Case Note & Summary
The petitioner, M/s. Parle Products Ltd., is a company engaged in manufacturing biscuits and confectioneries. Biscuits are excisable goods under Section 4A of the Central Excise Act, 1944, based on Maximum Retail Price (MRP). The petitioner clears biscuits for home consumption and export. For home consumption, the petitioner claims exemption under Notification No.3/2006-CE, which exempts biscuits in packaged form with a retail sale price per kg not exceeding Rs.100. However, when biscuits are exported, they do not bear the retail sale price in rupees as required by the notification. Therefore, the petitioner paid excise duty under Section 4 of the Act on the transaction value for export clearances and claimed rebate under Rule 18 of the Central Excise Rules, 2002. The Assistant Commissioner of Central Excise denied the rebate claim on the ground that the exemption notification does not impose any condition and that the biscuits exported were exempt from duty because their retail sale price per kg must be less than Rs.100, and the petitioner failed to prove otherwise. The authority also relied on an order of the Commissioner disallowing Cenvat credit on inputs used in such exempted biscuits. The Commissioner (Appeals) reversed this order, holding that the exemption notification is not applicable to exported goods because the provisions relating to retail sale price do not apply to exports. The revenue challenged this before the Revisional Authority under Section 35EE of the Central Excise Act, which restored the original order, holding that no duty was payable on the exported goods due to the exemption, and the duty paid cannot be treated as duty under the Act. The petitioner then filed a writ petition under Article 226 of the Constitution. The court considered the submissions. The petitioner argued that the exemption notification requires the retail sale price per kg to be not exceeding Rs.100, but since exported goods do not bear such price in rupees, they do not qualify for exemption, and duty was rightly paid. Alternatively, if the goods were exempt, the duty paid was without authority of law and must be refunded. The petitioner also pointed out that the revenue had accepted similar appellate orders in its own case and that the Commissioner's order relied upon by the revenue had been reversed by the Tribunal and accepted by the department. The revenue contended that the exemption notification was unconditional and the petitioner was not required to pay duty, and there is no provision for refund of duty wrongly paid. The court analyzed the issue and held that the exemption notification is not applicable to exported goods because the condition of retail sale price in rupees cannot be satisfied for exports. Therefore, the duty paid was valid, and the petitioner is entitled to rebate. Even if the goods were exempt, the revenue cannot retain the duty paid without authority of law, and the principle of unjust enrichment does not apply. The court allowed the petition, set aside the revisional order, and restored the appellate order granting rebate.
Headnote
A) Central Excise - Rebate - Exported Goods - Rule 18 of Central Excise Rules, 2002 - Notification No.3/2006-CE - The petitioner exported biscuits and paid duty under Section 4 of the Central Excise Act, 1944, claiming rebate. The revenue denied rebate on the ground that the biscuits were exempt under Notification No.3/2006-CE, which exempts biscuits with retail sale price per kg not exceeding Rs.100. The court held that the exemption notification is not applicable to exported goods because the retail sale price in rupees is not required to be declared on export packages under the Standards of Weights and Measures Act. Therefore, the duty paid was valid and rebate is admissible. (Paras 2-4, 10-12) B) Central Excise - Refund - Duty Paid Under Mistake - Article 265 of Constitution of India - Even if the goods were exempt, the revenue cannot retain duty paid without authority of law. The court held that the principle of unjust enrichment does not apply when the duty was paid under a mistake of law and the revenue has no right to retain it. The decision in Mahindra and Mahindra Ltd. was distinguished. (Paras 13-15) C) Central Excise - Precedent - Acceptance of Earlier Orders - The revenue had accepted similar appellate orders in the petitioner's own case allowing rebate, and the order of the Commissioner relied upon by the revenue was reversed by the Tribunal and accepted by the department. The court held that the revenue cannot take a contrary stand in the present case. (Paras 5, 7, 16)
Issue of Consideration
Whether the petitioner is entitled to rebate of excise duty paid on biscuits exported out of India, when the revenue contends that the goods were exempt from duty under Notification No.3/2006-CE and thus no duty was payable, and whether the duty paid voluntarily can be refunded.
Final Decision
The court allowed the writ petition, set aside the order of the Revisional Authority dated 14 February 2013, and restored the order of the Commissioner (Appeals) dated 20 September 2010, thereby granting the rebate claim of the petitioner.
Law Points
- Rebate under Rule 18 of Central Excise Rules
- 2002
- Exemption notification applicability to exported goods
- Duty paid under mistake of law
- Unjust enrichment
- Article 265 of Constitution of India
