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TMI Blog2016 (8) TMI 710X X X X Extracts X X X X X X X X Extracts X X X X ..... % Export Oriented Unit ("EOU" for short) engaged, inter alia, in the manufacture of goods falling under Chapter 30 of the Schedule to the Central Tariff Act, 1985, and for that purpose they have a factory, inter alia, at the address mentioned in the cause title. They also have another factory in District Raigad, particularly in the Maharashtra Industrial Development Corporation ("MIDC" for short) area at Mahad. Respondent No.1 is the Union of India and respondent Nos.2 to 4 are officers exercising powers under the Foreign Trade (Development and Regulation) Act, 1992 ("FTDR" for short). 5 The brief facts leading to the petition are that the petitioner No.1 has been receiving supplies of what is called intermediate products from its sister concern in the Domestic Tariff Area Unit ('DTA" for short). It is claimed that the said unit has been supplying these goods, on payment of cenvat duty under claim for rebate, to the petitioners EOU unit. The petitioners case is that these goods are used in the manufacture of goods cleared for export. The fact that the petitioners final products of the EOU unit have been exported is not disputed. 6 Relying upon the Foreign Trade Policy ("FTA" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar but on 23rd September, 2014, this Court disposed of the writ petition directing the respondent No.3 to pass a fresh order in accordance with law. Annexure-G is a copy of this order. Then, the time to dispose of refund applications was extended by this Court and subsequently, written submissions were filed. The refund claims were rejected on 6th January, 2015, and a copy of this order is Annexure-I. 9 It is aggrieved and dissatisfied with this order that the present writ petition has been filed. 10 The impugned order proceeds on the footing that the petitioners refund applications cannot be entertained and the reasons for the same are to be found from paragraph 9 at page 66 of the paper-book. It is held that the policy circular issued by DGFT is a mere clarification which is effective from the date of issuance of the FTP and not from the date of issuance of the circular. The DGFT by the policy circular dated 15th March, 2013, has not amended but only clarified the provisions of para 6.2(b) and 6.11(c)(ii) of the FTP stating that no refund of TED should be provided by the Regional authorities of the DGFT / office of the Development Commissioners because such supplies are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to refund of the duty paid by the suppliers in terms of para 8.3 subject to the condition that no Cenvat credit is taken by the EOU. The petitioners have not taken credit of duty paid on the goods cleared by the DTA unit on payment of duty. Then, reliance is placed upon Exhibit-1 to the affidavit in rejoinder which is a specimen copy of a form containing declarations. The petitioners submit that the requisite declarations having been submitted that there is a complete compliance with the FTP and the above rules. In the rejoinder affidavit it is contended that the policy circular cannot be held to be clarificatory and, therefore, no retrospective effect can be given to it. It is submitted that the approach of the respondents is contrary to the judgment of the Delhi High Court in the case of Kandoi Metal Powders Mfg. Co. Pvt. Ltd. vs. Union of India, 2014 (302) E.L.T. 209. For these reasons it is submitted that the petitions be allowed. 14 Mr. Shah appearing on behalf of the petitioners submits that the applications for refund of the duty paid on imports received by the EOU are rejected by the Development Commissioner solely relying upon the policy circular dated 15th March, 2013. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relied upon the several orders passed in that behalf. He points out that there was never any suppression or misrepresentation as the respondents were aware that the DTA unit is the supplier to the EOU. The DTA unit having issued an authorisation in favour of the petitioners which is an EOU that EOU is entitled to apply for and claim the refund. This is not a case of any double duty or dual refund nor is it a case of excess cenvat credit being utilized by a backdoor or oblique method. 17 He submits that even the circular and which is relied upon cannot be applied in this case for it is not clarificatory, but purports to create additional grounds and for dealing with the applications of the present nature. This circular, therefore, cannot have any retrospective operation. Mr. Shah also relies upon the principle that the DGFT has no power or jurisdiction to amend the policy. Its powers are limited, namely, to interpret and implement a FTP. The power to amend it vests exclusively in the Central Government. Once the refund claim pertains to a period prior to the amendment, then, the earlier provisions must govern the same. 18 Mr. Shah has placed heavy reliance on the judgment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s then pointed out is that the import and export in relation to the goods, services and technology regarding Special Economic Zone or between two such Zones shall be governed in accordance with the provisions contained in the Special Economic Zones Act, 2005. 