2014 (10) TMI 446 - HC - Central Excise

Refund of Terminal Excise duty Non speaking order - Petitioner, a 100% EOU receiving goods from units in DTA duty paid by DTA not claimed as CENVAT credit but the petitioner seeking refund of the TED paid by the DTA claim rejected by DGFT authorities by a letter citing Circular No.16(RE-2012/2009-14) dated 15.3.2013 issued by the Director of Foreign Trade clarifying that no refund of TED should be provided by RAs of DGFT / Office of Development Commissioners, because such supplies are ab initio exempted from payment of excise duty Held that - Communication of the nature relied upon cannot be termed as an order dealing with and disposing of a refund application - Minimal request of the petitioner for a personal hearing and a speaking order dealing with all the contentions and objections could have been fulfilled had the respondents complied with the same - once the petitioner is given an opportunity of personal hearing and raising all contentions, then, a speaking order assigning reasons can be passed by the respondents dealing with them - It could not be that a cryptic communication satisfies the requirement of a proper and speaking order being passed - fresh order to be passed expeditiously as possible within a period of 8 weeks - Petition disposed of.

Summary

Issues:
Claim of refund by petitioner under Policy Circular No.16(RE-2012/2009-14) dated 15.3.2013 - Ultra vires declaration sought - Writ of Certiorari under Article 226 - Refund of terminal excise duty - Deemed exports eligibility - Proper disposal of refund application - Compliance with principles of natural justice - Personal hearing and speaking order requirement - Reliance on policy circular for rejection of refund application.

Analysis:
The petitioner, a 100% Export Oriented Unit (EOU) engaged in manufacturing goods under Chapter 30 of the Central Excise Tariff Act, claimed refund of terminal excise duty paid by its DTA unit for goods supplied to its export oriented unit. The petitioner invoked the concept of deemed exports under the Foreign Trade Policy, emphasizing the eligibility for refund under specific conditions. The petitioner clarified non-availment of Cenvat credit and reliance on a certificate of disclaimer from the DTA unit. However, the refund application for a substantial amount was rejected through cryptic communications, citing Policy Circular No.16(RE-2012/2009-14) dated 15.3.2013, which the petitioner argued was inapplicable post-application.

The Court noted the lack of a proper speaking order and compliance with natural justice principles in rejecting the refund application based on the policy circular. The petitioner's plea for a personal hearing and a detailed order addressing all contentions was upheld. The Court emphasized the necessity of a comprehensive, reasoned order rather than relying on brief communications to dispose of refund claims. The respondents agreed to provide a personal hearing and issue a speaking order, ensuring all arguments, including challenges to the policy circular's relevance, are considered and addressed in the fresh decision.

In conclusion, the Court directed the authorities to pass a new order promptly, within eight weeks, considering all submissions and refraining from solely relying on previous communications or the contents of annexures D-1 and D-2. The judgment highlighted the importance of procedural fairness, thorough consideration of arguments, and the need for detailed, reasoned orders in handling refund applications under the specified policy circular.