Export under bond and rebate are distinct regimes; duty demand on aircraft stores failed, especially without a show-cause notice.

Export of superior kerosene/aviation turbine fuel as aircraft stores under bond under Rule 13 was treated as a distinct regime from rebate under Rules 12 and 12A. Because the fuel had not suffered duty before export, rebate provisions and Notification No. 364/77-C.E. could not be used to reduce or deny an amount that was not otherwise payable. The attempted duty demand was also procedurally defective because it was raised without the prescribed show-cause notice for recovery of short levy. The demand was therefore unsustainable and was set aside.

---

---

Issues: Whether duty could be demanded on superior kerosene/aviation turbine fuel exported as aircraft stores under bond under Rule 13 of the Central Excise Rules, 1944 by treating the case as one governed by the rebate provisions of Rules 12 and 12A and Notification No. 364/77-C.E.; and whether the demand was sustainable when it was made without a show-cause notice.

Analysis: Rule 13 permits export outside India without payment of duty under bond, which is distinct from the rebate mechanism under Rules 12 and 12A, those rules operating only where duty has already been paid and rebate is claimed. The notification reducing rebate could not be used to curtail a rebate that was not payable in the first place, since the fuel exported under bond had not suffered duty before export. The demand also proceeded on a misconception as to the interaction of the rules and, in addition, the order did not follow the statutory procedure for recovery of short levy because no prior notice to show cause had been issued.

Conclusion: The demand of duty was unsustainable and was set aside.

Final Conclusion: The assessee succeeded, and the excise demand relating to export of aviation turbine fuel under bond was annulled.

Ratio Decidendi: Export under bond under Rule 13 is a distinct regime from rebate under Rules 12 and 12A, and a demand cannot be sustained by applying rebate-reduction provisions to goods on which no duty was paid before export, especially where the demand is raised without the prescribed show-cause procedure.

---