M/S MAHASHAKTI COKE vs UNION OF INDIA
- Court
- Gujarat High Court
C/SCA/15459/2016 JUDGMENT DATED: 19/06/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 15459 of 2016
With
R/SPECIAL CIVIL APPLICATION NO. 14518 of 2018
With
R/SPECIAL CIVIL APPLICATION NO. 14520 of 2018
With
R/SPECIAL CIVIL APPLICATION NO. 14521 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
===================================================
Approved for Reporting Yes No
✔
===================================================
M/S MAHASHAKTI COKE
Versus
UNION OF INDIA & ORS.
===================================================
Appearance:
MS. SANGEETA PAHWA, for THAKKAR AND PAHWA
ADVOCATES(1357) for the Petitioner(s) No. 1
MS HARDIKA VYAS(11450) for the Respondent(s) No. 2,3
RULE SERVED for the Respondent(s) No. 1
===================================================
CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
Date : 19/06/2026
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COMMON ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
1. Special Civil Application No. 15459 of 2016 is taken-up as the
lead matter.
2. Heard learned advocate Ms. Sangeeta Pahwa for Thakkar and
Pahwa Advocates for the petitioner and learned Senior Standing
Counsel Ms.Hardika Vyas for the respondents.
3. The facts are common in all the matters and only the quantity
of the exported goods and the amount of rebate claim varies.
4. The brief facts are that, the petitioner is a company engaged
in the business of manufacturing excisable goods, i.e.
Metallurgical Coke (hereinafter referred as ‘Coke’ for short). The
petitioner received an order for export of about 50,000 Metric
Tons (hereinafter referred to as ‘MT’ for short) of coke from
Noble Resources PTE Ltd., Singapore. Accordingly, the petitioner
arranged for the export cargo for the purpose of shipment from
its unit / warehouse, between 02.04.2011 and 13.05.2011. The
petitioner transported about 51,294.800 MT of Coke towards
Mundra Port for onward shipment.
4.1. It is the case of the petitioner that, the Surveyor was
supervising the transportation measured the extent of moisture in
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respect of quantities loaded in each of the trucks and prepared a
daily truck receiving report at Mundra Port. It appears that,
thereafter the goods were measured at the port which weighed
51,177.110 MT, and hence there was a difference of 117.690 MT,
on account of handling loss, between the stage of loading the
cargo at the factory and at the time of cargo which is unloaded
and stored at the port.
4.2. Accordingly, the petitioner prepared ARE-1 for removing the
excisable goods from the unit for the purpose of export. The
petitioner also raised the commercial invoice dated 17.05.2011 on
Noble Resources PTE Ltd., and after obtaining requisite
permission and approvals, the entire export cargo came to be
loaded in the vessel-MV C Journey for the purpose of export,
and accordingly, the shipping bill dated 10.05.2011 came to be
prepared for the export cargo containing all requisite details.
4.3. The Customs authority processed the shipping bill and after
considering all the relevant documents including the report of the
Surveyor, determined the amount of duty as Rs.4,79,65,750/-.
The petitioner paid the entire duty to the department along with
educational cess.
4.4. Petitioner thereafter submitted an application dated
20.06.2011 to the Deputy Commissioner for claiming rebate of
Rs.4,94,04,741/- under Rule-18 of the Central Excise Rules, 2002
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(for short ‘the Rules’). After inter se exchange of the documents
and on confirmation and verification of details contained in ARE-
1, the respondent no.3 issued a show cause notice dated
12.09.2011 asking the petitioner to show cause as to why the
rebate of claim on 51294.800 MT should not be restricted to the
quantity of goods actually exported out of India being 49,499.997
MT under the provision of Section-11-B of the Central Excise Act,
1944 (for short ‘the Act’) explaining the loss of moisture, looking
to the nature of the goods, which were exported, i.e. Coke and
requested that the excess of moisture cannot frustrate the claim
of rebate for the total quantity of goods, which were dispatched
from the factory.
4.5. A detailed representation was also filed by the petitioner to
the respondent no.3. However the respondent no.3 sanctioned the
rebate only on the quantity of 49,499.994 MT of the goods,
instead of the actual quantity which were dispatched from the
warehouse / factory.
4.6. Being aggrieved by the order-in-original dated 30.09.2011 of
rejecting the rebate claim in respect of quantity of 1794.806 MT
of Coke, the petitioner filed an Appeal under Section-35 of the
Act to the respondent no.2 on 26.12.2011. The respondent no.2
vide order dated 02.03.2012 dismissed the Appeal, confirming the
order passed by the respondent no.3. Thereafter the petitioner
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preferred a Revision Application before the respondent no.1. The
same was also rejected by the respondent no.1 vide order dated
12.05.2016, which has compelled the petitioner to file the present
writ-petition.
