"Page 1\nJUDGMENT\nREPORTABLE\nIN THE SUPREME COURT OF INDIA\nCIVIL APPELLATE JURISDICTION\nCIVIL APPEAL NO. 1978 OF 2007\nM/S. SPENTEX INDUSTRIES LTD.\n...APPELLANT\nVERSUS\nCOMMISSIONER OF CENTRAL EXCISE \n& ORS.\n...RESPONDENTS\nW I T H\nCIVIL APPEAL NOS. 2025-2026 OF 2013\nCIVIL APPEAL NO. 2027 OF 2013\nAND\nCIVIL APPEAL NO. 10534 OF 2013\nJ U D G M E N T\nA.K. SIKRI, J.\nIn all these appeals, the basic question of law which arises\nfor consideration is as to whether or not the manufacturer/exporter is\nentitled to rebate of the excise duty paid both on the inputs and on the\nmanufactured product, when excise duty is paid on a manufactured\nproduct and also on the inputs which have gone into manufacturing the\nproduct and such manufactured product is exported? \n1\n\nPage 2\nJUDGMENT\n2)\nWe may point out at the outset that, as per the scheme provided by the\nrelevant Rules framed under the Central Excise Act, 1944 (hereinafter\nreferred to as the 'Act') two options are admissible in respect of\nexemption from excise duty which is to be given when the goods\nmanufactured are meant for export and are actually exported. A\nmanufacturer/exporter can either export the said goods without payment\nof duty by executing a bond to the effect that goods are meant for export\nand would be actually exported and also undertakes to satisfy other\nstipulated conditions, to earn the exemption from payment on excise\nduty. Other option is to pay the duty on intermediate products and/or\nfinal products and thereafter claiming rebate from the Government once\nthe goods are actually exported. When the manufacturer/exporter\nexercises first option, admittedly no duty is to be paid either on\nintermediate products or on final products. However, the dispute has\narisen when second option is executed. In such a case, the Department\nhas taken the stand that as per the relevant rules, the rebate is\nadmissible in respect of one duty alone, i.e., either on the duty paid\nexcisable goods or duty paid on materials used in the manufacture or\nprocessing of such goods but not on both the final as well as\nintermediate products. The authorities below, as would be noticed, in all\nthese cases have accepted the version of the Revenue. Therefore, in\nthese four appeals, assessees are the appellants.\n2\n\nPage 3\nJUDGMENT\n3)\nAfter giving the aforesaid preliminary background thereby putting the\nissue in perspective, that has arisen for consideration we may take note\nof the factual background. For the purpose of convenience, it would be\nsufficient if we traverse through the facts that emerge from Civil Appeal\nNo. 1978 of 2007. \n \nThe appellant/assessee, in this appeal, is engaged in the manufacturing \nof polyester cotton blended yarn and polyester viscose blended yarn and\nboth these products fall under Chapter 55 of the Schedule to the Central \nExcise Tariff Act, 1985. For manufacture of the aforesaid product, the \nassessee had used the raw material which was an intermediate product \nand paid excise duty thereupon. The final products were also cleared on\npayment of excise duty on those finished products. The assessee had \nexported these goods on payment of central excise duty in the CENVAT \naccount and, thereafter, filed as many as forty-five rebate claims \namounting to ₹1,46,90,995/- (₹75,42,487/-+ ₹71,48,508/-) in the months\nof November and December, 2004 respectively. These rebate claims \nwere filed under the provisions of Rule 18 of the Central Excise Rules, \n2002 (hereinafter referred to as the 'Rules').\n4)\nOn receipt of the aforesaid rebate claims, the Department issued show\ncause notice dated January 11, 2005 whereby the assessee was called\nupon to show cause as to why the rebate claimed by the assessee be not\n3\n\nPage 4\nJUDGMENT\nrejected as it was contrary to the provisions of Rule 18 of the Rules read\nwith Section 11B of the Act and the Notification issued thereunder, i.e.,\nNotification No. 19/2004-CE(NT) dated September 06, 2004. After\nconsidering the reply that was given by the assessee, the Deputy\nCommissioner of Central Excise, Division-II, Nagpur rejected the rebate\nof duty paid on the final product exported as well as the claim of rebate of\nduty paid on inputs contained therein by passing Order-in-original dated\nJanuary 28, 2005. Aggrieved by this order, the assessee filed the appeal\nbefore the Commissioner of Central Excise (Appeals), Nagpur. This\nappeal was decided by orders dated March 15, 2005 holding that in terms\nof Rule 18 of the Rules, the assessee is entitled to one of the two claims\nfor rebate, i.e., either rebate of duty paid on exported goods or the duty\npaid on inputs used in the exported goods, and not on both of them. He,\nthus, remitted the case back to the Deputy Commissioner to decide the\nclaim of the assessee after granting personal hearing to the assessee\nand taking its option as to which of the two claims assessee