M/s Vee Excel Drugs & Pharmaceuticals Private Limited vs Commissioner Of Central Excise Meerut I, U.P. And Another

Sudhanshu Dhulia, J

Since the issue raised in the aforesaid writ petitions is common and identical, therefore, these writ petitions are heard together and decided by this common judgment. However, for the sake of convenience, the facts of Writ Petition (M/S) No.2428 of 2012 are being referred in this judgment.

The petitioner before this Court is a merchant exporter of goods for which he has a licence, inter alia, for pharmaceutical purposes to foreign countries. In the present case, an assignment was given to the manufacturer/processor for manufacturing of a drug of which the generic name is "Sildenafil Citrate". The tablets were manufactured by the Manufacturer i.e. M/s Akums Drug & Pharmaceuticals Limited, Haridwar. However, since after the manufacture of drugs, they were marketed by the brand names of VIP, Infinity and Boos, according to the petitioner, ultimately it was the petitioner who had exported the drugs to foreign country (in the present case Bangladesh), and consequently the rebate on duty was liable to be given to the petitioner. His claim for rebate of duty was dismissed by the Adjudicating Authority vide order dated 30.10.2009 and thereafter he filed an appeal before the appellate authority which was also dismissed on 23.04.2010. Aggrieved, the petitioner filed a revision before the Central Government which too was dismissed on 08.06.2012. The claim of the petitioner was dismissed on the ground that rebate duty can either be claimed by the manufacturer or processer and not by the "merchant exporter" i.e. the present petitioner. The petitioner has filed the present writ petitions before this Court challenging the above orders.

The entire case of the petitioner is based on the clarification given by the Central Board of Excise and Customs which has primarily made a clarification vide its circular dated 21.11.2001 in Notification No. 41 of 2001 dated 26.06.2001, which reads as under:-

"Subject: Central Excise- Extending facility to merchant-exporters to get their export goods manufactured by another manufacturer/processor under claim of rebate on duty paid on inputs under Notification No. 41/2001-Central Excise (N.T.) dated 26th June, 2001-

I am directed to say that representations have been received in the Board to allow merchant exporters to get export goods manufactured by another manufacturer/processor under claim of rebate on duty paid on inputs under Notification No. 41/2001- Central Excise (N.T.) dated 26th June, 2001 on the lines of Circular No.164/75/95-CX dated 18.12.95 and modify Para 8.2 of the Part-V of Chapter-8 of the Central Excise Manual (effective from 1.9.2001)."

The Board has examined the matter and decided that status prior to 1.9.2001 shall be retained. Accordingly, it has been decided to allow rebate of duty paid on the inputs to merchant exporters where such inputs are used in the manufacture of export goods, directly cleared from the factory of the manufacturer/processor and the name of the merchant exporter is mentioned on ARE-2, subject to fulfillment of other conditions prescribed in Notification No.41/2001-Central Excise (N.T.) dated 26th June, 2001 in this behalf.

Lara 8.2 of the Part-V of Chapter-8 of the Central Excise Manual (effective from 1.9.2001) stands modified to this effect.

The field formations may suitably be informed.

Receipt of this Circular may please be acknowledged.

Hindi version will follow."

Vide circular dated 21.11.2001, while making the interpretation of the notification dated 26.06.2001 i.e. Notification No. 41 of 2001, the Central Board of Excise and Customs has interpreted that the rebate duty can be claimed either by the manufacturer or by the processor or even by the merchant exporter, but cannot be claimed by both. In case it is claimed by the merchant exporter, a disclaimer has to be given by the manufacturer. In other words, the claim on rebate duty was also given to the merchant exporter as per the aforesaid circular.

The powers to pass such circulars have been given under Section 37B of the Central Excise Act, 1944 which reads as under:-

"37B. Instructions to Central Excise Officers.- The Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963), may, if it considers it necessary or expedient so to do for the purpose of uniformity in the classification of excisable goods or with respect to levy of duties of excise on (such goods or for the implementation of any other provision of this Act), issue such orders, instructions and directions to the Central Excise Officers as it may deem fit, and such officers and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the said Board:

Provided that no such orders, instructions or directions shall be issued -

(a) so as to require any Central Excise Officer to make a particular assessment or to dispose of a particular case in a particular manner; or

(b) so as to interfere with the discretion of the (Commissioner of Central Excise (Appeals) in the exercise of his appellate functions."

A bare perusal of the aforesaid provision shows that the purpose of a circular is only clarificatory in nature and it cannot grant the benefit or add or substitute something which is not given in the Rules or in the notification which is statutory in nature.

In any case, now another notification has been issued by the Central Government being Notification No. 21 of 2004 on 06.09.2004. The relevant portion of the said notification reads as under:-

"Notification No.21/2004-Central Excise (N.T.)

In exercise of the powers conferred by of rule 18 of the Central Excise Rules, 2002 and in supersession of the Ministry of Finance, Department of Revenue, notification No. 41/2001-Central Excise (N.T.) dated the 26th June, 2001 [G.S.R.470 (E) dated the 26th June, 2001], the Central Government hereby directs that rebate of whole of the duty paid on excisable goods (hereinafter referred to as materials) used in the manufacture or processing of export goods shall, on their exportation out of India, to any country except Nepal and Bhutan, be paid subject to the conditions and the procedure specified hereinafter:-

(1) Filing of declaration.- The manufacturer or processor shall file a declaration with the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise having jurisdiction over the factory of manufacture describing the finished goods proposed to be manufactured or processed along with their rate of duty leviable and manufacturing/processing formula with particular reference to quantity or proportion in which the materials are actually used as well as the quality. The declaration shall also contain the tariff classification rate of duty paid or payable on the materials so used, both in words and figures in relation to the finished goods to be exported."

(emphasis provided)

The said notification i.e. Notification No. 21 of 2004 is in supersession of the earlier notification dated 26.06.2001 being Notification No. 41 of 2001, of which the circular dated 21.11.2001 was a clarification. In view of this, the learned counsel for the Excise Department Sri H.M. Bhatia would argue that the benefit was being claimed by the petitioner of the Notification dated 26.06.2001 (of which the Circular dated 21.11.2001 was merely a clarification). The circular is merely an interpretation of the notification dated 26.06.2001. Now by the subsequent notification dated 06.09.2004, the earlier notification dated 26.06.2001 itself stands superseded. In other words, there is no circular dated 26.06.2001 as of now. Admittedly the present relief is being claimed for the year 2008-2009, which is subsequent to 06.09.2004. The relief claimed here cannot be given to the petitioner.

In view of the above, no interference is being called for in the matter.

The writ petitions fail and are hereby dismissed.