SUBMISSIONS ON BEHALF OF THE PETITIONER:
5. Learned advocate Ms.Sangeeta Pahwa has submitted that the
impugned orders are required to be quashed and set aside, since
the respondents have failed to notice the nature of the goods,
which were metallurgical coke (coke), which has moisture in it
and the petitioner is entitled to the rebate on the entire quantity
of 51294.800 MT as per the provision of Rule-18 of the Rules.
5.1. She has submitted that it is not the case of the respondents
that there was diversion of any quantity of the goods which were
removed from the factory premises for the purpose of export and
the entire quantity which was received at the Port is exported.
However, the weight of the goods in question got reduced due to
loss of moisture content from the factory premises till the goods
were placed at the Port for the purpose of export.
5.2. She has submitted that the Surveyor, who was overseeing
the transport of the goods issued a Certificate on 14.09.2011
mentioning that total quantity of Coke was of 51178.110 MT,
during the period from 02.04.2011 to 13.05.2011 and the entire
quantity is loaded into vessel MVC Journey, which sailed on
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13.05.2011. This certificate is issued on 14.09.2011.
5.3. Thus, it is urged that the impugned action of the
respondents in allowing the rebate by deducting the quantity of
1794.806 MT of Coke on account of moisture loss is required to
be interfered with and set aside.
5.4. In support of her submissions, she has placed reliance on the
judgment of Bombay High Court in the case of Commissioner of
Central Excise v. Bharat Chemicals, 2015 (320) ELT 337 (Bom.)
which has confirmed the judgment of the Tribunal. Reliance is
also placed on the order of the Tribunal. While referring to the
Notification No. 19 of 2004 dated 06.09.2004, it is contended by
her that the rebate of the goods which are exported is directly
connected with the duty paid on excisable goods and not on the
actual export of goods and since the petitioner has paid the duty
on the entire quantity of goods, which were weighed and
transported at the time of warehouse, the rebate claim is
required to be processed on such quantity and not on the
quantity which has been actually exported.
5.5. Thus, it is urged that the impugned orders may be quashed
and set aside and the respondents may be directed to process and
grant rebate on the entire quantity, on which the duty is paid by
the petitioner.
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SUBMISSIONS ON BEHALF OF THE RESPONDENT:
6. Opposing the present writ-petition and the foregoing
submissions, learned Senior Standing Counsel Ms. Hardika Vyas
has urged that the impugned orders may not be interfered with.
That the respondents have precisely fixed the rebate on the
quantity of the actually exported goods which are shown in the
shipping bills. It is submitted that, there is no provision which
allows the process and grant of rebate, over and above the
quantity of goods which were exported.
6.1. While referring to Rule-4 of the Rules, 2002, she has
submitted that any person who produces or manufactures any
excisable goods or stores such goods in a warehouse, is required
to pay the duty leviable on such goods and as per Rule-18 of the
Rules, 2002, which governs the ‘rebate of duty’, more
particularly, the explanation under Rule- 18, which stipulates that
the rebate is processed and paid only on the goods which are
actually exported and since in the present case, the petitioner,
has exported goods as per the weight which was declared in the
shipping bills, the larger quantity or the weight of the goods
which was recorded at the factory premises of the petitioner
cannot be considered for processing the rebate.
6.2. In support of her submissions, she has placed reliance on the
decision of the Supreme Court in the case of Union of India v.
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Rajindra Dyeing and Printing Mills Limited, (2004) 10 SCC 187.
She has also placed reliance on the Division Bench judgment of
this Court in the case of Welspun Corporation Limited v. Union
of India & Ors., 2013 SCC Online Guj 1692. Thus, it is urged
that the Petition may not be entertained.
ANALYSIS AND OPINION:
7. The established facts from the pleadings and records are that,
petitioner is engaged in the business of export of metallurgical
coke and it exported the same on various dates. The details of
exported metallurgical coke as specified in all the four petitions
from 10.08.2011 to 14.10.2011 is as below:
SCA
OIO No. Good Cleared
Good Exported Difference Rebate
amount
Not allowed
15459/
2016
No
from Factory
1261/2011-12
dated
15.11.2011
(Page No. 45)
25120.70 MT 24999.950 MT 120.75 MT Rs.1,27,504/-
14518
/2018
1726/2011-12
dated
09.03.2012
(Page No. 55)
49719.570
MT
49340.997 MT 378.573 MT Rs.4,44,033/-
14520
/2018
180/2012-13
dated
22.05.2012
(Page No. 58)
44510.36 MT 42000.10 MT 2510.26 MT Rs.27,72,390/-
249/2012-13
dated
11.06.2012
(Page No. 63)
50890.74 MT 49300.499 MT 1590.241
MT
Rs.17,10,009/-
486/2012-13
dated
24.08.2013
(Page No. 68)
11499.860
MT
11000.000 MT 499.860 MT Rs.6,09,950/-
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487/2012-13
dated
14.08.2012
(Page No.
