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Rajasthan High Court · body

2012 DIGILAW 2051 (RAJ)

Rajasthan Textile Mills v. Union of India

2012-10-01

ARUN MISHRA, MEENA V.GOMBER

body2012
JUDGMENT Hon'ble MISHRA, CJ.—Heard finally. 2. The writ petitions have been preferred questioning the legality of orders passed by the Government of India, Ministry of Finance (Department of Revenue) in the revision applications filed by the petitioner as against the orders passed by Commissioner (Appeals-I) of the Customs & Central Excise, Jaipur. 3. Question raised in the petitioners is that under Rule 18 of the Central Excise Rules, 2002 (hereinafter referred to as `the Rules of 2002'), rebate of duty paid on excisable goods or duty paid on materials used in the manufacture or processing of such goods is available on both i.e. excisable goods and raw material simultaneously. Thus, the word "or" used in Rule 18 should be read as "and". 4. Since the issue involved in all the petitioners is identical, they are being decided by this common order. 5. Facts in short are that the petitioner is engaged in the manufacture of M.M. Yarn falling under Chapter 55 of the First Schedule to the Central Excise Tariff Act, 1985 (in short, `the Act of 1985'). Petitioner had filed various rebate claims under Rule 18 of the Rules of 2002 on the ground that it had used duty paid inputs in the manufacture of M.M. Yarn which was cleared for export on payment of duty; hence, the duty paid by it on inputs as well as finished goods is sought to be refunded under Rule 18 of the Rules of 2002 read with Section 11B(2)(a) of the Central Excise Act, 1944 (in short, `the Act of 1944'). The petitioner had also filed requisite combined declaration, as per notification No. 21/2004-Central Excise (N.T.). The adjudicating authority rejected the rebate claims on the ground that Rule 18 of the Rules of 2002 does not permit grant of rebate of duty paid on exported finished goods simultaneously with the rebate of duty paid on inputs. Appeals preferred against the said orders were rejected by the Commissioner (Appeals-I), Customs & Central Excise, Jaipur and the orders were affirmed. Aggrieved thereby, revision applications were filed before the Government of India, Ministry of Finance, which were also dismissed. Hence, the writ petitions have been preferred. 6. Mr. Appeals preferred against the said orders were rejected by the Commissioner (Appeals-I), Customs & Central Excise, Jaipur and the orders were affirmed. Aggrieved thereby, revision applications were filed before the Government of India, Ministry of Finance, which were also dismissed. Hence, the writ petitions have been preferred. 6. Mr. Sanjay Jhanwar, learned counsel appearing on behalf of the petitioners has raised the submission that the word "or" used in Rule 18 of the Rules of 2002 should be read as "and", considering the language used in Notifications No. 19/2004- Central Excise (N.T.) and 21/2004-Central Excise (N.T.), whole of the duty paid on excisable goods has been exempted. He has also relied upon the combined form for claiming the rebate and Rule 19 of the Rules of 2002 to submit that whole of the duty paid on manufactured goods is exempted under the said Rule. As such, when the petitioner has opted for Rule 18, he cannot be put at a disadvantageous situation in the matter of claiming such rebate. 7. Mr. Anil Mehta, learned counsel appearing on behalf of the respondents has supported the impugned orders. He has submitted that there is no reason to read the word "or" "and", in the context and manner in which it has been used in Rule 18 of the Rules of 2002. A plain reading of the Rule makes it clear that the rebate of duty paid on inputs and rebate of duty paid on finished goods are different stages; as such, they are not admissible simultaneously. Rebate of duty on inputs has already been allowed, as such, the petitioner cannot claim the same on finished exported goods; the opinion formed by the concerned authorities in this regard is appropriate. Thus, no case for interference is made out. 8. Firstly, we come to the question of interpretation of Rule 18 of the Rules of 2002, which reads thus:- "Rule 18. Rebate of duty.-Where any goods are exported, the Central Government may, by notification, grant rebate of duty paid on such excisable goods or duty paid on materials used in the manufacture or processing of such goods and the rebate shall be subject to such conditions or limitations, if any, and fulfillment of such procedure, as may be specified in the notification. It is crystal clear from bare reading of Rule 18 that grant of rebate of duty paid is available on excisable goods or duty paid on materials used in the manufacture or processing of such goods i.e. on raw material. Thus, it is open to claim the benefit of rebate either on manufactured/finished goods or on raw material, not on both. 9. When we consider Rule 19 of the Rules of 2002 also, reference is to excisable goods. Rule 19(1) provides that any excisable goods may be exported without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, as may be approved by the Commissioner. Rule 19(2) provides that any