Case Note & Summary
The Supreme Court of India was seized of a group of civil appeals filed by M/s Hindustan Petroleum Corporation Ltd. against the Collector of Central Excise, Union of India and concerned authorities under Section 35(A) of the Central Excises and Salt Act, 1944. The appeals raised a common question of law: whether excisable goods supplied as ship's stores for consumption on board vessels bound for foreign ports were liable to excise duty under Rule 13 of the Central Excise Rules, 1944 or under Rule 12 of the said Rules. The proceedings arose from refund claims concerning Light Diesel Oil (LDO), Furnace Oil, and Aviation Turbine Fuel (ATF) supplied from bonded stock to foreign-going ships and foreign-bound aircraft during the period 1977 to 1981. In the first group of appeals, the appellant claimed refund of Rs. 18,859.50 paid as basic excise duty on LDO supplied as ship's stores on seven occasions; the Assistant Collector rejected the claim holding that additional excise duty was payable at concessional rates under Rule 12 notifications, and the Appellate Collector and the Customs, Excise & Gold (Control) Tribunal dismissed the appeals following the Delhi High Court decision in Hindustan Aluminium Corporation Ltd. v. Superintendent of Central Excise, Mirzapur (1981 ELT 642). In the second group, the appellant paid duty under protest on LDO and Furnace Oil after demand; the Appellate Collector allowed the refund claims under Rule 13, but the Government issued a show cause notice under Section 36(2) and the Tribunal set aside the appellate order and restored the Assistant Collector's rejection. In the third group, similar facts pertained to LDO and Furnace Oil supplied from bonded tanks in bunkers; the Appellate Collector allowed the refund under Rule 13, but on revenue's review the Tribunal restored the Assistant Collector's rejection. In the fourth group, the appellant supplied ATF from bonded stock to foreign-bound aircraft from Palam depot and filed twenty-one refund claims; the Assistant Collector rejected them, the Appellate Collector dismissed the appeals, and the Government rejected twenty-one revision applications, leading to Special Leave Petitions granted under Article 136 of the Constitution. The appellant contended that Rule 13 is independent of Rule 12, that export from warehouse or registered factory can be made without payment of duty, and that the duty paid under protest was refundable, relying on the Calcutta High Court in Indian Aluminium Company Limited v. Union of India (1988 (36) E.L.T. 435). The revenue contended that the Delhi High Court view was correct and that Rule 12 and its notifications applied. The Supreme Court reproduced Rules 12 and 13 and noted that Rule 12 covers goods already subjected to excise duty and subsequently exported, while Rule 13 permits export without payment of duty from warehouse or licensed factory under bond. The available excerpt of the judgment does not include the final operative order or directions of the Court.
Headnote
A) Central Excise - Export of Excisable Goods - Rebate v. Export Under Bond - Central Excise Rules, 1944, Rules 12 and 13; Central Excises and Salt Act, 1944, Section 35(A) - The core question was whether goods supplied as ship's stores/aircraft stores for consumption on board foreign-bound vessels/aircraft attracted duty under Rule 12 (rebate on duty-paid goods subsequently exported) or were exportable without payment of duty under Rule 13. The court examined the text of the rules and observed that Rule 12 covers goods already subjected to excise duty, while Rule 13 permits export without payment of duty from warehouse or licensed factory under bond. The final holding and directions are not contained in the available excerpt. (Paras 1, 11-12) B) Central Excise - Ship's and Aircraft Stores as Exports - Applicability of Rule 13 Exemption - Central Excise Rules, 1944, Rule 13 - The appeals involved refund claims for Light Diesel Oil, Furnace Oil, and Aviation Turbine Fuel supplied from bonded stock to foreign-going vessels and aircraft between 1977 and 1981. Lower authorities differed: Assistant Collector rejected claims, Appellate Collector allowed some under Rule 13, and the Tribunal restored the Assistant Collector's orders following Delhi High Court in Hindustan Aluminium Corporation Ltd. v. Superintendent of Central Excise, Mirzapur (1981 ELT 642). The appellant relied on Calcutta High Court in Indian Aluminium Company Limited v. Union of India (1988 (36) E.L.T. 435) holding Rule 13 independent. The final decision is not included in the excerpt. (Paras 2-10)
Issue of Consideration
Whether excisable goods exported as ship's stores for consumption on board vessels bound for foreign ports are liable to excise duty under Rule 13 of the Central Excise Rules, 1944 or under Rule 12 of the said Rules.
Final Decision
The available judgment excerpt does not include the final operative order. The Supreme Court was analysing whether Rule 12 or Rule 13 of the Central Excise Rules, 1944 applied to goods supplied as ship's stores/aircraft fuel to foreign-bound vessels/aircraft.
Law Points
- Rule 12 of Central Excise Rules
- 1944 provides rebate of duty on goods already subjected to excise duty and subsequently exported
- Rule 13 permits export without payment of duty from warehouse or licensed factory under bond
- Rule 13 is independent of Rule 12 for direct exports
- supplies as ship's stores/aircraft fuel to foreign-bound vessels/aircraft may constitute exports eligible for exemption under Rule 13
