In International Tractors Ltd V. Commissioner of Central Excise & Service Tax, a division bench of the Delhi High Court held that an exporter cannot claim for rebate of duty under the Central Excise Rules when he already availed the benefit of Advance Authorizations under the Customs Act in respect of the same transaction.
The petitioners, manufacturers of models of tractors, approached the High Court seeking a direction to allow their claim for rebate of duty under Rule 18 of the Central Excise Rules. The department had, earlier rejected the claim and passed orders against the petitioners.
The bench comprising Justices S Muralidhar and Prathibha M Singh found that the petitioner has availed the benefits under the Advance Authorizations by importing input material and exporting the manufactured goods.
It was contended on behalf of the petitioners that availing of the benefit under Rule 18 of CER is not dependent or contingent upon any other notification or obligation. Overruling this submission, the bench said that Rule 18 is a rebate, which is subject to such conditions or limitations, as may be stipulated.
“In the present case, there is a categorical reference to Rule 18 in Notification No.93. It is a conscious and deliberate inclusion, inasmuch as, the policies envisaged in Rule 18 of the 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 the exemptions when clearly, the intention seems to be to permit only one exemption,” it said.
Dismissing the petition, the bench held that “The reference to Rule 18 and 19 (2) 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 the CA, the same export transaction cannot be used for seeking rebate of duty under CER, as the rebate, in this case, is subject to the conditions and limitations, as specified in Notification No.93, which clearly requires that ‘the facility under Rule 18 or Sub-rule (2) of 19 of CER, 2002’ ought not to have been availed. The Petitioner’s right to seek rebate is clearly limited by this condition and hence it is not entitled to rebate under Rule 18 CER.”
Read the full text of the Order below.
