2014 (11) TMI 382 - HC - Customs

100% EOU - TED refund - challenge to the policy circular - Supply of goods by DTA unit of the petitioner to EOU unit of the petitioner - benefit of Deemed Export - refund of terminal excise duty (TED) - petitioner clarified that they did not claim or avail Cenvat credit in respect of the duty paid by the DTA unit. Meaning thereby, they did not invoke the provisions of Cenvat Credit Rules, 2004. The petitioner s DTA unit did not claim the TED refund and a certificate of disclaimer was relied upon. - Held that - 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. Therefore, it would be open for the petitioner to raise all contentions, including that the policy circular, a copy of which is annexed to the writ petition as annexure-B, should not be relied upon to deny the refund. - respondents shall deal with the same while passing a speaking order on the Refund Application. - Petition disposed of.

Summary

Issues:
Claim of refund by petitioner under Policy Circular No.16 (RE-2012/2009-14) dated 15.3.2013 issued by Director of Foreign Trade - Rejection of refund applications by authorities based on cryptic communications - Violation of principles of natural justice in disposal of refund application - Request for personal hearing and speaking order - Reliance on policy circular for rejection of refund application - Need for competent authority to consider rival contentions.

Analysis:
The petitioner, a 100% Export Oriented Unit (EOU), sought relief declaring Policy Circular No.16 (RE-2012/2009-14) as ultra vires and sought writs of Certiorari and mandamus for refund claims. The petitioner's export activities involved supplies from a DTA unit without claiming Cenvat credit, relying on deemed exports benefits under the Foreign Trade Policy. Despite regular refund grants, two applications were rejected through cryptic communications, citing the policy circular dated 15th March, 2013.

The court noted the absence of proper speaking orders in the refund application disposal, violating principles of natural justice. Emphasizing the need for a personal hearing and a detailed order, the court directed the authorities to provide the petitioner with a fair opportunity to present contentions. The court highlighted that reliance solely on the policy circular for rejection was insufficient, urging the competent authority to address all raised contentions in a comprehensive speaking order.

Acknowledging the parties' agreement to a personal hearing and a detailed order issuance, the court clarified that a fresh order must not solely rely on previous cryptic communications. It mandated the authorities to pass a new order promptly within 8 weeks, ensuring a thorough consideration of all contentions, including the validity of the policy circular in denying the refund. The judgment concluded by disposing of the writ petition without costs, emphasizing the importance of due process and reasoned decision-making in refund application adjudication.