. Petitioner claimed rebate of duty by invoking Rule 18 of Central Excise Rules, 2002. Assistant Commissioner approved input/output norms declared by Petitioner, upon verification, for purpose of claiming of rebate of duties. Petitioner filed 39 rebate claims claiming rebate of duties for its exports during relevant period. Said claims were not allowed. Petitioner preferred 39 appeals before Commissioner, which were dismissed vide order dated 29th February, 2012. Petitioner thereafter approached Revisional Authority ('RA'), who vide order dismissed revision application. Short issue arising in present case is whether Petitioner is entitled to rebate of duty under Rule 18 of Central Excise Rules, 2002 ("CER"), having availed of benefit of Notification No. 93/2004-Cus : MANU/CUST/0150/2004 dated 10th September, 2004 issued under Section 25(1) of Customs Act, 1962 ('CA') ("Notification No. 93").

It is the admitted position that, Petitioner has availed benefits under Advance Authorizations by importing input material and exporting manufactured goods. Petitioner has, thus, availed of benefit of non-payment of customs duty on whole of imports which it made during relevant period. Discharge of Advance Authorizations given in favour of Petitioner was as per Notification No. 93 of 2004.

In present case, there is a categorical reference to Rule 18 of CER in Notification No. 93. It is a conscious and deliberate inclusion, as, policies envisaged in Rule 18 of CER and Notification No. 93 is grant of rebate on payment of excise and exemption from payment of customs duty respectively. A party cannot be allowed to avail of both exemptions when clearly, intention seems to be to permit only one exemption.

Reference to Rule 18 and 19(2) of CER in Notification No. 93 clearly reveals that, non-payment/rebate of either excise duty or customs duty is being granted to encourage exports. Once an export transaction has been used for seeking discharge of Advance Authorizations issued under CA, same export transaction cannot be used for seeking rebate of duty under CER, as rebate, in this case, is subject to conditions and limitations, as specified in Notification No. 93, which clearly requires that 'facility under Rule 18 or Rule 19(2) of CER’, ought not to have been availed. Petitioner's right to seek rebate is clearly limited by this condition and hence, it is not entitled to rebate under Rule 18 of CER. Petitioner is not entitled to the relief prayed for.


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