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Judgment
S. Ravindra Bhat, J
Claiming to be aggrieved by the Revisional Authority’s order under Section 35EE of the Central Excise Act, the present writ petitioner has
approached this Court for quashing of the impugned order as well as the order in appeal by the Commissioner of Central Excise (Appeals).
The facts of this case are that the petitioner manufactured Gutkha and forwarded two consignments for export purposes. It claimed the benefit of
excise rebate in terms of Rule 18 of the Central Excise Rules, 2002 (hereafter “Rulesâ€). That provision enables the Central Government to grant
rebate payable on execisable goods or duty paid on materials used in the manufacturing of processing of such goods on conditions or limitations as are
prescribed. It is not in dispute that this procedure is spelt out in paras 2 and 3 of the Notification no.19/2004. The benefit of this rebate was extended
to Gutkha vide notification No.32/2008; the petitioner’s rebate claim was based upon its contention that the rebate was permissible by virtue of
Notification No.32/2008, which specifically listed pan masala falling under tariff item 21069020 on pan masala containing tobacco commonly known as
“gutkha†falling under tariff item 2403 99 90- on which duty of excise has been paid under Section 3A of the Central Excise Act.
The rebate claim was processed by the competent authority i.e. the Assistant Commissioner who granted it by the order-in-original dated
01.05.2013. The Commissioner of Central Excise, took cognizance of this order at the behest of the Revenue and reversed the rebate granted, on the
premise that by a notification of 11.09.2012 issued by the Commissioner, Food Safety, Government of NCT of Delhi, the manufacture, storage, sale,
transportation, display or distribution of Gutkha within the territory of Delhi was entirely prohibited. The essential reasoning on the basis of which the
appellate authority disallowed the rebate is contained in the following extract of its order:
“7.1 I have also gone through the Notification no. F.1(3)/DO-I/2012/5185-5203 dated 11.09.2012 issued by the Commissioner of Food Safety, Govt,
of NCT vide which manufacture, storage, sale, transportation, display or the- distribution of Gutkha (by whatsoever .name it is available in the market)
and Pan Masala containing Tobacco/ nicotine is prohibited in the NCT of Delhi-in the interest of public health w.e.f. 11.09.2012. The said notification
was issued, in pursuance of regulation 2.3.4 of Food safety and standards (Prohibition and restriction on sales) Regulations. 2011 made by the Food
safety and standards Authority •of India in exercise of the powers conferred by clause (1) of Section 92 of the Food Safety and Standards Act,
2000 (Central Act 34 of 2006) read with Section 26 thereof, that prohibits articles of food containing tobacco/nicotine with health hazards.
7.2 I have also gone through the case laws cited by the appellant and find that in the case of Pankaj Jain Agencies vs. Union of India, 1994 (72)
E.L.T.805 (S.C.) the Hon'ble Supreme Court have held that the Rules and Notifications take effect from the date of their publication In the official
gazette. In another case Haryana Plywood Industries vs. Collector of Customs 199 (51) E.L.T. 119 (Tribunal); it was concluded by the Hon'ble
Tribunal that the date of effect of a notification is the date on which it is made available public.â€
The petitioner approached the Revisional Authority i.e. the Central Government who endorsed the view of the Commissioner holding as follows:
“3. On examination of the revision application in the light of Commissioner (Appeals)'s order, it is noticed by the Government that there is no
dispute that the gutkha was cleared by the applicant from their factory on 11.9.12 only under two ARE-1s to the merchant exporter when the
prohibition order with regard to sale, manufacture, storage, transportation, display or distribution of gutkha was already in force. Applicant has claimed
that they had cleared gutkha from the factory prior to publication of the above Notification by the Delhi Government, but they have not adduced any
evidence to substantiate their claim. Moreover, the actual export of the gutkha was effected much later as is evident from the dates of the shipping bill
and the airway bill as mentioned above. Thus even if consignments of gutkha were cleared on 11.9.12 by the applicant before having knowledge about
the Delhi Government's ban order, these consignments involving sale, transportation and storage were in India until these were exported under the
export documents dated 25.9.12 and 26.9.12. Thus right from the day of clearance of gutkha from the applicant's factory on 11.9.12 till export of
gutkha, all activities of the applicant as well as the merchant exporter with regard to manufacture, sale, transportation and storage etc. of gutkha
covered under two ARE-1s were clearly hit by the Delhi Government's prohibition order dated 11.9.12 and the scope of this order is wide enough to
cover even export of goods from the territory of NCT of Delhi as if invariably involved all activities prohibited under the above Notification.
One of the conditions for allowing rebate of duty on excisable goods under Notification No.19/2004-CE(NT) dated 6.9.2004 read with Notification
No.32/2008CE(NT) dated 28.8.2008, is that export of goods should not be prohibited under any law for the time being in force. Since the export of
gutkha from 11.9.12 involving sale, transportation and storage etc. in NCT of Delhi was prohibited by the Government of NCT of Delhi, the above
condition in Notification No.19/2004 that goods should not be prohibited under any law is undoubtedly attracted in this case. Therefore, the
Government observes that the rebate of duty has been rightly disallowed by the Commissioner (Appeals) to the applicant. The applicant's averment
that gutkha is not prohibited for export under the Delhi Government's order or under the Central Excise and Customs Acts is completely misplaced in
the light of above discussion that the Delhi Government's order covers all activities relating to the movement, storage and sale of goods involved in the
export of goods also and once it is banned by the Government of Delhi by taking into account the public health, it was applicable for all purposes in the
territory of Delhi and a separate provision under the Central Excise Act and the Customs Act was not necessary.â€
The revision was also dismissed on the ground of limitation which was occasioned on account of delay in depositing the requisite registration/Court
fee.
