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2018 (7) TMI 868 - HC - CustomsRefund of Terminal Excise Duty (TED) - Whether the petitioner who has manufactured and supplied goods (after payment of excise duty via the CENVAT credit route) to a 100% Export Oriented Unit (EOU) is entitled to claim refund of Terminal Excise Duty (TED)? Held that - Apart from anything else what emerges from the record is that the PRC s decision is neither consistent nor even handed. Though the petitioner obtained refund of TED for the quarter April, 2011 to June, 2011 and July, 2011 to September, 2011 despite PRC s earlier decision of 04.12.2012, the third application for the quarter October, 2011 to December, 2011 was rejected despite the facts and circumstances of the case being pari materia with other two quarters. The goods which qualify as deemed exports are exempt from TED where supplies are made against ICB. However, where supplies are not made against ICBs refund of TED is to be given. This fact is reiterated in para 8.4 which speaks about various benefits available to supplier under paras 8.3(a), (b) & (c) to suppliers. Paragraph 8.5 of the FTP 2009-2014 also alludes to the fact that the supply of goods would be eligible for refund of TED in terms of paragraph 8.3(c) of the FTP provided the recipient of the goods does not avail of CENVAT credit or rebate on such goods. The petitioner s entitlement to refund of TED will be governed by the relevant provisions of the FTP as obtaining in the relevant period for which the claim was made. The fact that the petitioner could or could not get refund under the CENVAT Credit Rules or under the provisions of the Central Excise Act is not relevant for adjudicating upon the issue at hand. The Court, for adjudicating the issue at hand required to look at only the relevant provisions of the FTP. The argument that since excise duty was not paid via cash but was paid by utilizing the CENVAT credit route and hence, the petitioner would not be entitled to claim refund is unsustainable as there is no bar in law in paying duty by utilizing CENVAT credit. The impugned communication dated 21.04.2016, issued by respondent no.3, whereby the petitioner s claim for refund was declined is set aside - petition allowed - decided in favor of petitioner.
Issues Involved:
1. Entitlement to refund of Terminal Excise Duty (TED) for goods supplied to a 100% Export Oriented Unit (EOU). 2. Consistency in granting TED refunds for different periods. 3. Impact of amendments and circulars on TED refund claims. 4. Applicability of CENVAT credit route for TED refund. 5. Legal provisions governing deemed exports and TED refunds. Detailed Analysis: 1. Entitlement to Refund of TED: The primary issue was whether the petitioner, who supplied goods to a 100% EOU and paid excise duty via the CENVAT credit route, was entitled to a refund of TED. The court examined the relevant provisions of the Foreign Trade Policy (FTP) 2009-2014, specifically paragraphs 6.11(a), 8.2(b), 8.3(c), and 8.4, which treated supplies from Domestic Tariff Area (DTA) to EOU as deemed exports eligible for TED refund. The court noted that the petitioner had previously received TED refunds for two quarters in 2011, which established a precedent for consistency in granting refunds. 2. Consistency in Granting TED Refunds: The petitioner had received TED refunds for the quarters April-June 2011 and July-September 2011 but was denied a refund for October-December 2011. The court highlighted the inconsistency in the Policy Relaxation Committee's (PRC) decisions, as the facts and circumstances for all three quarters were identical. The court emphasized that the PRC's decision should be even-handed and consistent, and the petitioner’s entitlement to TED refund should not be arbitrarily denied. 3. Impact of Amendments and Circulars on TED Refund Claims: The respondents argued that the policy Circular No.16 dated 15.03.2013 and the amendment via notification No.4 dated 18.04.2013 impacted the petitioner’s entitlement to TED refund. However, the court clarified that these amendments and circulars could not retroactively affect the petitioner’s claims for the period October-December 2011, as the relevant FTP provisions at that time allowed for TED refunds. The court stated that the petitioner’s entitlement should be governed by the FTP provisions in effect during the period for which the claim was made. 4. Applicability of CENVAT Credit Route for TED Refund: The respondents contended that since the petitioner paid excise duty using the CENVAT credit route, they were not entitled to a TED refund. The court rejected this argument, citing the Supreme Court judgment in Jayaswal Neco Ltd., which established that there is no legal bar on paying duty through the CENVAT credit route and subsequently claiming a refund. The court emphasized that denying the refund would result in the export of taxes, contrary to the intent of the FTP and detrimental to exporters and the Indian economy. 5. Legal Provisions Governing Deemed Exports and TED Refunds: The court examined the relevant FTP provisions, including paragraph 8.3(c) (both pre and post-amendment), which provided for TED refunds where supplies were not made against International Competitive Bidding (ICB). The court noted that the petitioner’s supplies were not against ICB, and thus, under the unamended FTP provisions, the petitioner was entitled to a TED refund. The court also referred to the Delhi High Court judgment in Kandoi Metal Powders Mfg. Co. Pvt. Ltd. v. Union of India, which supported the petitioner’s entitlement to TED refund under similar circumstances. Conclusion: The court concluded that the petitioner was entitled to a refund of TED for the period October-December 2011, as the relevant FTP provisions at that time allowed for such refunds. The court set aside the impugned communication dated 21.04.2016, which denied the refund, and directed the respondents to refund TED to the petitioner to the tune of ?83,64,802.86 within two weeks of receiving the judgment. The court emphasized the need for consistency and adherence to the legal provisions governing deemed exports and TED refunds.
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