Unrebated duty on aviation fuel supplied under bond and remand of limitation issue for fresh findings

Aviation Turbine Fuel supplied to foreign-bound aircrafts under bond was treated as remaining liable to the unrebated duty contemplated by the Rule 12 rebate framework, following earlier Tribunal rulings and the Delhi High Court view; the duty question was decided in favour of the Revenue. The limitation plea under Section 11A could not be determined because the appellate authority had recorded no finding and the record was inadequate, so that issue required fresh examination on remand. The operative principle stated is that bonded export supply does not by itself displace the duty consequence under the rebate notification, while limitation must be decided on proper records.

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Issues: (i) whether Aviation Turbine Fuel supplied to foreign-bound aircrafts in bond under Rule 13 of the Central Excise Rules, 1944 was liable to duty at the unrebated rate prescribed in the notification issued under Rule 12 of the Central Excise Rules, 1944; and (ii) whether the demands were barred by limitation under Section 11A of the Central Excises and Salt Act, 1944.

Issue (i): whether Aviation Turbine Fuel supplied to foreign-bound aircrafts in bond under Rule 13 of the Central Excise Rules, 1944 was liable to duty at the unrebated rate prescribed in the notification issued under Rule 12 of the Central Excise Rules, 1944

Analysis: The Tribunal followed its earlier decisions, which in turn followed the Delhi High Court ruling that even where goods are exported under bond under Rule 13, duty remains payable to the extent required under the rebate framework of Rule 12. No contrary authority was shown, and the earlier rulings were treated as binding.

Conclusion: The unrebated rate of duty was payable, and this issue was decided in favour of the Revenue.

Issue (ii): whether the demands were barred by limitation under Section 11A of the Central Excises and Salt Act, 1944

Analysis: The Collector (Appeals) had not recorded any finding on limitation, and the record before the Tribunal was insufficient to decide the question. The issue therefore required examination on the relevant records by the lower authority.

Conclusion: The limitation issue was remanded for de novo consideration.

Final Conclusion: The duty demand on the notified unrebated rate was upheld in principle, but the matters were sent back for fresh determination on limitation.

Ratio Decidendi: Goods supplied under bond for export remain subject to the duty consequence contemplated by the rebate notification, and when the appellate record is inadequate on limitation, the matter must be remitted for fresh findings.

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