material may be removed without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, for use in the manufacture or processing of goods which are exported, as may be approved by the Commissioner. Further, Rule 19(3) provides that the export under sub-rule (1) or sub-rule (2) shall be subject to such conditions, safeguards and procedure as may be specified by notification by the Board. We find that Rule 19(1) clearly provides that any excisable goods can be exported without payment of duty from the factory of producer, however, it does not provide for rebate of duty paid on the materials used in manufacture or processing of such goods. The only benefit available under Rule 19(1) is rebate of duty paid on finished goods; such goods can be exported without payment of duty from the factory of producer. Thus, the benefit available under Rule 19 is only on the finished goods, not on raw material. Thus, it is not in dispute that the procedures of Rules 18 and 19 are totally different, stages are also different. Thus, Rule 18 cannot be read in the method and manner which is sought. Merely with the aid of different provision of Rule 19, we cannot interpret the word "or" used in Rule 18 as "and" to provide benefit for both, would not be permissible. Hence, in our considered opinion, the word "or" cannot be read as "and". The intendment of Rule 19 is also not to provide rebate on both; it provides for rebate on manufactured goods. 10. Mr. Hence, in our considered opinion, the word "or" cannot be read as "and". The intendment of Rule 19 is also not to provide rebate on both; it provides for rebate on manufactured goods. 10. Mr. Anil Mehta, learned counsel appearing on behalf of the respondents has also relied upon decision of the Hon'ble Supreme Court in Manmohan Das Shah & Ors. vs. Bishun Das, AIR 1967 SC 643 in which the Apex Court has laid down that the ordinary rule of construction is that a provision of a statute must be construed in accordance with the language used therein unless there are compelling reasons, such as, where a literal construction would reduce the provision to absurdity or prevent the manifest intention of the legislature from being carried out. The Apex Court in Manmohan Das Shah (supra) has laid down thus:- "(6)...The ordinary rule of construction is that a provision of a stature must be construed in accordance with the language used therein unless there are compelling reasons, such as, where a literal construction would reduce the provision to absurdity or prevent the manifest intention of the legislature from being carried out. There is no reason why the word "or" should be construed otherwise than in its ordinary meaning. If the construction suggested by Mr. Desai were to be accepted and the word "or" were to be construed as meaning "and" it would mean that the construction should not only be such as materially alters the accommodation but is also such that it would substantially diminish its value. Such an interpretation is not warranted for the simple reason that there may conceivably be material alterations which do not, however, diminish the value of the accommodation and on the other hand there may equally conceivably be alterations which are not material alterations but nevertheless would substantially diminish the value of the premises. It seems to us that the legislature intended to provide for both the contingencies and where one or the other exists it was intended to furnish a ground to the landlord to sue his tenant without having to obtain the previous permission of the District Magistrate. The construction of Cl. (c) placed by the High Court is, therefore, not correct." 11. Mr. Sanjay Jhanwar, learned counsel appearing on behalf of the petitioner has placed reliance on decision of the Hon'ble Supreme Court in Prof. Yashpal & Anr. The construction of Cl. (c) placed by the High Court is, therefore, not correct." 11. Mr. Sanjay Jhanwar, learned counsel appearing on behalf of the petitioner has placed reliance on decision of the Hon'ble Supreme Court in Prof. Yashpal & Anr. vs. State of Chhattisgarh & Ors., AIR 2005 SC 2026 = (2005) 5 SCC 420, in which the Apex Court has considered the word "or" used in between the words "established" and "incorporated" in Secs. 2(f), 22 and 23 of the UGC Act. The Hon'ble Supreme Court, considering the context in which the word "or" has been used, has laid down that the word "or" is normally disjunctive and "and" is normally conjunctive but at times, they are read vice-versa to give effect to the manifest intentions of the legislature, as disclosed from the context. If literal reading of the word produces an unintelligible or absurd result "and" may be read for "or" and "or" may be read for "and". Following is the relevant discussion made by the Hon'ble Supreme Court:- "40....The word "or" is normally disjunctive and "and" is normally conjunctive but at times, they are read vice-versa to give effect to the manifest intentions of the legislature, as disclosed from the context. If literal reading of the word produces an unintelligible or absurd result "and" may be read for "or" and "or" may be read for "and". (See Principles of Statutory Interpretation by G.P. Singh 7th ed. page 339, and also State of Bombay vs. RMD Chamarbaugwala, (1957) 1 SCR 874 and Mazagaon Dock vs. CIT, (1958) 34 ITR 368 (SC). We are of the opinion that having regard to the Constitutional scheme and in order to ensure that the enactment made by the Parliament, namely University Grants Commission Act is able to achieve the objective for which it has been made and the UGC is able to perform its duties and responsibilities, and further that the State enactment does not come in conflict with the central legislation and create any hindrance or obstacle in the working of the later, it is necessary to read the expression "established or incorporated" as "established and incorporated" insofar as the private Universities and concerned." 