2018 (9) TMI 398 - HC - Customs

Refund of the Terminal excise duty - duty paid for goods supplied to Export Oriented Units - Deemed export or not - rejection on the ground that refund of TED cannot be granted where ab initio exemption is available from payment of excise duty - Held that - It is not in dispute that the petitioner supplied goods to the EOU at the relevant time, its entitlement would be as defined in terms of the then existing policy i.e. refund in terms of Para 8.2 to 8.5 of the policy. Any subsequent amendment made to the existing policy liberalizing the Scheme and exempting payment of TED cannot be a reason to deny the refund of payment already made by the petitioner. Delhi High Court in Kandoi Metal Powders Mfg. Co. Pvt. Ltd s case 2014 (2) TMI 773 - DELHI HIGH COURT , has held that once the supply of goods fall within the category of deemed export, the unit would be entitled to refund of TED. Refund allowed - petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to communication seeking declaration of eligibility for refund of Terminal Excise Duty (TED) paid for goods supplied to Export Oriented Units (EOU) under Foreign Trade Policy 2009-14.

Analysis:
1. The petitioner, a Private Limited Company, supplied computer systems to EOU during June 2009 to October 2009, paying TED. The petitioner filed a refund application, rejected by the authorities citing ineligibility due to ab initio exemption from excise duty.

2. The petitioner argued that amendments restricting refund eligibility were made after the relevant period. Citing relevant case laws, the petitioner contended that the circular clarifying the policy was ultra vires and could not be applied retrospectively.

3. Respondents argued that the circular clarified that no refund should be provided for supplies ab initio exempted from excise duty. Referring to the Bombay High Court judgment, they claimed the amendment was clarificatory and retroactive.

4. The High Court analyzed the benefits and eligibility criteria under the FTP 2009-14 for deemed exports. It held that subsequent amendments exempting TED payment could not deny refunds already made. Citing judgments from Calcutta, Delhi, and Madras High Courts, the Court emphasized entitlement to TED refund for deemed exports.

5. The Court noted that the Bombay High Court's view on the circular's clarificatory nature differed from the Delhi High Court's interpretation. It emphasized that amendments to the FTP indicated a prospective liberalization of policy.

6. Consequently, the Court allowed the petition, quashing the communication from the Deputy Director of Foreign Trade. It directed the authorities to process the refund claim in accordance with the 2009 Policy within two months, emphasizing the prospective nature of policy amendments.

7. The judgment highlighted the importance of adhering to the policy in force during the relevant period and ensuring the rightful refund entitlements for deemed exports, despite subsequent policy amendments.

Conclusion:
The High Court's decision emphasized the need to interpret policy provisions in line with the period of relevant transactions, ensuring fairness and adherence to established legal principles governing refund entitlements for deemed exports under the Foreign Trade Policy.