2025 (3) TMI 326 - AT - Central Excise

Refund of duty paid on inputs used for export goods when foreign exchange proceeds have not been realized - amount was paid under protest or not - rejection on the ground of failure to fulfill condition of Exim policy with regard to net foreign exchange earnings - HELD THAT - It is found that in the impugned order the appellate authority has found that the case laws cited by the appellant pertain to demand of duties on the issues like removal/diversion of goods/waste into DTA improper removal from bonded warehouse entitlement to deemed export and remission of duty and that the case of the appellant is with regard to consumption of inputs where export proceeds have not being realized and therefore the decisions cited by the appellant were not found relevant to the issue and therefore were not considered. The appellant in the appeal and during the hearing also has relied on the same case laws. We find that it is an undisputed fact that the appellant has not realized foreign exchange for the exports made during the year 2006-07 to the extent of Rs. Rs. 47, 68, 477/-and they have also written off of Rs. 6, 08, 729/-as bad debts. The conditions prescribed in the Notification Nos. 23/2003-CE and 52/2003-Cus and B-17 bond executed by the appellant read with the Exim policy allows the Customs/Excise department to demand duty foregone on the inputs used in the export of goods where the foreign exchange is not realized. Conclusion - The appellant s failure to realize foreign exchange for certain exports led to the duty foregone on inputs being recoverable under the relevant notifications and policy framework. Appeal dismissed.

Summary

The issues presented and considered in the legal judgment are as follows:1. Whether the appellant is entitled to a refund of duty paid on inputs used for export goods when foreign exchange proceeds have not been realized.2. Interpretation of Notification Nos. 23/2003-CE and 52/2003-Cus in relation to duty foregone on inputs.3. Application of the Foreign Trade Policy (FTP) in determining duty obligations for EOUs.4. Relevance of case law cited by the appellant in the context of duty foregone on inputs.The detailed analysis of the issues is as follows:The Court considered the appellant's claim for a refund of duty paid on inputs used for export goods when foreign exchange proceeds were not realized. The adjudicating authority rejected the refund claim based on various grounds, including non-realization of foreign exchange, discrepancies in shipping bills, and failure to submit bank realization certificates. The Commissioner (Appeals) upheld the rejection, emphasizing the EOU's obligation to achieve net foreign exchange earnings and pay duty foregone in case of failure.The appellant argued that Notification Nos. 23/2003-CE and 52/2003-Cus do not explicitly require realization of foreign exchange for each export shipment and that duty reversal is not necessary if goods are physically exported. The Court noted that the appellant had not realized foreign exchange for certain exports and had written off bad debts, attributing the non-realization to quality issues raised by overseas buyers. The Court found that the conditions in the notifications and the B-17 bond allowed the Customs/Excise department to demand duty foregone on inputs when foreign exchange was not realized.Regarding the relevance of case law cited by the appellant, the Court determined that the cited cases pertained to different issues such as diversion of goods and remission of duty, not directly applicable to the consumption of inputs without foreign exchange realization. The Court concluded that the decisions cited by the appellant were not relevant to the current case.The significant holdings of the judgment include the Court's determination that the appellant was not entitled to a refund of duty paid on inputs due to non-realization of foreign exchange proceeds. The Court upheld the decisions of the adjudicating authority and the Commissioner (Appeals), dismissing the appellant's appeal.In conclusion, the Court found that the appellant's failure to realize foreign exchange for certain exports led to the duty foregone on inputs being recoverable under the relevant notifications and policy framework. The appeal was therefore dismissed, affirming the decisions of the lower authorities.End of analysis.