Dr. Seema Jain, learned counsel for the petitioner urges that the conditions of the notification of 11.09.2012 are entirely extraneous to the issue of
grant or refusal of rebate which are wholly governed by Rule 18 of the 2002 Rules as well as the relevant procedure spelt out in Rules 2 and 3 of the
Notification No.19/2004 â€" by virtue of its extension to pan masala (by a notification No.32/2008 dated 28.08.2008). It is submitted that the
expression “export†is nowhere defined in the Central Excise Act and has to be understood either in the common parlance or in terms of the
definition in the cognate enactment i.e. the Customs Act, 1962 which defines it as an Act of “taking to a place outside Indiaâ€. It was submitted
that the ban with respect to storage, transportation, sale, etc. of gutkha within the territory of Delhi or for the purpose of use, sale and consumption in
Delhi and did not per se apply to export transactions that aimed at export.
Mr. Harpreet Singh, learned counsel for the Revenue contended that the order of the Revisional Authority is valid. He relied upon under Section
2(33) of the Customs Act, which inter alia describes prohibited goods as those which are subjected to “any prohibition under the Act or any other
law for the time being in forceâ€. It was, therefore, urged that the notification of 11.09.2012 had universal and wide application; its effect and
objective could not be curtailed in the manner sought by the petitioner. Rule 18 of the 2002 rules is extracted below:
“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 fulfillment of such procedure as may be specified in the notification.â€
The notification No.19/04-CE by Rule 2 prescribes the conditions and limitations for availing excise rebate; Para 3 of that notification elaborates the
procedure prescribed.
Pan masala and gutkha were apparently not covered in the first instance by notification 19/04-CE. The Revenue therefore, included in the list of
items that could claim rebate, pan masala and gutkha, through Notification No.32/08-CE. The conditions for availing such rebate were spelt out as well
in Clauses (i) to (viii). Clause (ix) stated that the procedure prescribed in Notification No.18/2004 would be applicable mutatis mutandis. It is not in
dispute that these conditions were complied with.
The Revenue’s objection to the grant of rebate was the prohibition brought in by the 11.09.2012 notification. That Notification issued by the
Government of NCT of Delhi reads as follows:
“(TO BE PUBLISHED IN THE DELHI GAZETTE PART IV EXTRAORDINARY) GOVERNMENT OF NCT OF DELHI DEPARTMENT
OF FOOD SAFETY A-20, LAWRENCE ROAD INDUSTRIAL AREA, RING ROAD, DELHI-110 035
No.F.1(3)/DO-I/2012/5185-5203 Dated: the 11 September, 2012
NOTIFICATION
WHEREAS, regulation 2.3.4. of the Food Safety and Standards (Prohibition and restriction of Sales) Regulations, 2011 made by the Food Safety and
Standards Authority of India in exercise of the powers conferred by clause (I) of sub-section (2) of section 92 of the Food Safety and Standards Act,
2006 (Central Act 34 of 2006) read with Section 26 thereof, prohibits articles of food in which tobacco and/or nicotine are used as ingredients, as they
are injurious to health.
AND WHEREAS, Guthka (by whatever name) and Paan masala containing tobacco and/or nicotine is an article of food in which tobacco and/or
nicotine are widely used as ingredients now-a-days.
AND WHEREAS, it is expedient to prohibit the manufacture, the storage, the sale, the transportation, the display or the distribution of Gutkha and
Paan masala containing tobacco and/or nicotine in the NCT of Delhi, being food products in which tobacco and/or nicotine are widely used as
ingredients.
NOW, THEREFORE, in pursuance of regulation 2.3.4. of the Food Safety and Standards (Prohibition and Restriction on Sales) Regulations, 2011, the
manufacture,
the storage, the sale, the transportation, the display or the distribution of Guthka by whatever name and Paan masala containing tobacco and/or
nicotine as ingredients by whatsoever name it is available in the market, is hereby prohibited in the NCT of Delhi in the interest of Public Health.
(K.J.R. BURMAN)
COMMISSIONER FOOD SAFETY,
DELHI.
No.F1(3)/DO-I/2012/5185-5203 Dated: the 11September, 2012â€
A careful reading of the NCT’s notification would in the opinion of this Court disclose that what was prohibited was the manufacture, storage,
sale, transportation, display or the distribution of gutkha and pan masala or other substances containing tobacco and nicotine products within the
National Capital Territory of Delhi “being food products in which tobacco and/or nicotine are widely used as ingredientsâ€. Clearly the objective of
this notification was to prohibit transaction of sale or other activities which facilitated the sale of the prohibited items deemed deleterious to public
health - within the NCT of Delhi. Thus for instance, the storage for the purpose of sale, storage for the purpose of transportation and storage for
purpose of display or distribution of gutkha was the subject matter of ban. Although, the notification did advert to prohibition on manufacture at the
same time it is silent as to whether the manufacture for the purposes of sale was per se or even by implication, prohibited.
In the opinion of this Court, the Government of NCT could not have banned the export of sale â€" as is understood in the Customs enactment
parlance. This is for the simple reason that the legislative competence and concurrently, the co-extensive executive power, to deal with the subject
matter of customs or international transactions are not with the State or the Union Territory but that of the Central Government or Parliament, as the
case may be. In this, consequently, upholding the revisional order would lead to anomaly in that so far as the Central Government or Parliament is
concerned, gutkha per se is not prohibited at least for export, whereas, for the purposes of interpretation of the notification, even export of gutkha is
prohibited. Clearly, such an anomalous consequence cannot be contemplated much less countenanced in law.
For the above reasons, this Court is of the opinion that the impugned order of the Revisional Authority as well as the order of the appellate
authority which it confirms, cannot be sustained. They are hereby quashed. The order-in-original is hereby restored.
This writ petition is allowed in the above terms.