2023 (2) TMI 825 - SC - Central Excise

100% EOU - power of review own order - Power of Development Commissioner - grant of DTA sale permission - grant on the basis of clubbed value of physical exports and deemed exports - availment of concessional rate of excise duty under Section 3(1) of the Central Excise Act, 1944 as prescribed under Notification Nos. 8/97-C.E. and 2/95-C.E. - HELD THAT - The term FOB value of exports has also been used in the application format whereby deemed exports had been considered at par with physical exports. As a consequence, the respondent submitted deemed export data at the time of applying for DTA sale. Although the appellants have contended that this requirement was only for the purpose of calculation of NFEP achievement, it appears that there was no explicit distinction between deemed exports and physical exports during the application process. In view of the above position of law emanating from Para 9.9(b) of the EXIM Policy as stood at the relevant time and the decision of this Court in Virlon Textile 2007 (4) TMI 6 - SUPREME COURT , the very basis of the show cause notice issued in this matter to the respondent seeking to question the permission granted after about 10 years when it had already been operated and executed, cannot be countenanced. For this reason alone, this appeal is required to be dismissed. Power to Review - HELD THAT - The High Court has, of course, essentially set aside the order impugned as passed by the Development Commissioner for want of power of review while relying on its own decision in the case of Hanil Era 2011 (2) TMI 1467 - BOMBAY HIGH COURT , wherein it was held that without the statute having conferred any such power, the order earlier passed could not have been reviewed. However, it is noticed that the said decision of the High Court was examined by this Court in the judgment 2013 (10) TMI 1467 - SUPREME COURT , wherein, while leaving aside the question of power of review, this Court permitted the Ministry of Commerce and Industry to issue appropriate show cause notice. In the present case, when the orders impugned are not being sustained on merits, we would leave this question open to be examined in an appropriate case. Appeal dismissed.

Summary

Issues Involved:
1. Entitlement of the respondent to Domestic Tariff Area (DTA) sale on deemed exports.
2. Validity of the Development Commissioner's review of his own order.
3. Applicability of the Ministry of Commerce's letter dated 4-4-2000 retrospectively.
4. Laches due to the delay in reviewing the DTA permission.

Detailed Analysis:

1. Entitlement of the respondent to DTA sale on deemed exports:
The core issue was whether the respondent was entitled to DTA sales on deemed exports under Para 9.9(b) of the EXIM Policy 1997-2002. Initially, the respondent was granted DTA sale permission based on both physical and deemed exports. However, a later clarification by the Ministry of Commerce stated that only physical exports should be considered for DTA entitlement. The Supreme Court noted that at the time of the respondent's application, there was no clear distinction between physical and deemed exports in the EXIM Policy. The term "FOB value of exports" was used, which included both types of exports. The Court referenced its decision in Virlon Textile Mills Ltd. v. Commissioner of Central Excise, which equated deemed exports with physical exports for certain benefits. Consequently, the show cause notice questioning the permission granted after ten years was deemed unsustainable.

2. Validity of the Development Commissioner's review of his own order:
The High Court had set aside the Development Commissioner's orders, stating that he could not review his own order after it had been fully implemented, as he lacked the statutory power to do so. The Supreme Court, however, chose not to delve into this issue, focusing instead on the merits of the case. The Court acknowledged the High Court's reliance on its decision in Hanil Era Textiles Ltd. & Anr. v. Union of India & Ors., which held that the Development Commissioner lacked the power to review his own orders without statutory authority.

3. Applicability of the Ministry of Commerce's letter dated 4-4-2000 retrospectively:
The Ministry's letter, which clarified that only physical exports should be considered for DTA entitlement, was issued after the respondent had already been granted DTA sale permission. The respondent argued that this clarification could not be applied retrospectively. The Supreme Court agreed, noting that the policy at the time of the respondent's application did not distinguish between physical and deemed exports. Therefore, the retrospective application of the Ministry's letter was not justified.

4. Laches due to the delay in reviewing the DTA permission:
The respondent contended that the review of the DTA permission after ten years was unsustainable due to laches. The Supreme Court found merit in this argument, emphasizing that the respondent had arranged its business based on the permission granted in 1999. The delay in questioning the permission was deemed unreasonable and in violation of the principles of natural justice.

Conclusion:
The Supreme Court dismissed the appeal, holding that the respondent was entitled to DTA sales on deemed exports based on the EXIM Policy as it stood at the relevant time. The orders of the Development Commissioner and the Appellate Authority were set aside on merits, without addressing the broader question of the Development Commissioner's power to review his own orders. The Court left this question open for future consideration in an appropriate case.