wanted to\nprefer. \n5)\nStill not satisfied with this partial relief given by the Commissioner\n(Appeals), as the assessee wanted rebate on both types of excise duties\npaid, the assessee challenged the order of the Commissioner (Appeals)\nby filing Revision Application before the Joint Secretary to the\nGovernment of India under Section 35EE of the Act. This Revision\n4\n\nPage 5\nJUDGMENT\nApplication of the assessee was decided in its favour as the Joint\nSecretary held that the assessee was entitled to rebate both on the\nexported goods as well as inputs used in the exported goods. It was now\nthe turn of the Department to feel dissatisfied with the aforesaid outcome\nand, therefore, it challenged the aforesaid revisional order by filing the\nwrit petition in the High Court of Bombay, Nagpur Bench. This writ petition\nhas been decided in favour of the Revenue whereby the view taken by\nthe Joint Secretary to the Government of India is reversed and that of\nCommissioner (Appeals) is upheld holding that out of the two excise\nduties, Rule 18 of the Rules permits rebate only qua one of them and not\non the both duties. \n6)\nSpecial Leave Petition against this judgment of the Bombay High Court\nwas preferred by the assessee in which leave was granted. That is how\npresent appeal comes up for hearing to decide the question of law that\nhas arisen for consideration.\n7)\nBefore embarking on the case that is pleaded by both sides on the\ninterpretation of the relevant provisions of the Act and Rules, and in\nparticular Rule 18 of the Rules, it is imperative to scan through those\nprovisions. First of all, we take note of the relevant statutory provision in\nthe Act which is Section 11B thereof. That portion of this long provision,\nwhich is relevant for us, is extracted below:\n“S. 11B. Claim for refund of duty and interest, if any,\n5\n\nPage 6\nJUDGMENT\npaid on such duty.— (1) Any person claiming refund of\nany duty of excise and interest, if any, paid on such duty\nmay make an application for refund of such duty and\ninterest if any, paid on such duty to the Assistant\nCommissioner of Central Excise or Deputy Commissioner\nof Central Excise before the expiry of one year from the\nrelevant date in such form and manner as may be\nprescribed and the application shall be accompanied by\nsuch documentary or other evidence including the\ndocuments referred to in section 12A as the applicant may\nfurnish to establish that the amount of duty of excise and\ninterest, if any, paid on such duty in relation to which such\nrefund is claimed was collected from or paid by him and\nthe incidence of such duty and interest if, any, paid on\nsuch duty had not been passed on by him to any other\nperson:”\n8)\nThereafter, Central Excise Rules, 2002 were framed by the Central\nGovernment in exercise of powers contained in Section 37 of the Act. As\nmentioned above, the scheme of the relevant Rules or the subject matter\nof the issue at hand provides for two options insofar as payment of\nexcise duty on the products meant for exports are concerned. Under\nRule 18, an exporter has the option to pay the duty and then claim\nrebate thereof and under Rule 19, export can be made without payment\nof duty on execution of a bond. Both these rules are given below. \n“Rule 18. Rebate of duty.— Where any goods are\nexported, the Central Government may, by notification,\ngrant rebate of duty paid on such excisable goods or duty\npaid on materials used in the manufacture or processing of\nsuch goods and the rebate shall be subject to such\nconditions or limitations, if any, and fulfillment of such\nprocedure, as may be specified in the notification. \nRule 19. Export without payment of duty.— (1) Any\nexcisable goods may be exported without payment of duty\nfrom a factory of the producer or the manufacturer or the\nwarehouse or any other premises, as may be approved by\nthe Commissioner.\n6\n\nPage 7\nJUDGMENT\n(2) Any material may be removed without payment of duty\nfrom a factory of the producer or the manufacturer or the\nwarehouse or any other premises, for use in the\nmanufacture or processing of goods which are exported,\nas may be approved by the Commissioner.\nxxx\nxxx\nxxx”\n9)\nObviously, the controversy that arises is qua interpretation that is to be\naccorded to Rule 18. The Rule stipulates that the Central Government\nmay, by notification, grant rebate of duty paid on such excisable goods\nOR duty paid on material used in the manufacturing or processing of\nsuch goods. The word 'OR' which is used in between the two kinds of\nduties in respect of which rebate can be granted is the bone of\ncontention and it is to be interpreted whether it postulates grant of one of\nthe two duties or both the duties can be claimed. It is also to be noted at\nthis stage itself that Rule 18 is only an enabling provision which\nempowers the Central Government to issue a notification for grant of\nthese rebates and prescribes the procedure for claiming such rebate(s).