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of <h1>Supreme Court clarifies excise duty rules: Deferred payment, rebate provisions reconciled for fair treatment</h1> <h3>HINDUSTAN PETROLEUM CORPORATION LTD. Versus COLLECTOR OF C. EXCISE</h3> HINDUSTAN PETROLEUM CORPORATION LTD. Versus COLLECTOR OF C. EXCISE - 1995 (77) E.L.T. 256 (SC) Issues Involved:1. Whether the appellant's goods exported as ship's stores for consumption on board vessels bound for any foreign ports are liable to pay excise duty as per Rule 13 or Rule 12 of the Central Excise Rules.2. Whether the refund claims made by the appellants for the excise duty paid on Light Diesel Oil (LDO) and Furnace Oil supplied as ship's stores for foreign-going ships are valid.3. Whether the Tribunal's reliance on the Delhi High Court's judgment in Hindustan Aluminium Corporation Ltd. v. Superintendent of Central Excise was correct.4. Whether Rule 13 is independent of Rule 12 or both rules are complementary to each other.Detailed Analysis:1. Liability to Pay Excise Duty under Rule 13 or Rule 12:The primary issue revolves around the interpretation of Rules 12 and 13 of the Central Excise Rules, 1944. Rule 12 deals with the rebate of duty on goods exported after payment of excise duty, while Rule 13 allows for the export of goods without initial payment of duty, provided a bond is executed. The Court concluded that both rules are complementary and cover the same topic of excise duty on exported goods. Rule 13 does not provide total exemption from duty but allows deferred payment, contingent on proof of export.2. Validity of Refund Claims:The appellants claimed a refund for excise duty paid on LDO and Furnace Oil supplied as ship's stores, arguing that no duty was payable under Rule 13. The Assistant Collector and the Tribunal rejected these claims, adjudicating them under Rule 12. The Court upheld this view, stating that Rule 13 does not grant total exemption but defers the duty payment, which must be reconciled with Rule 12's rebate provisions.3. Tribunal's Reliance on Delhi High Court Judgment:The Tribunal relied on the Delhi High Court's judgment in Hindustan Aluminium Corporation Ltd. v. Superintendent of Central Excise, which held that Rule 13 does not provide total exemption from excise duty but allows for deferred payment under a bond. The Supreme Court affirmed this reliance, agreeing that Rule 13 should be read in conjunction with Rule 12 to avoid discriminatory and inequitable results.4. Independence or Complementarity of Rules 12 and 13:The appellants argued that Rule 13 is independent of Rule 12, but the Court rejected this contention. It held that Rule 13 is not independent but complementary to Rule 12, ensuring that the burden of excise duty on exported goods is consistent, irrespective of whether the duty is paid initially or deferred under a bond. The Court emphasized that interpreting Rule 13 independently would lead to arbitrary and discriminatory outcomes, violating Article 14 of the Constitution.Conclusion:The Supreme Court dismissed the appeals, affirming that Rule 13 does not provide total exemption from excise duty but allows deferred payment, which must be reconciled with Rule 12's rebate provisions. The Tribunal's reliance on the Delhi High Court's judgment was deemed correct, and the interpretation that Rules 12 and 13 are complementary was upheld to ensure equitable treatment of excisable goods exported from India.
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