By TIOL News Service

AHEMDABAD, DEC 29, 2016: THE petitioners have inter alia prayed for issuance of a writ of mandamus directing the respondents to disburse the due export rebate amounts totalling Rs.45,93,405/- with interest for the delayed payments; return of bank guarantees and non-imposition of penalties.

Insofar as grant of rebate is concerned, the respondent agreed to consider the claims within a period of two weeks from furnishing of documents by the petitioner. The petitioner did not press for relief of interest. So also, as regards bank guarantees, the petitioners did not press for the same and submitted that they would approach the appropriate authority in this regard.

The question now remaining is the challenge to the penalty imposed in terms of Rule 17 of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956 alleging failure to furnish the proof of export within the prescribed period.

The High Court adverted to rule 17 which reads -

"17. Penalty for failure to furnish proof of export within the prescribed period - When any person authorized to export dutiable goods in bond in accordance with the provisions of Chapter VII of these rules fails to furnish proof of such export to the satisfaction of the Excise Commissioner, he shall upon a written demand being made by the officer-in-charge forthwith pay the duty leviable on such goods, and shall also be liable to a penalty which may, subject to a maximum of two thousand rupees, extend to twice the amount of duty and until such duty and penalty are paid, the Excise Commissioner may in his discretion refuse to permit such person to make further exports of dutiable goods in bond."

The counsel for the Revenue relied upon Rule 103 of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956, which reads -

"103. Presentation of claim for rebate - In order to obtain payment of the rebate, the exporter shall produce to the Excise Commissioner from whose jurisdiction the goods were dispatched, the duplicate application bearing the certificate of the officer, who examined the goods at the port or post office of export or the frontier, as the case may be. If the Excise Commissioner is satisfied from comparison of the duplicate application with the original received from such certifying officer, that the claim is in order, he shall sanction the rebate.

Provided such claims for rebate of duty shall be made within one month from the date of issue of the certificate of the officer who examined the goods at the port or post office of export or the frontier, as the case may be:

Provided further that the Excise Commissioner may in his discretion extend the period within such claims for rebate shall be made."

The High Court, thereafter, observed -

++ we are of the opinion that while imposing the penalty, Rule 103 shall not be applicable at all. Rule 103 is with respect to presentation of claim for rebate;

++ Imposition of penalty will be only under Rule 17 of the Rules;

++ on considering Rule 17, the purpose and object to levy the penalty seems to be that on one hand the concerned person has exported the dutiable goods under bond (without making the payment of duty) and on the other hand thereafter he fails to furnish the proof of such export to the satisfaction of the Excise Commissioner;

++ meaning thereby, he continues to get the benefit of export without making the payment of duty as he has exported the goods under bond. Under the circumstances, in the present case, the respondent authority is not justified to levy the penalty upon the petitioners under Rule 17 of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956;

++ it is reported that the respondents have recovered Rs.1,28,000/- towards penalty under Rule 17 Medicinal and Toilet Preparations (Excise Duties) Rules, 1956, which cannot be sustained, and therefore, the petitioners shall be entitled to refund /get back the penalty.

The penalty imposed of Rs.1,28,000/- u/r 17 of the Rules, 1956 was quashed and set aside.

The respondents were directed to return the same to the petitioners within a period of six weeks and failing which to pay an interest at the rate of 9% per annum.

(See 2016-TIOL-3154-HC-AHM-CX)