Polyplex Corporation Ltd. vs Joint Secry.

Sudhir Agarwal, J.—Heard Sri Nishant Mishra, learned counsel for petitioner and Sri R.C. Shukla, Advocate, appearing for respondents.

The short question raised before this Court is that petitioner has been denied rebate on export of goods by relying on restrictions relating to period etc. imposed by an executive order, i.e., Circular No. 354/70/97-CX dated 13.11.1997, copy whereof has been placed on record as Annexure-9 to writ petition, and it is contended that in the Statutory Order/Notification No. 19/2004-C.E. (N.T.) dated 6.9.2004, there is no such restriction of limitation and a statutory order issued in exercise of power under Rule 18 of Central Excise Rules, 2002 (hereinafter referred to as "Rules, 2002) could not have been altered, amended, modified or efficacy thereof could not have been extended by issuing an executive order. Therefore, the respondents in proceeding to decline the claim of petitioner for rebate in Central Excise by relying on Circular dated 13.11.1997 have acted wholly illegally. In substance, it is stated that a statutory provision cannot be modified, amended or altered by an executive order.

Sri Shukla, learned counsel appearing for respondents, could not dispute that as a matter of legal proposition, a statutory order, rule or regulation cannot be altered, amended or modified by mere an executive order, but he submits that Central Government possess power to issue Circulars also, which in absence of any otherwise provision, are binding.

In my view, the above argument of learned counsel appearing for respondents would not help him for the reason that by means of Circular in question, Central Board of Excise and Customs has revised the procedure, which was to be followed in respect to acceptance of proof of exports, though the procedure was already prescribed in Notification dated 6.9.2004 and, therefore, the question of revising procedure for such proof touching upon the matter already covered by Notification dated 6.9.2004 does not arise for the reason that an executive order, laying down something otherwise than what is prescribed in the Notification would not be permissible in law. It is well established that an executive order cannot prevail over the statutory rules. Mere executive decision cannot authorize the authorities concerned to do something which is not otherwise permitted under statutory rules. It is well settled that an executive order cannot prevail over statutory rules.

In Indra Sawhney Vs. Union of India (UOI) and Others, the Apex Court held that though the executive orders can be issued to fill up the gaps in the rules if the rules are silent on the subject but the executive orders cannot be issued which are inconsistent with the statutory rules already framed. In Laxman Dundappa Dhamanekar and Another Vs. Management of Vishwa Bharata Seva Samiti and Another, also the same view was taken.

In K. Kuppusamy and Another Vs. State of T.N. and Others, the Court said that statutory rules cannot be overridden by executive orders or executive practice and merely because the government has taken a decision to amend the rules does not mean that the rule stood obligated. So long as the rules are not amended in accordance with the procedure prescribed under law the same would continue to apply and would have to be observed in words and spirit. In Chandraprakash Madhavrao Dadwa and Others Vs. Union of India and Others, also the Apex Court expressed the same view holding that the executive orders cannot be conflicted with the statutory rules.

In view of above exposition of law and considering the facts and circumstances of the case, the orders impugned in this writ petition cannot sustain.

The writ petition is allowed. Impugned order dated 9.9.2011 is hereby quashed. Respondent no. 4 is directed to re-consider the claim of petitioner with regard to rebate in central excise on the import of goods in question in the light of Notification dated 6.9.2004 and ignoring Circular dated 13.11.1997.