\n10)\nAs is clear from the bare reading of Rule 18, the manner of getting the\nrebate under the said Rule has to be as per the procedure that may be\nspecified in the notification.\n11)\nThe Central Government has issued Notification No. 19/2004-CE(NT)\ndated September 06, 2004 which deals with grant of rebate of whole of\nduty on excisable goods exported. The opening portion of this\n7\n\nPage 8\nJUDGMENT\nNotification, which needs to be taken note of, is as under: \n“In exercise of the powers conferred by rule 18 of the\nCentral Excise Rules, 2002 and in supersession of the\nMinistry of Finance, Department of Revenue, notification\nNo. 40/2001-Central Excise (N.T.), dated the 26th June\n2001, [G.S.R. 469(E), dated the 26th June, 2001] insofar as\nit relates to export to the countries other than Nepal and\nBhutan, the Central Government hereby directs that there\nshall be granted rebate of the whole of the duty paid on all\nexcisable goods falling under the First Schedule to the\nCentral Excise Tariff Act, 1985 (5 of 1986) exported to any\ncountry other than Nepal and Bhutan, subject to the\nconditions, limitations and procedures specified\nhereinafter-\nxxx\nxxx\nxxx”\n12)\nIt also lays down conditions and limitations for claiming such rebate as\nwell as procedure which needs to be fulfilled. The provision, inter alia,\nprescribes the time limit within which claim for rebate to Central Excise is\nto be presented. What is relevant for the purposes of present case is the\nForm, as per which application for removal of excisable goods for export\nis to be made and the same is prescribed in Annexure 2 to the Rules.\nColumn 3 thereof reads as under: \n“xxx \nxxx\nxxx\n3. I/We hereby certify that the above-mentioned goods\nhave been manufactured.\n(a)\navailing facility/without availing facility of Cenvat\ncredit under Cenvat Credit Rules, 2002.\n(b)\navailing facility/without availing facility under\nNotification No. 21/2004-Central Excise (N.T.), dated the\n6th September, 2004 issued under rule 18 of Central\nExcise Rules, 2002.\n(c)\navailing facility/without availing facility under\n8\n\nPage 9\nJUDGMENT\nNotification No. 43/2001-Central Excise (N.T.), dated the\n26th June, 2001 issued under rule 19 of Central Excise\n(No. 2) Rules, 2001.\nxxx\nxxx\nxxx”\n13)\nThe aforesaid Notification, as is evident from the reading thereof, deals\nwith grant of rebate of duty paid on the finished goods, that are ultimately\nexported. There is yet another Notification No. 21/2004-CE(N.T.); dated\nSeptember 06, 2004 issued by the Government for claiming rebate of\nwhole of the duty paid on excisable goods used in the manufacture or\nprocessing of exported goods, as is clear from the reading of the\nopening para thereof:\n“In exercise of the powers conferred by rule 18 of the\nCentral Excise Rules, 2002 and in supersession of the\nMinistry of Finance, Department of Revenue, notification\nNo. 41/2001-Central Excise (N.T.), dated the 26th June,\n2001 [G.S.R. 470(E) dated the 26th June 2001], the\nCentral Government hereby, directs that rebate of whole of\nthe duty paid on excisable goods (hereinafter referred to\nas 'materials') used in the manufacture or processing of\nexport goods shall, on their exportation out of India, to any\ncountry except Nepal and Bhutan, be paid subject to the\nconditions and the procedure specified hereinafter.” \n14)\nThis Notification also prescribes, inter alia, the procedure for export in\nthe specified format which is Form ARE2 appended as Annexure 2B's\nRules and envisages filing of combined application for removal of goods\nfor export under the claim for rebate of duty paid on excisable material\nused in the manufacture and packing [i.e., intermediate product used as\nraw material] as well as duty paid on the final product for export. This\n9\n\nPage 10\nJUDGMENT\nform, thus, enables the manufacturer of the final product exported to\nclaim rebate of both kinds of duties paid. That becomes evident from the\nfollowing portion of the said form: \n“Form A.R.E. 2\nCombined application for removal of goods for export under\nclaim for rebate of duty paid on excisable materials used in\nthe manufacture and packing of such goods and removal\nof dutiable excisable goods for export under claim for\nrebate of finished stage Central Excise Duty or under bond\nwithout payment of finished stage Central Excise Duty\nleviable on export goods.\nTo\nThe Superintendent of Central Excise,\n(Address)\n…...............(full postal address)\n1.\nParticulars of the Assistant Commissioner of Central\nExcise or the Deputy Commissioner of Central Excise from\nwhom rebate shall be claimed/with whom bond is executed\nand his complete postal address__________\n2. \nI/We_________of _____ propose to export the under\nmentioned goods (details of which are given in Table 1\nbelow) to ____ (country of destination) by air/sea/land/post\nparcel under claim for rebate of duty paid on excisable\nmaterials used in the manufacture and packing of such\ngoods.