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2022 (9) TMI 758 - HC - CustomsRefund of Terminal Excise Duties - supply of equipment and materials towards the establishment and setting up of Bakreswar Thermal Power Project, West Bengal - deemed export benefits - appointment of the Appellant as a sub-contractor by the Project Authority/WBPDCL for the supply of materials to the Project in pursuance of the Main Contract, in light of the provisions of the Foreign Trade Policy 2009-14 - HELD THAT - In order to be ordained eligible for claiming deemed export benefits, clause 8.6.2 of the FTP 2009-14 lays down the condition of inclusion of a party s name as a sub-contractor under the Main Contract only. The Appellant through the course of proceedings in multiple adjudications before concerned authorities has relied on a slew of documents to support and advance their claim of eligibility for refund of payment of TED. However, none of the documents submitted can confirm the Appellant s status as that of a sub-contractor under the Main Contract, and appointed in such capacity by the Project Authority. Secondly, clause 8.3(c) of the FTP 2009-14 in clear terms exempts the requirement of payment of terminal excise duties for supplies made under ICB contracts for projects sponsored by foreign agencies. The Main Contract was signed under the process of International Competitive Bidding, and the Project at Bakreswar Thermal Power Plant was sponsored by a notified foreign agency, being the JBIC. The finding of the Ld. Single Judge in W.P.(C) 1712/2021 that the claim of refund of Terminal Excise Duty is dependent upon the name of the Appellant being duly endorsed by the Project Authority, and that the Appellant has been unsuccessful in showing any provision under the Foreign Trade Policy 2004-09 in terms of which endorsement of certification by the main contractor was envisaged sufficient for the purpose of refund of Terminal Excise Duty and, therefore, in the absence of such certification, the benefits as contemplated in Clause 8.6.2 of the FTP 2009-14 cannot be extended to the Appellant herein does not require any interference. Application dismissed.
Issues Involved:
1. Eligibility for refund of Terminal Excise Duty (TED) under the Foreign Trade Policy (FTP) 2009-14. 2. Recognition of the Appellant as a sub-contractor under the Main Contract. 3. Interpretation and implementation of FTP provisions by the DGFT. 4. Application of Policy Circular No. 11/2015-20 dated 23.07.2018. Detailed Analysis: 1. Eligibility for refund of Terminal Excise Duty (TED) under the Foreign Trade Policy (FTP) 2009-14: The Appellant sought a refund of TED amounting to Rs. 42,50,643/- under the FTP 2009-14, claiming that the supplies made to the Bakreswar Thermal Power Project were deemed exports. The relevant provisions cited include Clause 8.2(d) of the FTP 2009-14, which considers supplies to projects financed by international agencies as deemed exports. However, the DGFT and other authorities rejected the refund claim, stating that the supplies were made under an International Competitive Bidding (ICB) contract, which exempts payment of excise duties ab-initio as per Clause 8.3(c) of the FTP 2009-14. 2. Recognition of the Appellant as a sub-contractor under the Main Contract: The Appellant contended that they were recognized as a sub-contractor by the Main Contractor (BHEL) and included in the Vendors List dated 11.02.2005. However, the authorities and the court emphasized that for deemed export benefits, the Appellant's name must be endorsed as a sub-contractor in the Main Contract or subsequent documents before the supply of goods, as per Clause 8.6.2 of the FTP 2009-14. The Appellant failed to provide such endorsement by the Project Authority (WBPDCL). 3. Interpretation and implementation of FTP provisions by the DGFT: The DGFT, empowered under Section 6(2) of the Foreign Trade (Development and Regulation) Act, 1992, interpreted the FTP provisions and rejected the Appellant's claim. The DGFT's Policy Interpretation Committee clarified that only supplies made by entities directly endorsed as sub-contractors in the Main Contract are eligible for deemed export benefits. The court upheld the DGFT's interpretation, noting that the Appellant did not meet the necessary criteria. 4. Application of Policy Circular No. 11/2015-20 dated 23.07.2018: The Appellant argued that the Policy Circular dated 23.07.2018 clarified that JBIC-funded projects are entitled to deemed export benefits. However, the authorities and the court found that this circular did not apply to the Appellant's case, as it did not alter the requirement for endorsement as a sub-contractor in the Main Contract. The court noted that the Appellant's reliance on the circular and subsequent clarifications did not satisfy the conditions laid out in the FTP 2009-14. Conclusion: The court concluded that the Appellant was not eligible for the refund of TED under the FTP 2009-14. The Appellant failed to provide necessary endorsement as a sub-contractor in the Main Contract, and the supplies were made under an ICB contract exempting TED ab-initio. The DGFT's interpretation and the findings of the Ld. Single Judge were upheld, and the appeal was dismissed.
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