2014 (2) TMI 1267 - HC - Customs

Recovery of terminal excise duty earlier disbursed - civil works contract - deemed export benefits - treat supplies to such projects are equivalent to exports, with the same benefits - power of DGFT to review an order under Section 16 of the Act - the decision of the case Alstom India Ltd Through Authorized Signatory Versus Union of India & Another 2014 (2) TMI 1013 - GUJARAT HIGH COURT is referred to. Held that - There can be no review of an earlier refund except in accordance with the provision of Section 16 of the FTDR Act, which only permits the DGFT or the Central Government (in case the original order was by the DGFT) to exercise the power of review. The declaration in paragraph 7 of ANF-8, that Simplex will return any excess duty refunded, cannot eclipse the narrow statutory power to review provided under the Act. - the impugned order and subsequent recovery proceedings exceeds the authority granted by law under the FTDR Act. Recovery cannot be made. Petition allowed - decided in favor of petitioner.

Summary

Issues:
Impugning legality of orders demanding recovery of terminal excise duty refunded to petitioner.

Analysis:
1. Refund of Terminal Excise Duty (TED):
- Simplex Infrastructure procured construction goods from local manufacturers, who paid excise duty passed on to Simplex. Simplex claimed refund under the Foreign Trade Policy, which grants benefits for deemed exports.
- Refund was granted, but later sought to be recovered by the authorities, leading to the present petition.

2. Constitution of Policy Interpretation Committee (PIC):
- PIC meetings clarified eligibility for deemed export benefits, leading to recovery orders against Simplex.
- Simplex challenged the authority of PIC, arguing that the PIC's actions were void due to an amendment post-refund.

3. Validity of Policy Interpretation and Review Powers:
- Simplex challenged the vires of policy interpretation powers vested in PIC and the subsequent review by authorities.
- Citing a Gujarat High Court decision, it was argued that no power exists to re-determine or re-verify deemed export benefits post-approval, except under Section 16 of the FTDR Act.

4. Court's Decision:
- The Court concurred with the Gujarat High Court's ruling, emphasizing that review of refunds is permissible only under Section 16 of the FTDR Act.
- The impugned order demanding recovery of TED exceeded legal authority, and the Court quashed the order, ruling in favor of Simplex.

5. Conclusion:
- The writ petition succeeded, and the impugned recovery order was quashed, with no costs imposed on Simplex. The judgment reaffirmed the statutory framework governing refund reviews under the FTDR Act, limiting the authorities' power to re-determine benefits already approved.