\n3.\n*The finished goods being exported are not dutiable.\n Or\nWe intended to claim the rebate of Central Excise Duty paid on\nclearances of goods for export under notification No.\n19/2004-Central Excise (N.T.), dated the 6th September,\n2004 issued under Rule 18 of Central Excise Rules, 2002.”\n15)\nThe argument of learned counsel for the appellant is that it has always\nbeen the policy of the Central Government to exempt the goods from\npayment of excise duty both on the final excisable products as well as\non material used in the manufacturing of goods for payment of duty if\n10\n\nPage 11\nJUDGMENT\nthe goods are meant for export outside India. Moreover, Rule 18 is\nonly an enabling provision and in exercise of powers contained in this\nRule, the Central Government has also issued notification for grant of\nrebate or duty paid on excisable goods as well as duty paid on material\nused in the manufacture of goods. Even the notifications which\nprescribe the procedure contemplate a situation where duty may have\nbeen paid not only on the excisable goods but on the material used in\nthe manufacture of goods and provide for claiming the rebate in\nrespect of duty paid on both these goods. It was also argued that the\norder of the Joint Secretary, Government of India further shows the\nmind of the Government itself, disclosing that both the duties are\neligible for grant of rebate. On that basis, it is argued that Rule 18 has\nto be interpreted keeping in view the overall scheme of the statute and\nthe Rules and the manner in which the Government itself operated the\nsaid Rule. Learned counsel for the respondent, on the other hand,\npredicated his arguments on the plain and grammatical meaning that\nneeds to be accorded to Rule 18 of the Rules by arguing that the word\n'OR' used therein clearly signifies that it is one of the two duties to\nwhich the rebate can be granted and not both. For this purpose,\nreasoning given by the High Court was adopted with the submission\nthat it was in accord with the cardinal principle of literal interpretation\nand, therefore, the view of the High Court was correct in law.\n11\n\nPage 12\nJUDGMENT\n16)\nAfter giving due consideration to the respective submissions, in the light\nof statutory scheme envisaged for grant of rebate in the Act and Rules,\nwe are constrained to hold that the High Court has not taken correct\nview, which we feel is a myopic view and ignores the overall scheme\npertaining to grant of rebate in respect of goods exported out of India.\nThere are multiple reasons for arriving at this conclusion which are\ndiscussed hereinafter.\n(i)\nHistorical perspective of the statutory scheme: Central Excise\nRules under the Act were first framed in the year 1944. Rule 12 thereof\nprovided for rebate of duty and Rule 13 enabled exporter to export the\ngoods without payment of duty. Relevant portion of these Rules was as\nunder:\n“Rule 12. Rebate of duty.— The Central Government\nmay, from time to time, by notification in the Official\nGazette, grant rebate of -\n(a)\nduty paid on the excisable goods;\n(b)\nduty paid on materials used in the manufacture of\ngoods; if such goods are exported outside India or shipped\nas provision or stores for use on board a ship proceeding\nto a foreign port, or supplied to a foreign going aircraft to\nsuch extent and subject to such safeguards, conditions\nand limitations as regards the class or description of\ngoods, class or description of materials used for\nmanufacture thereof, destination, mode of transport and\nother allied matters as may be specified in the notification.\nxxx\nxxx\nxxx\nRule 13. Export in bond of goods on which duty has\nnot been paid.—(1) The Central Government may, from\ntime to time, by notification in the Official Gazette -\n12\n\nPage 13\nJUDGMENT\n(a)\npermit export of specified excisable goods in bond\nwithout payment of duty, in the like manner, as the goods\nregarding which the rebate is granted under sub-rule (i) of\nrule 12 from a factory of manufacture or warehouse or any\nother premises as may be approved by the Commissioner\nof Central Excise;\n(b)\nspecify materials, removal of which without\npayment of duty from the place of manufacture or storage\nfor use in the manufacture in bond of export goods may be\npermitted by Commissioner of Central Excise;\n(c) Allow removal of excisable material without payment of\nduty for the manufacture of export goods, as may be\nspecified, to be exported in execution of one or more\nexport orders; or for replenishment of duty paid materials\nused in the manufacture of such export goods already\nexported for the execution of such orders, or both;\nsubject to such safeguards, conditions and limitations as\nregards the class or description of goods, class or\ndescription of materials used for manufacture thereof,\ndestination, mode of transport and other allied matters as\nmay be specified in the notification which the exporter\nundertakes to abide by entering into a bond in the proper\nform with such surety or sufficient security, and under such\nconditions as the Commissioner approves.