52015.910
MT
49500.000 MT 2515.910
MT
Rs.29,51,143/-
14521/
2018
1470/2011-12
Dated
06.01.2012
(Page No. 60)
49499.466
MT
47497.596 MT 2001.85 MT Rs.18,29,693/
-
7.1. It is not in dispute that when the goods were dispatched
from the plant/factory of the petitioner, they weighed more than
the goods which were actually exported, as per the shipping bills
details of which are mentioned herein-above. For example, the
petitioner had cleared total 25120.17 MT of coke, however, as
per the shipping bill no.5197961 dated 29.08.2011, the quantity
of exported goods was shown as 24999.950 MT. Thus, there was
a short shipment of 120.75 MT from this quantity. Thus, as per
the shipping bill no. 5197961, the petitioner exported only
24999.950 MT of coke out of 25120.70 MT which was cleared
from his factory. This data relates to only one shipping bill. The
overall loss of weight ranges from 120 MT to 2515 MT. We are
fairly informed by learned advocate Ms.Pahwa that as per her
calculation, the average weight loss for all the shipping bills will
come to 9% (approx).
7.2. Thus, it is established that the petitioner, as required by the
provision of Rule-4 of the Rules, 2002, paid the duty on the
goods which it manufactured, however, the goods which were
exported, were less in weight than the one which were loaded in
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the trucks at the factory premises.
7.3. It is the case of the petitioner that the loss in quantity /
weight was due to evaporation of moisture contents found in the
nature of the goods, after it was dispatched from the factory, and
hence the petitioner is entitled to rebate on the duty which is
paid on the quantity / weight of excisable goods loaded on
trucks at the factory premises.
7.4. At this stage we may refer to Rule-18 of the Rules.
“Rebate of duty – Rule 18. Where any goods are exported, the
Central Government may, be 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.”
7.5. A plain and simple reading and ingredients of Rule-18 of the
Rules, 2002 clarifies that the rebate of duty is intrinsically
connected with the export of goods and the amount of rebate is
to be fixed by the Notification issued by the Central Government.
The Explanation under Rule-18 of the Rules, 2002 is relevant to
fix the rebate of duty paid on the excisable goods. The
explanation clarifies the term- ‘export’ and it categorically
stipulates that for the purpose of Rule-18, ‘export’ means taking
goods out of India to a place outside India and includes shipment
of goods as provision or stores for use on board a ship
proceeding to a foreign port or supplied to a foreign going
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aircraft. Thus, the export of goods out of India to a place outside
India is a quintessential feature for deciding the rebate of duty
under Rule-18 of the Rules, 2002. Thus, a combined reading of
the constituent of Rule-18 of the Rules, 2002 along with
‘Explanation’ exposits that the goods which are exported by a
person by taking goods out of India to a place outside India
including shipment of goods, the rebate of duty paid on such
excisable goods is determined, if such goods are exported. The
expression ‘duty paid on such excisable goods’ is required to be
construed with the goods which are actually exported out of
India to a place outside India, as mentioned in the explanation.
The petitioner filled statutory FORM ARE-1 prescribed under Rule
18 of the Rules, 2002 giving details of manufacture/description,
gross/Net weight, marks and Nos. on packages, quantity of goods
and Duty paid. The undertaking in FORM ARE-1 specifically
mentions that the goods are proposed for export. It is an
admitted fact that the total quantity of goods cleared from the
factory, as reflected in the ARE-1 forms and Central Excise
Invoices, does not match the quantity exported under the
Shipping Bills. The petitioner was required to declare the
moisture content in both the invoice and the ARE-1 at the
time of clearance and duty payment. Had such a declaration
been made at the time of removal from the factory, the
Customs authorities could have verified the actual loss in
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quantity against the stated moisture content. In the absence of
any such declaration, the Customs authorities cannot be
expected to presume that a substantial shortage in the quantity
of goods was caused merely by moisture loss.
7.6. At this stage, we may refer to the decision of the Supreme
Court in the case of Rajindra Dyeing and Printing Mills (supra),
where the Supreme Court, while examining the provision of
Section 75 of the Customs Act, 1962 in relation to drawback
under the Customs and Central Excise Duties Drawback Rules,
1971, which is defined under Rule-2(a) of the Rules, is available
to the goods manufactured in India and exported and which is
also having a pari materia definition, "taking out of India to a
place outside India", the Supreme Court has held thus:
“2. The respondents contended, even so, that they had
exported the said cargo and were entitled to duty drawback
thereon under the Customs and Central Excise Duties
Drawback Rules, 1971. The claim and the appeal therefrom
having been rejected, the respondents filed a writ petition
before the High Court of Gujarat. The writ petition was
allowed and the appellants are in appeal.
