2019 (5) TMI 86 - HC - Customs

Refund of Terminal Excise Duty - International Competitive Bidding - para 8.3(c) of Foreign Trade Policy - principles of natural justice - HELD THAT - There is a specific clause in the purchase order and eventhough it is pointed out that the appellant is eligible for exemption from payment of Terminal Excise Duty, the claim application was deficient, and the same was not considered on the ground that there is no provision under para 9.2(c) of Foreign Trade Policy to allow such claim. It is the duty of the customers to obtain exemption from Terminal Excise Duty at the time of making supply itself and the claim made subsequently for refund of Terminal Excise Duty being the benefits provided in para-8.3(c), which stipulates that exemption from Terminal Excise Duty, where supplies are made against International Competitive Bidding and in other cases, refund of Terminal Excise Duty will be given could not be considered. This Court is of the view that when the same issue has been allowed in favour of the assessee and against the respondent, this petitioner is also entitled for similar relief seeking for refund of the Terminal Excise Duty and respondent is directed to process the refund claim petition made, in accordance with 2009 policy. Petition allowed.

Summary

Issues Involved:
1. Eligibility for refund of Terminal Excise Duty (TED) under International Competitive Bidding (ICB) as per Foreign Trade Policy (FTP).
2. Compliance with principles of natural justice in the rejection of the refund application.
3. Applicability of previous judicial decisions on similar matters.

Issue-wise Detailed Analysis:

1. Eligibility for Refund of Terminal Excise Duty (TED) under International Competitive Bidding (ICB) as per Foreign Trade Policy (FTP):

The petitioner company, involved in providing fire protection solutions, procured pipes from M/s. Jindal Pipes Ltd. and paid excise duty. They sought a refund of TED under para 8.3(c) of the FTP, which allows for an upfront exemption of TED where supplies are made against ICB. The petitioner argued that since their supplies were made under ICB, they were exempt from TED and any payment made inadvertently should be refunded. However, the second respondent rejected the refund application, stating that supplies under ICB are exempt from TED, and thus, a refund is not applicable. The first respondent upheld this decision, noting that the petitioner did not fall under the 'other cases' category eligible for a refund as per para 8.3(c).

2. Compliance with Principles of Natural Justice in the Rejection of the Refund Application:

The petitioner contended that the rejection of their application violated principles of natural justice, as the first respondent did not communicate deficiencies in the application or provide an opportunity to rectify them. The respondents countered that the petitioner should have sought a revision under Sections 15 and 16 of the Foreign Trade (Development & Regulation) Act, 1992, if aggrieved by the decision.

3. Applicability of Previous Judicial Decisions on Similar Matters:

The petitioner cited the case of "Lenovo (India) Pvt. Ltd. vs. Union of India," where the Madras High Court ordered a refund for payments made inadvertently, despite a policy circular stating otherwise. The court in that case relied on the Calcutta High Court's decision in "JDGFT vs. IFGL Refractories Limited," which held that once supplies are deemed exports, the unit is entitled to a TED refund. The respondents, however, referred to the Bombay High Court's decision in "Sandoz Private Limited vs. Union of India," which upheld the denial of a refund when supplies were exempt from TED under the policy.

Judgment Analysis:

The court reviewed the records and found that the petitioner had filed an application for a TED refund, which was rejected based on para 8.3(c) of the FTP. The court noted that previous judgments, including those from the Madras and Calcutta High Courts, supported the petitioner's claim for a refund of TED paid inadvertently. The court also acknowledged that an SLP was pending before the Supreme Court against the Bombay High Court's decision cited by the respondents.

Conclusion:

The court concluded that the petitioner was entitled to a refund of TED, as similar issues had been resolved in favor of the assessee in previous judgments. The court directed the respondents to process the refund claim in accordance with the 2009 policy and pass appropriate orders within three weeks from the date of receipt of the order. The writ petition was allowed with no costs.