\nxxx\nxxx\nxxx ”\n17)\nIt is manifest from the reading of the aforesaid Rules that from the very\nbeginning, two alternative methods were provided enabling an exporter\nof goods to get rid of the burden of paying the excise duty; both on\nexcisable goods as well as on materials used in the manufacture of\ngoods. The exporter could either claim rebate when the duty was paid.\nOr else, he was free not to pay excise duty at all on both types of goods\nby executing a bond in the prescribed form and fulfilling the conditions\nprescribed in this behalf. The grant of rebate, in either of the options,\n13\n\nPage 14\nJUDGMENT\nhas always been in respect of both kinds of excise duties, i.e. on the\nfinal product that is exported as well as on the intermediate product on\nwhich excise duty is paid/payable and the same is used as raw material\nin the manufacture of goods. Under these Rules also, Notification No.\n41/94-CE(NT), dated September 12, 1994 and Notification No.\n42/94-CE(NT), dated September 21, 1994 were issued for grant of\nrebate of duty on export of all excisable goods, except minerals oils and\nship stores and rebate on materials used in manufacture of goods\nexported out of India, respectively.\n18)\nThe aforesaid Rules of 1944 were replaced by Central Excise Rules,\n2001. In these rules, relevant provisions were Rules 18 and 19. It is not\nnecessary to reproduce these Rules which are same as Rules 18 and\n19 of the existing Rules. Under these Rules also similar Notifications\nwere issued, i.e., Notification No. 40/2001-CE(NT) dated June 26, 2001\nand Notification No. 41/2001-CE(NT) dated June 26, 2001 providing for\nrebate of whole of duty on excisable goods when exported as well as\nrebate of inputs used in manufacture/processing of export goods.\nLikewise, Notifications 40 and 41 dated June 26, 2001 were issued\nunder Rule 19 of these Rules.\n19)\nCentral Excise Rules, 2001 were superseded by the present Rules, viz.\nCentral Excise Rules, 2002 and the exact provisions thereof have\n14\n\nPage 15\nJUDGMENT\nalready been quoted. The aforesaid historical narration of the relevant\nprovisions from time to time depict one common theme, namely, to\nprovide rebate of duty paid on the excisable goods as well as the duty\npaid on material used in the manufacture of goods.\n(ii) \nScheme of the Rules : A cumulative reading of the scheme enshrined\nin Rules 18 and 19 of the Rules, 2002 has already been pointed out\nabove. These Rules provide two alternatives to the exporter enabling\nhim to get the benefit of exemption from paying the excise duty. Under\nRule 19, exporter is not required to pay any excise duty at all. At the\ntime of removal of these goods from the factory gate of the producer or\nthe manufacturer or the warehouse or any other premises, he is\nsupposed to comply with the conditions, safeguards and procedure, as\nmay be notified by the Board. Such a procedure provides for execution\nof a bond which, inter alia, lays down the condition that the goods which\nare cleared are actually meant for export and he is to furnish the proof\nthat those goods are actually exported. What is important is that when\nthe exporter opts for this method, with the approval of the Commissioner,\nhe is not required to pay duty either on the final product, i.e., on\nexcisable goods or on the material used in the manufacture of those\ngoods. The intention is loud and clear, namely, the goods which are\nmeant for exports are free from any excise duty. It extends not only to\nthe material which is used in the manufacture of goods but also on the\n15\n\nPage 16\nJUDGMENT\ngoods that are produced and ultimately exported. Once we keep in mind\nthis scheme, it cannot be the intention of the Legislature to provide\nrebate only on one item in case a particular exporter/manufacturer opts\nfor other alternative under Rule 18, namely, paying the duty in the first\ninstance and then claiming the rebate. Giving such restrictive meaning\nto Rule 18 would not only be anomalous but would lead to absurdity as\nwell. In fact, it would defeat the very purpose of grant of remission from\npayment of excise duty in respect of the goods which are exported out of\nIndia. It may also lead to invidious discrimination and arbitrary results.\n \nLet us visualize another situation. A particular exporter may opt for\nscheme under Rule 18, i.e., for claim of rebate insofar as, say, excise\nduty on material used in manufacture of goods is concerned. He would\npay that duty and claim rebate. When it comes to payment of duty of\nexport of excisable goods, he exercises the option under Rule 19 and\nexecutes a bond which enables him not to pay any duty on excisable\ngoods. In this scenario, the exporter will still be able to get the benefit of\nnot paying any excise duty on both final product as well as intermediate\nproduct.