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2023 (2) TMI 68 - HC - Central Excise100% EOU - Denial of refund of Terminal Excise Duty (TED) paid on the inputs purchased by the Petitioner and used in the manufacture of the final products exported by the Petitioner - deemed exports - paragraph No.6.11 (c)(ii) of the FTP - HELD THAT - The Hon ble Supreme Court in the case of Sandoz Private Limited 2022 (1) TMI 225 - SUPREME COURT has considered Chapter 8 of the FTP, including paragraph 8, as well as the policy circular dated 15 March 2013 and has held that EOU entities who had procured and imported specified goods from DTA supplier are entitled to do so without payment of duty having been ab-initio exempted from such liability under paragraph No.6.11 (c)(ii) of the FTP being deemed exports. Since the Supreme Court has held that EOU is additionally eligible to avail of the entitlement of the DTA even though no duty was paid by them being ab initio exempt from payment of such duty subject to a suitable disclaimer from the DTA supplier and subject to compliance of other necessary formalities, in view of the change in law, the matter can be remanded to the concerned Commissioner for consideration. The communications dated 12 September 2014 annexed at Exhibit F (collectively) are quashed and set aside, and the refund claims submitted by the Petitioner on 10 December 2012 stands restored to file of Respondent No.2 to be forwarded to Respondents No. 3 and 4, as the case may be - petition disposed off.
Issues:
1. Denial of refund of Terminal Excise Duty (TED) paid on inputs used in manufacturing final products exported by the Petitioner. 2. Interpretation of Foreign Trade Policy 2009-2014 regarding refund of TED for deemed exports. 3. Impact of the circular dated 15 March 2013 by the Directorate General of Foreign Trade on TED refund eligibility. 4. Refund claim rejection by the Assistant Development Commissioner based on the circular. 5. Effect of the Hon'ble Supreme Court judgment in Sandoz Private Limited Vs. Union of India on the entitlement of Export Oriented Units (EOUs) for TED refund. Analysis: 1. The Petitioner, a registered Export Oriented Unit (EOU), sought a refund of Terminal Excise Duty (TED) paid on inputs used in manufacturing final products exported. The dispute arose due to the denial of this refund by the authorities. 2. The case revolved around the interpretation of the Foreign Trade Policy 2009-2014, specifically paragraphs 8.2(d), 8.3, and 8.5, which outlined the eligibility criteria for TED refund for deemed exports. The policy aimed to encourage DTA suppliers by providing TED refunds to EOUs, subject to compliance with formalities. 3. The circular dated 15 March 2013 issued by the Directorate General of Foreign Trade clarified that TED refunds should not be granted for supplies ab initio exempted from excise duty. This circular impacted the eligibility criteria for TED refunds as per the Foreign Trade Policy. 4. The Assistant Development Commissioner rejected the Petitioner's refund claim based on the circular, leading to a series of communications and delays in processing the refund claim. 5. The judgment referred to the Hon'ble Supreme Court's decision in Sandoz Private Limited Vs. Union of India, which highlighted the entitlement of EOUs for TED refund for deemed exports. The Court emphasized the importance of compliance with FTP provisions and the need for suitable disclaimers from DTA suppliers for TED refunds. 6. In light of the Supreme Court judgment, the High Court quashed the earlier communications rejecting the refund claim and restored the claim for reconsideration by the authorities. The Petitioner was allowed to submit additional representations based on the changed legal position established by the Supreme Court ruling. 7. The judgment concluded by directing the concerned authorities to reevaluate the Petitioner's refund claim in accordance with the updated legal interpretation provided by the Supreme Court judgment, thereby providing an opportunity for the Petitioner to seek TED refund based on the revised understanding of the law.
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