Bonded ship's stores remained dutiable where export rebate rules did not apply to the clearance from warehouse.

Clearance of light diesel oil and furnace oil from bonded stocks as ship's stores for foreign-going vessels was held dutiable for the relevant period because the goods were not cleared from duty-paid stocks and Rule 12 rebate notifications did not apply on their terms. Although additional excise duty stood exempted during the period, Notification No. 349/77 reduced the rebate otherwise available under Rule 12 only for duty-paid clearances, while Rule 13 permitted export without payment of duty from bond or a licensed factory only in the manner contemplated by the export rebate framework. The Tribunal followed the Delhi High Court view that ship's stores exported from bond remained subject to the duty incidence required under that framework, and the appeals failed.

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Issues: Whether light diesel oil and furnace oil cleared from bonded stocks as ship's stores for foreign-going vessels were liable to duty during the period 16-12-1977 to 22-8-1978, and whether the rebate limitation under Rule 12 governed such clearances.

Analysis: During the material period, additional excise duty on the goods stood exempted, but Notification No. 349/77 reduced the rebate otherwise available under Rule 12 for duty-paid clearances. The supplies in question were from bonded stocks, not duty-paid stocks, and Rule 12 notifications were therefore not directly applicable on their terms. Rule 13 permitted export without payment of duty from a warehouse or licensed factory, but the phraseology and the scheme of the rules showed that ship's stores could be exported under that rule only in the manner contemplated by the export rebate provisions. The Tribunal followed the Delhi High Court view that even exports under Rule 13 from bond were subject to the duty incidence required under the Rule 12 framework, and no contrary binding decision was shown.

Conclusion: The clearance of the goods from bonded stocks as ship's stores was rightly subjected to duty, and the appeals fail.

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