12. On plain reading of Rule 18, it is apparent that if the word "or" is disjunctive, no absurd result occurs, rather the intention which is manifested in Rule 18 has also been given full effect to give the benefit admissible on one of the item, either on finished goods or inputs used in the manufacture or processing of such goods. Rule 19 also does not provide for rebate on inputs, it provides for rebate on goods manufactured. 13. Coming to the submission raised by learned counsel appearing on behalf of the petitioner with respect to notification No. 19/2004-Central Excise (N.T.) dated 6.9.2004 which has been issued in exercise of the powers conferred by Rule 18 of the Rules of 2002 and in supersession of the Ministry of Finance, Department of Revenue, notification No. 40/2001-Central Excise (NT) dated 26.6.2001 (G.S.R. 469 (E), dated 26.6.2001) insofar as it relates to export to the countries other than Nepal and Bhutan, the Central Government has directed that there shall be granted rebate of the whole of the duty paid on all "excisable goods" falling under the First Schedule to the Act of 1985. The said notification does not touch the question whether the rebate is admissible on both i.e. manufactured/finished goods and inputs used in manufacturing or processing of such goods; same is silent in this regard. Thus, it has to be construed harmoniously with the Rule that rebate of duty is available either on finished goods or the inputs, not on both. 14. When we consider Notification No. 21/2004-CE (NT) dated 6.9.2004, we find that it deals with the rebate of whole of the duty paid on `materials' i.e. inputs used in the manufacture or processing of export goods. It nowhere lays that on finished goods also, rebate can be claimed. Thus, issuance of two different notifications makes it clear that both the benefits are not available to be claimed simultaneously, and the words "whole of the duty" used in the notification has to be understood in the context of materials/inputs used in the manufacture or processing of export goods, whereas notification No. 19/2004 CE (N.T.) has to be understood with respect to the manufactured/finished goods. Issuances of two separate notifications also indicates that the benefit on both is not available at the same time. Issuances of two separate notifications also indicates that the benefit on both is not available at the same time. Merely by the fact that Form ARE-2 is providing either to claim the rebate on finished goods or on inputs used in manufacture of such goods, it cannot be culled out that the same is available on both i.e. finished goods as well as on the inputs. Merely by preparation of any combined form for both the benefits, the word "or" cannot be construed as "and" to be used conjunctively. Thus the submission raised by Mr. Sanjay Jhanwar with respect to Form ARE-2 has no legs to stand. It is further submitted by Mr. Sanjay Jhanwar that Form ARE-1 has to be used only in case one benefit is to be claimed, whereas Form ARE-2 has to be used when both benefits are to be claimed. Merely if alternatives have been provided in Form ARE-2, out of which, one has to be scored out, it would not entail any different interpretation of the rule and the form which is part of the notification, cannot govern the interpretation of the rule; it has to be harmoniously interpreted with the rule and cannot substitute the rule or supersede it. 15. The statutory Rules 18 and 19 of the Rules of 2002, which have been framed, make it clear that exemption of duty or rebate is not available on both i.e. inputs as well as finished goods; same is available only on one and such intendment has to be given full effect to. 16. At this stage, with respect to writ petition No. 4470/2012, Mr. Jhanwar, learned counsel appearing on behalf of the petitioner has also pressed for alternative claim under Rule 19 of the Rules of 2002, procedure of which was not followed admittedly not adhered to. As such, benefit of Rule 19 could not have been pressed at the stage of passing of order, as essential requirement of Rule 19 is that a person from the department is posted at the factory premises and under his supervision, goods are to be exported, which is not done in the instant case. 17. In view of the aforesaid discussion, we find that the writ petitions being devoid of merit, deserves dismissal and the same are hereby dismissed. Cost is made easy.