1. Appeals under Section 35B of the Central Excises and Salt Act, 1944, praying that in the circumstances stated therein, the Tribunal will be pleased to set aside the order of the lower authority and order grant of rebate of duty on blended tea exported by the appellants.
2. These appeals coming up for orders upon perusing the records and upon hearing the arguments of the Advocates/representatives referred to above in the respective appeals for the appellants and upon hearing the arguments of Shri S.K. Choudhury, Senior Departmental Representative for the respondent, the Tribunal makes the following : 3. As the issue involved in each of these appeals is identical, we deal with these cases together. In each case the appellants had exported a certain quantity of tea blended out of unblended tea through the port of Cochin and claimed rebate at the rate of forty paise per kilogram in terms of Notification No. 166/81-CE dated 23.9.81. This notification prescribed a procedure, set out as Appendix to proviso (1) of the notification. Para 1 of the Appendix requires that the exporter of tea "shall apply in Form A for registration for export to the Collector of Central Excise within whose jurisdiction he carries on his business".
In each case an application for registration was made but after the date of the export of tea. The Maritime Collector of Central Excise, Cochin rejected the claim observing that according to para 1 of the Appendix, registration with the Collector should be prior to the actual export. Appeals to the Appellate Collector of Central Excise against the order of the Maritime Collector were rejected. Details of the orders are given in the Schedule to the Order.
4. At the time of hearing before us it is urged that the registration referred to in para 1 of the Appendix to the notification does not and could not mean that it should be done prior to the export. In fact due to certain peculiar circumstances that existed in Cochin, application for such export could be filed only after the date of actual export. It is claimed that immediately on the publication of the news about the issue of the notification in the newspapers, the appellants had contacted the Excise authorities at Cochin for a copy of the same but were informed that the authorities had no information about it. The department made available a copy through its Trade Notice No. 248/81 dated 30.10.82. Soon after the appellants filed the application for registration for the year 1981. No particular verification is done on the basis of the registration. It will be seen from para 2 of the Appendix to the notification that for renewal of registration of the succeeding years action is to be in the month of January. This would mean that application for renewal can be submitted any time during the month of January, even upto the very last day. It could not be the intention of the department to disallow rebate in such a situation for exports during the month of January every year. The rebate is at the rate of forty paise per kilogram, the lowest rate of excise duty leviable on unblended tea, either in the same form or after blending, on the tea usually exported through the port of Cochin.
5. When there is an ambiguity in the notification any benefit flowing therefrom should be given to the assessee. The primary objective of the notification is to assist the exporters in selling blended teas at competitive prices in the world market. The objective will be better served by inter preting para 1 of the Appendix as providing for registration any time during 1981 and not necessarily prior to export.
6. It was also pointed out that registration is a lesser degree of control than licensinge.g. exemption based on the procedure under Chapter X of the Central Excise Rules. The rebate is not dependent on the quantity of unblended tea which has gone into the manufacture of the exported goods but is related to the actual weight of the goods exported.
7. On the other hand, the Senior Departmental Representative strenuously urged that a careful reading of the Notification will show that prior registration is implied. He referred to para 2 of the application form which reads: I/We submit the details of the estimated quantity of blended tea to be exported, etc. as per schedule attached.
An estimate of the quantity exported refers to the future and not in relation to past; what was exported in the past would be a known quantity and not remain an estimate. He also referred to Sub-rule 3 of Rule 12A, the rule under which Notification No. 166/81 has been issued.
According to this Sub-rule the Collector has to satisfy himself that rebate is allowed only in respect of such quantity and material as is shown to his satisfaction to be duty paid. The procedure set out in the notification is obviously intended to enable the Collector to arrive at a finding in this regard. Registration is not a technical formality. In this connection he referred to the Judgment of the Supreme Court in the case of Sri Ramamohan Motor Service v. Commissioner of Income-tax, Hyderabad AIR 1973 SC 1445. Reference was also made to the decision of Supreme Court in the case of Sharif-ud-Din v. Abdul Gani Lone . In the Sri Ramamohan Motor Service case the Court was dealing with an application for registration under Section 26A of the Income-tax Act. The Section requires that an application for registration has to be made before the end of the "previous year". When the application was actually made on 30.6.55 (assessment year being 1956-57) it was found that the partnership constituted under the deed was void as one of the five partners was a minor. Though the deed was amended later on, the Court held that the application made for registration was an invalid application and the subsequent alteration of the terms of the partnership deed, even if validly made, cannot validate the application itself. In this case all that was needed for getting the benefit under the Income-tax Act was the making of an application by a prescribed date and its registration by the Income-tax Officer. The facts in the present case are different. The benefit of rebate is dependent on export of goods and not merely on the fact of registration with the Collector. The act of registration is one in a chain of actions and is not the sole act determining accrual of benefit to the assessee. We, therefore, consider that the ratio of the decision in the Sri Ramamohan Motor Service case is not applicable to the present case.
8. In the Sharif-ud-Din case the Supreme Court has laid down certain criteria vis-a-vis provisions to determine what are mandatory and which provisions are directory, in interpreting statutes. In para 9 of the Judgment Their Lordships observe, The fact that the statute uses the word "shall" while laying down a duty is not conclusive on the question whether it is a mandatory or directory provision. In order to find out the true character of the legislation, the court has to ascertain the object which the provision of law in question is to subserve and its design and the context in which it Js enacted. If the object of a law is to be defeated by non-compliance with it, it has to be regarded as mandatory. But when a provision of law relates to the performance of any act done in disregard of what provision causes serious prejudice to those for whose benefit it is enacted and at the same time who have no control over the performance of the duty, such provision should be treated as a directory one.
9. Proviso (1) to Notification No. 166/81 refers to "the procedure set out in the Appendix being followed". The rebate is payable on establishment of the fact of export of blended teas, the quantum of rebate is also dependent on rebate on the quantity of tea exported. We enquired and were informed that no particular follow-up action is taken in respect of registration in connection with the verification of the duty paid nature of unblended tea used, the quantum of unblended tea in the blended tea exported etc. In appeal Nos. ED(MAS) 26/83, 27/83, 98/83, 99/83, 100/83, 101/83, 102/83, 117/83, 118/83, 85/83 and 92/83, it was stated before us that in the nature of things, the department is accepting that the tea (unblended tea) in those cases has suffered central excise duty at the appropriate rate. From all these it is clear that the provision regarding registration is regulatory in character it cannot be said to be mandatory in the light of the observations of the Supreme Court referred to above.
10. As claimed on behalf of one of the appellants, registration is a degree of control lesser than that of licensing, though in these cases the type of control exercised after registration has not been spelt out. There is also considerable force in the argument on behalf of the appellants that for purposes of renewal, action can be taken any time during the month of January every year. It could not be the intention of the Government that there should be prior application for renewal and disallow the rebate in respect of teas exported during the month of Januarybetween the 1st of January and the date of application for renewal.
11. Under the circumstances we consider that the registration required under the Appendix to Notification No. 166/81, when done for the first time, can be done any time during the year 1981 and not necessarily prior to undertaking export. Accordingly we allow the appeals and order consequential payment of rebate to the appellants.