Export under bond could not attract post-export duty demand where the rules operated independently and executive instructions could not override them.

Export under Rule 13 of the Central Excise Rules, 1944 without payment of duty could not be treated as liable to a post-export demand on the footing of Rule 12. Rule 12 governed rebate where duty had first been paid and goods were then exported, while Rule 13 applied to export under bond of non-duty-paid goods; the two operated in different fields and were not supplementary. An executive instruction could not override or cut down the rule-based exemption. The demand notices and consequential orders were therefore unsustainable and liable to be quashed.

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Issues: Whether goods exported under Rule 13 of the Central Excise Rules, 1944 without payment of duty could be subjected to a demand for the unrebatable portion of duty on the basis of Rule 12 and an executive direction.

Analysis: Rule 12 dealt with rebate of duty on goods first cleared on payment of duty and then exported, whereas Rule 13 dealt with export under bond of goods on which duty had not been paid. The two provisions operated in different fields and were not supplementary in the manner suggested by the revenue. The language of Rule 13 showed that export under bond was permitted without payment of duty, and the absence of any provision for post-export recovery of duty supported that construction. Section 37(xvii) of the Central Excises and Salt Act, 1944 authorised rules granting exemption, and an executive instruction could not cut down the effect of the rule. The demand notice, being founded on an executive interpretation contrary to the rule, had no legal basis.

Conclusion: Export under Rule 13 was not liable to excise duty on the footing of Rule 12, and the impugned show cause-cum-demand notices and consequential orders were unsustainable and liable to be quashed.

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