The Hon’ble Supreme Court of India, in its judgment, delivered on 8th October, 2015, has held that the Manufacturer-Exporter is eligible to claim rebate of Central Excise Duty paid on both the Goods Exported as well as the inputs used in manufacture of the Exported Goods.
The rebate of Central Excise Duty paid on the goods exported out of India is governed by Rule 18 of the Central Excise Rules, 2002, which are reproduced below for ready reference:-
“RULE 18. Rebate of duty. — Where any goods are exported, the Central Government may, by notification, grant rebate of duty paid on such excisable goods or duty paid on materials used in the manufacture or processing of such goods and the rebate shall be subject to such conditions or limitations, if any, and fulfilment of such procedure, as may be specified in the notification. “
The High Court of Maharashtra and Rajasthan had taken the view that the term ‘or”used in the aforesaid rule cannot be read as ‘and’, therefore, the manufacturer can claim rebate either of the Central Excise Duty paid on Raw material used in the Export goods or of the duty paid on such Export goods. However, the Hon’ble Supreme Court held as under:-
“Of Course, these two words ‘or’ and ‘and’ are to be given their literal meaning, unless some other part of the same Statue or the clear intention of it requires that to be done. However, wherever use of such a word viz., ‘and’/’or produces unintelligible or absurd results the Court has power to read the word ‘or’ as ‘and’ and vice-versa to give effect to the intention of the Legislature which is otherwise quite clear.”
The Hon’ble Apex Court studied the Historical perspective of the scheme of rebate and the Relevant Notifications held that the term ‘or’ used in the aforesaid legal provision is to be read as ‘and’ and the exporters are entitled to both the rebates under Rule 18 and not one kind of rebate.
For text of the judgment please click here