22 Before us, there is no dispute that the authority which has passed the impugned order was so empowered. It had the necessary power and jurisdiction to pass the impugned order. By Chapter III, the Central Government has powers to make orders and announce the FTP. Section 3 falling in Chapter II confers power to make provisions relating to imports and exports. Subsection (1) itself clarifies that the whole emphasis is to facilitate imports and increase the exports. Sub-section (2) empowers the Central Government to make provisions for prohibiting, restricting or otherwise regulating in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the order, the import or export of goods or services or technology. There is an amendment carried out and to the Act in the year 2010 by Act No.25 of 2010. The FTP is dealt with by section 5. It reads as under : "5. Foreign Tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods and services (except permissible sales in DTA) may be set up under the EOU scheme for manufacture of goods, including repair, remaking etc. The trading units are not covered under these schemes. Para 6.2 deals with export and import of goods. Clause (a) thereof states that a EOU / EHTP / STP / BTP unit may export all kinds of goods and services except items that are prohibited in ITC (HS). Export of special chemicals, organisms, materials, equipment and technologies shall be subject to fulfillment of the conditions indicated in ITC (HS). Clause (b) of this paragraph is important for our purpose and it reads as under:- "(b) An EOU/EHTP/STP/BTP unit may import and/or procure, from DTA or bounded warehouses in DTA/international exhibition held in India, without payment of duty, all types of goods, including capital goods, required for its activities, provided they are not prohibited items of import in the ITC (HS). Any permission required for import under any other law shall be applicable. Units shall also be permitted to import goods including capital goods required for approval activity, free of cost or on loan/lease from clients. Import of capital goods will be on a self ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.2 deals with categories of supply of goods by main / sub contractors which shall be regarded as deemed exports under FTP, provided goods are manufactured in India and supply of such goods is at EOU. Mr. Shah then relies upon para 8.3 which deals with Benefits for Deemed Exports. The deemed exports shall be eligible for any / all of following benefits in respect of manufacture and supply of good qualifying as deemed exports subject to terms and conditions as in HBP v1: The terms and conditions that we are concerned with are to be found in clause (c) of para 8.3. That grants exemption from terminal excise duty where supplies are made against ICB. In other cases, refund of terminal excise duty will be given. Exemption from TED shall also be available for supplies made by an advance authorisation holder to a manufacturer holding another advance authorisation if such manufacturer, in turn, supplies the product(s) to an ultimate exporter. Mr. Shah submits that para 8.4.2 of the of FTP states that the supplier shall be entitled to benefits listed in para 8.3(a), (b) and (c) of the FTP whichever is applicable in respect of supply of goods to EOU. 31 Benefits to the supplier are set out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the various categories of supplies, inter alia, supplies of goods by DTA unit to the EOU and, therefore, such categories of supplies which are exempt ab initio will not be eligible to receive refund of TED. 35 We would prefer to rest our conclusion on this part of the controversy as the petitioners are submitting that the respondents are trying to support the impugned order by additional reasons and which are set out in the affidavit-in-reply. 36 Whether this is a merely clarificatory provision or it purports to amend and substantively the paragraph 8.3 and, therefore, it would not govern the period during which refund is claimed by the petitioners is thus the essential controversy. 37 In the case of Kandoi (supra) the Hon'ble High Court at Delhi was dealing with the petitioner - manufacturer of metal powders. That metal powder suffers excise duty. It claimed to have supplied manufactured goods to 100% EOU in consonance with the FTP. Claiming that it was entitled to refund of TED for the supplies made during the relevant period January 2012 to March 2012 and April 2012 to June 2012, the petitioners made applications to the third respondent to that writ petition. The applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te relief or clarification. Paragraph 9 of the decision, therefore, essentially dealt with the issue before the Division Bench where the refund claims were not processed. The refund claims were not processed, but the petitioners before the Delhi High Court were directed to approach the DGFT for appropriate relief or clarification. The Division Bench ruled that when none of the respondents disputed the factual position, then, there was no reason for such an approach. That is why the Division Bench quashed the orders and directed to process and pass appropriate orders on the refund application in terms of the 2009 policy. 39 To our mind, the Division Bench did not at all deal with the contentions as have been noted by us in the foregoing paragraphs of this judgment. We would have to, therefore, deal with this issue and independent of this judgment. Once we find that the export and import of goods and particularly by EOU is dealt with by para 6.2, then, we must find out whether the respondents are right in relying upon the policy circular dated 15th March, 2013 by terming it as merely clarificatory. In our view, para 6.2(b) specifically says that an EOU unit may import and / or procu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TA unit to them and they are eligible for refund thereof. Then, without prejudice it was urged that the policy circular also admits that if the duty is paid, then, it should be refunded. 40 The respondents in dealing with all these contentions, to our mind, have rightly taken note of the provisions of the FTP and Handbook procedure Volume I 2009-2014 and the clarification issued by the DGFT. It is common ground that the interpretation and implementation of the policy by the DGFT is a permissible exercise and does not run counter to the scheme of the FTDR Act. After para 6.2 of the FTP is reproduced and particularly clause (b) thereof so also para 6.11 of the FTP which states that the EOU shall be entitled to exemption from payment of central excise duty on goods procured from DTA on goods manufactured in India, what the respondents have held is that the policy circular is merely clarificatory. We have no hesitation in accepting this contention for the simple reason that para 6.2(b) and 6.11(c)(ii) of the FTP states that no refund of TED should be provided by Regional authorities of the DGFT or the office of the Development Commissioners because such supplies are ab initio exempted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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