3. “Drawback” is defined by Rule 2(a) of the said Rules.
Drawback is available to “goods manufactured in India and
exported”. For the purposes of the Rules, “export” is defined
to mean, “taking out of India to a place outside India …”.
4. Learned counsel for the appellants contends that, in the
instant case, there was no export as contemplated by the said
Rules inasmuch as the said cargo had not been taken out of
India to a place out of India; in fact, the vessel had sunk and
the said cargo was destroyed within the territorial waters of
India. Our attention was drawn to the judgment of this Court
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in Collector Of Customs, Calcutta v. Sun Industries . 1988
Supp SCC 342 , (1988) 35 ELT 241. This was a case where
goods had been loaded on to a vessel in India and the vessel
had sunk after it moved out of the territorial waters. This
Court said: (ELT pp. 243-44, para 6)
“When the ship got clearance and moved out of the
territorial waters the export was complete. … But the
expression ‘taking out to a place outside India’ would
also mean a place in high seas. It is beyond the
territorial waters of India. High seas would also mean a
place outside India, if it is beyond the territorial waters
of India. Therefore, if the goods were taken out to the
high seas outside territorial waters of India, they will
come within the ambit of expression ‘taking out to a
place outside India’. Indubitably the goods had been
taken out of India.”
5. The emphasis in the judgment aforementioned is on the
movement of the goods outside the territorial waters of India.
It is then that an export may be said to have taken place. In
the instant case, the said cargo was destroyed when the
vessel sunk within the territorial waters of India. There was,
therefore, no export of the said cargo. Accordingly, no duty
drawback was available in respect of the said cargo.”
7.7. The Supreme Court while referring to the judgment rendered
in the case of Collector of Customs vs. Sun Industries 1988 Supp.
SCC 342, where goods had been loaded on to a vessel in India
and the vessel had sunk after it moved out of territorial waters,
has clarified that the export would be complete, if the goods are
cleared and loaded on a vessel which leaves the territorial waters
of India and once the goods are taken out to the high seas
outside the territorial waters of India, they will come within the
ambit of the expression ‘taking out to a place outside India’, and
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it is then that an export may be said to have taken place. The
Supreme Court had refused the grant of drawback, since, in that
case, the cargo was destroyed when the vessel sank within the
territorial waters of India and thus there was no export of the
cargo and accordingly, no duty drawback was available in respect
of the said cargo. Thus, on an overall appreciation of the scheme
of the Rules governing rebate, the petitioner would be entitled to
rebate only on such quantity which finds place in the shipping
bills. The actual quantity of coke which is exported, as
mentioned in the shipping bills, is required to be considered for
the purpose of process and fixation of the amount of rebate
under Rule-18 of the Rules. The decision of Bombay High Court
in case of Bharat Chemicals (supra) does not remotely apply to
the issue raised in the instant case.
7.8. The Notification dated 06.09.2004, which is issued under
Rule-18 of the Central Excise Rules, 2002 further specifies the
procedure for the grant of rebate. The Paragraph-2 of the
Notification stipulates about conditions and limitations governing
the rebate. Condition No.2(a) is as under:
“(2) Conditions and limitation:-
(a) that the excisable goods shall be exported after payment of
duty, directly from a factory or warehouse, except as otherwise
permitted by the Central Board of Excise and Customs by a
general or special order;”.
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7.9. The Notification mandatorily mentions that the excisable
goods shall be exported after payment of duty directly from a
factory or warehouse, except as otherwise permitted by the
Central Board of Excise and Customs by general or special order.
The mandatory condition is that the goods must be exported and
the rebate has to be processed and calculated on the quantity of
the goods, which are actually exported. The petitioner was
supposed to determine and declare the loss of moisture contents
resulting into loss of weight.
7.10. Thus, in wake of the fact that since the petitioner has
failed to declare the moisture content in the goods at the
relevant point while paying the duty, and clearance from the
factory for export, we do not find any error in the decision of
the respondent authorities, which have precisely determined the
rebate on the actual quantity of goods which was exported as per
the shipping bills. Thus, rebate cannot be processed on the
quantity of the goods which was reduced on account of moisture,
as the petitioner has failed to calculate the moisture contents,
while loading the goods from his warehouse till they were
brought to the Dock to be exported, pertinently, when the loss of
weight in the goods is huge ranging from120 MT to 2515 MT.
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8. We do not find any infirmity in the orders of the
respondent authorities. Hence, all the writ-petitions fail and the
same are dismissed. Rule is discharged with no order as to cost.
(A. S. SUPEHIA, J)
(VAIBHAVI D. NANAVATI,J)
Pradhyuman/1/
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