2014 (12) TMI 1054 - HC - Customs

Refund claim of Terminal Excise Duty (TED) - Supply of manufactured goods to 100% EOU - Deemed export - Denial in terms of the provisions of the Foreign Trade Policy 2009-14 framed under the Foreign Trade (Development and Regulation) Act, 1992 - Held that - petitioner did not make any supplies against the ICB. Therefore, it would be covered by latter part of para 8.3(c), i.e. cases where refund of TED will be given. This intention is given effect by the second entry in column (a) of para 8.4 read with corresponding benefits spelt-out in column (c) which states that entitlement in terms of para 8.3 to refund is permissible. The eligibility for refund, therefore, would be in terms of these provisions and the unit has to apply for such refund - authorities in this case appear to have proceeded to make an order adverse to the petitioner and proceeded to hold that the petitioner was disentitled to the benefit of refund in view of some clarification given by the Policy Interpretation Committee, in its meeting of 04.12.2012 to the effect that refund of CENVAT credit provisions are available under Excise rules and CENVAT rules which should be availed of rather than claiming refund . This reasoning appears to have prevailed with the Policy Relaxation Committee as well in this case. Court also is unable to see the reason why the respondents were of the view that refund claim or benefit under the CENVAT regime under the Central Excise Act or the other statutory schemes framed under it is available. In this Court s opinion, that regime operates in its own terms and is independent of the rights and liabilities of the petitioner and the respondents under the import-export policies framed under the 1992 Act - The respondents are hereby directed to process and pass appropriate orders in accordance with the 2009 policy in respect of the petitioner s refund claims made through its applications dated 29.08.2012 and 16.11.2012 within three months - Following decision of Kandoi Metal Powders Mfg. Co. Pvt. Ltd. Versus Union of India And Others 2014 (2) TMI 773 - DELHI HIGH COURT - Decided in favour of assessee.

Summary

Issues:
Interpretation of policy guidelines regarding terminal excise duty on supplies made to 100% Export Oriented Units (EOUs) under the Foreign Trade Policy.

Analysis:
The petitioner sought a writ of certiorarified mandamus to challenge the decision taken by the Policy Interpretation Committee regarding the interpretation of terminal excise duty paid by a Domestic Tariff Area (DTA) unit on supplies to EOUs under the Foreign Trade Policy. The Committee opined that no policy interpretation was required as supplies to EOUs are exempted from terminal excise duty. The petitioner, a manufacturer of Printed Coffee Cans, claimed a refund of terminal excise duty paid during supplies to EOUs, citing provisions from the Foreign Trade Policy. The petitioner argued that supplies to EOUs should be considered as Deemed Exports, entitling them to benefits including terminal excise duty refund. The Committee rejected the refund claim, stating that supplies to EOUs are exempted from duty under CT3 procedures. The petitioner contended that EOUs did not provide CT3 certificates, rendering them ineligible for exemption. The petitioner referred to a Delhi High Court judgment in a similar case, where the court ruled in favor of the manufacturer, emphasizing the entitlement to refund under the Foreign Trade Policy.

The respondents, relying on the policy guidelines, opposed the petitioner's interpretation, stating that the Director General of Foreign Trade's decision is final and binding. They argued that the petitioner's failure to obtain CT3 forms from EOUs was their own lapse, making them liable for any loss. The respondents maintained that the Foreign Trade Policy clearly exempts supplies to EOUs from terminal excise duty and does not mention refund provisions. The first respondent's counsel supported the stand taken by the other respondents.

The Court, after considering the arguments and the Delhi High Court judgment, found that the issue raised in the writ petition was covered by the Delhi High Court decision. The Court quashed the impugned orders and directed the respondents to process the petitioner's refund claims in accordance with the 2009 Policy within three months. The Court emphasized the entitlement to refund under the existing policy for supplies considered as deemed exports, rejecting the respondents' reliance on CENVAT rules for denying the refund. The Court's decision aligned with the interpretation of the Calcutta High Court, affirming the entitlement to refund of terminal excise duty for deemed exports.

In conclusion, the Court allowed the writ petition, quashed the impugned order, and directed the third respondent to process the refund claim in line with the 2009 Policy within three months, following the Delhi High Court's decision. No costs were awarded in the matter.