\n(iii)\nGovernment's own perception: As mentioned above, Rule 18 is\nenabling provision which authorises the Central Government to issue a\nnotification for grant of these rebates. Exercising powers under this Rule,\n16\n\nPage 17\nJUDGMENT\nthe Central Government has issued necessary notifications for rebate in\nrespect of both the duties, i.e., on intermediate product as well as on the\nfinal product. Further, and which is more significant, these notifications\nproviding detailed procedure for claiming such rebates contemplate a\nsituation where excise duty may have been paid both on the excisable\ngoods and on material used in the manufacture of those goods and\nenables the exporter to claim rebate on both the duties. This kind of\nprocedure and format of prescribed Forms, already described above,\nbecomes a clincher insofar as understanding of the Government of Rule\n18 of the Rules is concerned.\n20)\nIt is to be borne in mind that it is the Central Government which has\nframed the Rules as well as issued the notifications. If the Central\nGovernment itself is of the opinion that the rebate is to be allowed on\nboth the forms of excise duties the government is bound thereby and the\nrule in-question has to interpreted in accord with this understanding of\nthe rule maker itself. Law in this respect is well settled and, therefore, it\nis not necessary to burden this judgment by quoting from various\ndecisions. Our purpose would be served by referring to one such\ndecision in the case of R & B Falcon (A) Pty Ltd. v. Commissioner of\nIncome Tax1 wherein interpretation given by the Central Board of Direct\nTaxes (CBDT) to a particular provision was held binding on the tax\n1\n(2008) 12 SCC 466\n17\n\nPage 18\nJUDGMENT\nauthorities. The Court explained this principle in the following manner:\n“33. CBDT has the requisite jurisdiction to interpret the\nprovisions of the Income Tax Act. The interpretation of the\nCBDT being in the realm of executive construction, should\nordinarily be held to be binding, save and except where it\nviolates any provisions of law or is contrary to any\njudgment rendered by the courts. The reason for giving\neffect to such executive construction is not only same as\ncontemporaneous which would come within the purview of\nthe maxim temporania caste pesto, even in certain\nsituation a representation made by an authority like\nMinister presenting the Bill before Parliament may also be\nfound bound thereby.\n34. Rules of executive construction in a situation of this\nnature may also be applied. Where a representation is\nmade by the maker of legislation at the time of introduction\nof the Bill or construction thereupon is put by the executive\nupon its coming into force, the same carries a great\nweight.\n35. In this regard, we may refer to the decision of the\nHouse of Lords in R. (Westminster City Council) v.\nNational Asylum Support Service (2002) 1 WLR 2956 :\n(2002) 4 All ER 654 (HL) and its interpretation of the\ndecision in Pepper v. Hart 1993 AC 593 : (1992) 3 WLR\n1032 : (1993) 1 All ER 42 (HL) on the question of\n“executive estoppel”. In the former decision, Lord Steyn\nstated: (WLR p. 2959, para 6)\n“6. If exceptionally there is found in the Explanatory Notes\na clear assurance by the executive to Parliament about the\nmeaning of a clause, or the circumstances in which a\npower will or will not be used, that assurance may in\nprinciple be admitted against the executive in proceedings\nin which the executive places a contrary contention before\na court.”\n36. A similar interpretation was rendered by Lord Hope of\nCraighead in Wilson v. First County Trust Ltd. (No. 2)\n(2004) 1 AC 816 : (2003) 3 WLR 568 : (2003) 4 All ER 97\n(HL), wherein it was stated: (WLR p. 600, para 113)\n“113. ...As I understand it [Pepper v. Hart 1993 AC 593 :\n(1992) 3 WLR 1032 : (1993) 1 All ER 42 (HL), it\nrecognised a limited exception to the general rule that\nresort to Hansard was inadmissible. Its purpose is to\nprevent the executive seeking to place a meaning on\nwords used in legislation which is different from that which\n18\n\nPage 19\nJUDGMENT\nministers attributed to those words when promoting the\nlegislation in Parliament.”\n37. For a detailed analysis of the rule of executive estoppel\nuseful reference may be to the article authored by Francis\nBennion entitled “Executive Estoppel: Pepper v. Hart\nRevisited”, published in Public Law, Spring 2007, p. 1\nwhich throws a new light on the subject-matter.”\n21)\nWe are also of the opinion that another principle of interpretation of\nstatutes, namely, principle of contemporanea expositio also becomes\napplicable which is manifest from the act of the Government in issuing\ntwo notifications giving effect to Rule 18. This principle was explained by\nthe Court in Desh Bandhu Gupta and Co. and others v. Delhi Stock\nExchange Association Ltd.2 in the following manner:\n“9. It may be stated that it was not disputed before us that\nthese two documents which came into existence almost\nsimultaneously with the issuance of the notification could\nbe looked at for finding out the true intention of the\nGovernment in issuing the notification in question,\nparticularly in regard to the manner in which outstanding\ntransactions were to be closed or liquidated. The principle\nof contemporanea expositio (interpreting a statute or any\nother document by reference to the exposition it has\nreceived from contemporary authority) can be invoked\nthough the same will not always be decisive of the\nquestion of construction. (Maxwell 12th Edn. p. 268). In\nCrawford on Statutory Construction (1940 Edn.) in para\n219 (at pp. 393-395) it has been stated that administrative\nor executive officers charged with executing a statute)\ngenerally should be clearly wrong before it is overturned;\nsuch a construction commonly referred to as practical\nconstruction although not controlling, is nevertheless\nentitled to considerable weight it is highly persuasive. In\nBaleshwar Bagarti v. Bhagirathi Dass (1908) ILR 35 Cal\n701 at 713 the principle which was reiterated in Mathura\nMohan Saha v. Ram Kumar Saha, ILR 43 Cal. 790: (AIR\n1916 Cal. 136) has been stated by Mukerjea J. thus:\n2\n(1979) 3 SCR 373\n19\n\nPage 20\nJUDGMENT\n“It is a well-settled principle of construction that courts in\nconstruing a statute will give much weight to the\ninterpretation put upon it, at the time of its enactment and\nsince, by those whose duty it has been to construe,\nexecute and apply it. I do not suggest for a moment that\nsuch interpretation has by any means a controlling effect\nupon the Courts; such interpretation may, if occasion\narises have to be disregarded for cogent and persuasive\nreasons, and in a clear case of error, a Court would\nwithout hesitation refuse to follow such construction.”\nOf course, even without the aid of these two documents\nwhich contain a contemporaneous exposition of the\nGovernment's intention, we have come to the conclusion\nthat on a plain construction of the notification the proviso\npermitted the closing out or liquidation of all outstanding\ntransactions by entering into a forward contract in\naccordance with the rules, bye-laws and regulations of the\nrespondent.”\n \n22)\nIn this hue, we may now advert to the reasoning given by the Joint\nSecretary itself in the order passed in Revision Petition wherein he has\ndiscussed the issue in the following perspective:\n“.....Govt. notes that as a principle and a policy measure,\nGovt. has accepted that export of goods from India should\nbe relieved of domestic levies (both customs and Central\nExcise) in order to promote export of domestic products\nfrom India and to make then internationally competitive. In\norder to achieve this objective, two schemes operate,\nnamely, export under bond and export under payment of\nduty and both are comparable, as objectives of both the\nschemes are same i.e. to neutralize the burden of internal\nlevies on goods exported. In case of former, export goods\nare exempted from payment of duty, subject to\nconditions/restrictions etc. and in the case of latter export\ngoods are cleared on payment of duty which is rebated\nsubject to production of proof of export. For export under\nbond Rule 19 provides for excisable goods to be exported\nwithout payment of duty, subject to conditions etc. which\nare detailed in Notfn. No. 42/2001 – CE(NT) dt.\n26.06.2001 and Notification No. 43/2001-CE(NT) dtd.\n26.06.2001 further relieves the burden of duty on inputs\n20\n\nPage 21\nJUDGMENT\nused to manufacture such goods by obtaining them duty\nfree under bond. Thus, export goods are relieved of the\nburden of excise duty both on finally exported goods as\nwell the inputs used vide these legislative and machinery\nprovisions. As both schemes are comparable as objective\nto serve the common goal of relieving the burden of\ndomestic taxation, the other scheme provides for similar\ndispensation in case goods are exported on payment of\nduty by way of rebating central excise duty suffered on\nsuch export goods. Rule 18 provides for rebate of duty on\nsuch export goods or duty paid on material used in\nmanufacture of such export goods. While Notification No.\n40/2001 – Central Excise (NT) dtd. 26.6.2001 as amended\ndeals with details provisions for rebate on finishing goods,\nNotfn. No. 41/201 C.E. (NT) as amended deals and\nprovides the detailed procedural provisions for input stage\nrebate also. Similar provisions and export relief existed for\nexport on payment of duty and under bond in the erstwhile\nRule 12 and 13 of Central Excise Rules. The fundamental\nobjective of existing rules and the earlier ones is the same\ni.e. to neutralise the duty element on the goods exported\nand hence no other interpretation denying the relief sought\nappears possible. Circular No. 129/40/95 dt. 29.09.95,\npara 1.5 of Chapter 8 of Part V of CBEC Manual further\nleaves no room for any other interpretation.”\n(iv)\nInterpretation of word 'OR' occurring in Rule 18: The aforesaid\ndiscussion leads us to the only inevitable consequence which is this : the\nword 'OR' occurring in Rule 18 cannot be given literal interpretation as\nthat leads to various disastrous results pointed out in the preceding\ndiscussion and, therefore, this word has to be read as 'and' as that is\nwhat was intended by the rule maker in the scheme of things and to\ncarry out the objectives of the Rule 18 and also to bring it at par with\nRule 19.\n23)\nWe are conscious of the principle that the word 'or' is normally\n21\n\nPage 22\nJUDGMENT\ndisjunctive and 'and' is normally conjunctive (See Union of India v.\nKamlabhai Harjiwandas Parekh and others3). However, there may be\ncircumstances where these words are to be read as vice-versa to give\neffect to manifest intention of the Legislature as disclosed from the\ncontext. \n24)\nOf course, these two words normally 'or' and 'and' are to be given their\nliteral meaning in unless some other part of same Statute or the clear\nintention of it requires that to be done. However, wherever use of such a\nword, viz., 'and'/'or' produces unintelligible or absurd results, the Court\nhas power to read the word 'or' as 'and' and vice-versa to give effect to\nthe intention of the Legislature which is otherwise quite clear. This was\nso done in the case of State of Bombay v. R.M.D. Chamarbaugwala4\nand while doing so, the Court observed as under:\n“...Considering the nature, scope and effect of the\nimpugned Act, we entertain no doubt whatever that the first\ncategory of prize competitions does not include any\ninnocent prize competitions. Such is what we conceive to\nbe the clear intention of the Legislature as expressed in\nthe impugned Act read as a whole and to give effect to this\nobvious intention as we are bound to do, we have perforce\nto read the word “or” appearing in the qualifying clause\nafter the word “promoter” and before the word “or” as\n“and”. Well-known canons of construction of statutes\npermit us to do so. (See Maxwell on the Interpretation of\nStatutes, 10th edition, page 238)”\n25)\nIn J. Jayalalitha v. Union of India5, provisions of Section 3 of the\n3\n(1968) 1 SCR 463\n4\n(1957) 1 SCR 874\n5\n(1999) 5 SCC 138\n22\n\nPage 23\nJUDGMENT\nPrevention of Corruption Act, 1988 empowers the Government to\nappoint as many special judges as may be necessary for such area or\nareas or for such case or group of case, as may be specified in the\nnotification. Construing the italicised 'or' it was held that it would mean\nthat the Government has the power to do either or both the things, i.e.,\nthe Government may, even for an area for which a special judge has\nbeen appointed, appoint a special judge for a case or group of cases.\n26)\nLikewise, in Mazagaon Dock Ltd. v. The Commissioner of Income\nTax and Excess Profits Tax6, word 'or' occurring under Section 42(2) of\nthe Income Tax Act, 1922 was construed as 'and' when the Court found\nthat the Legislature 'could not have intended' use of the expression 'or' in\nthat Section. We have already explained the statutory scheme\ncontained in the Act and Rules which express manifest intention of the\nLegislature which provide for granting of both kinds of rebates to the\nassessee. In Mazagaon Dock Ltd. (supra), this aspect was explained\nin the following manner: \n“10. The word “or” in the clause would appear to be\nrather inappropriate as it is susceptible of the interpretation\nthat when some profits are made but they are less than the\nnormal profits, tax could only be imposed either on the one\nor on the other, and that accordingly a tax on the actual\nprofits earned would bar the imposition of tax on profits\nwhich might have been intended, and the word “or” would\nhave to be read in the context as meaning “and”. Vide\nMaxwell's Interpretation of Statutes, Tenth Edition, pages\n238-239. But that, however, does not affect the present\nquestion which is whether the word “derived” indubitably\n6\n(1959) 1 SCR 848\n23\n\nPage 24\nJUDGMENT\npoints to the business of the non-resident as the one\ntaxable under S. 42(2) and for the reasons already given\nthe answer must be in the negative.”\n27)\nThe aforesaid discussion leads us to inevitable conclusion, namely, that\nthe exporters/appellants are entitled to both the rebates under Rule 18\nand not one kind of rebate. The impugned judgments are, accordingly,\nset aside allowing these appeals.\n.............................................J.\n(A.K. SIKRI)\n.............................................J.\n(ROHINTON FALI NARIMAN)\nNEW DELHI;\nOCTOBER 09, 2015.\n24\n"