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TMI Blog2018 (7) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... s duty exemption, by virtue of Note 41 to the Excise Duty exemption notification. However, the customs duty exemption notification restricted duty exemption only to supplies made to specified contracts relating to the Delhi Metro Rail Corporation. Thus, the respondent authorities, in the opinion of the court, proceeded on an entirely erroneous premise. The Supreme Court’s ruling in Director General of Foreign Trade and Ors. v. Kanak Exports and Ors. [2015 (11) TMI 80 - SUPREME COURT OF INDIA] has now authoritatively settled the issue that provisions of the Export Import Policy and the related Handbook are statutory. Therefore, any clarification issued by any official: howsoever high in rank she or he might be, cannot override the policy. In the present case, a combined reading of the central excise exemption notification and the customs duty exemption notification made it clear that such unconditional exemption was not extended to the goods. Rather, unconditional exemption was given only to goods supplied under contracts funded to the Delhi Metro Rail Corporation. This meant that the goods in question, supplied by the petitioner were dutiable. Clearly, therefore it was entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oject or the said project ). The primary project authority for the same is Chennai Metro Rail Limited (hereinafter referred to CMRL ). CMRL followed the procedures of International Competitive Bidding and appointed Alstom Projects India Ltd. ( APIL ) as the main contractor. The Petitioner, in turn was appointed by APIL, as a sub-contractor to supply 33 train sets to CMRL. The Petitioner manufactured and supplied 6 Train sets between 26.02.2014 30.08.2014. It is aggrieved by and seeks appropriate directions to the respondents (officials of the Directorate General of Foreign trade, and the Central Excise department) to refund the amounts of terminal excise duty ₹ 12,42,18,219/- collected from it, and further seeks quashing of part of Para 7.05(ii)(a) of the Foreign Trade Policy 2015-2020 ( New FTP ) and quashing of limited portions of Para 8.3(c) and Para 8.4(d) of the New FTP. 2. The relevant facts of this case are that the CMR project was funded by the Japan International Cooperation Agency ( JICA ), which was notified by the Department of Economic Affairs, Ministry of Finance, Government of India by Notification No. 1 (FT)/DEA/2010, New Delhi, dated 05.05.2010 for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of turnkey contracts )to projects financed by multilateral or bilateral Agencies/Funds as notified by DEA, MoF under ICB, in accordance with procedures of those Agencies/Funds, which bids may have been invited and evaluated on the basis of Delivered Duty Paid (DDP) prices for goods manufactured abroad; (e) Supply of capital goods, including in unassembled/disassembled condition as well as plants, machinery, accessories, tools, dies and such goods which are used for installation purposes till stage of commercial production, and spares to extent of 10% of FOR value to fertilizer plants; (f) Supply of goods to any project or purpose in respect of which the MoF, by a notification, permits import of such goods at zero customs duty; (g) Supply of goods to power projects and refineries not covered in (f) above; (h) Supply of marine freight containers by 100% EOU (Domestic freight containers-manufacturers) provided said containers are exported out of India within 6 months or such further period as permitted by customs; (i) Supply to projects funded by UN Agencies; and j) Supply of goods to nuclear power projects through competitive bidding as opposed to ICB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Exemption (f) Yes Yes Exemption Exemption, if ICB. Refund, if without ICB. (h) No Yes Refund (i) Yes Yes No (j) Yes Yes Refund 4. The petitioner urges that with effect 01.04.2015, FTP 2009-2014 was replaced by FTP 2015-2020. Consequently 'Deemed Exports' were now covered under Chapter 7 of the new FTP where Para 7.02 covered the categories of deemed exports and Para 7.03 and 7.04 covered the benefits available to Deemed Exports and Para 7.05 categorically covered the conditions for refund of Terminal Excise Duty. The said new provisions are extracted as follows: 7.02 Categories of Supply Supply of goods under following categories (a) to (d) by manufacturer and under categories (e) to (h) by main/subcontractors shall be regarded as Deemed Exports : A. Supply by manufacturer: (a) Supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r International Organizations for their official use or supplied to the projects financed by the said United Nations or an International organisation approved by Government of India. List of such organisation and conditions applicable to such supplies is given in the Excise Notification No I 08/95-CE, dated 28.08.1995, as amended from time to time. A list of Agencies covered under this paragraph, is given in Appendix 7B. (h) Supply of goods to nuclear power projects provided: (i) Such goods are required for setting up of any Nuclear Power Project as specified in the list 33 at Sl. No. 511 of Notification No. 12/2012 -Customs dated 17.3.2012, as amended from time to time. (ii) The project should have a capacity of 440 MW or more. (iii) A certificate to the effect is required to be issued by an officer not below the rank of Joint Secretary to Government of India, in Department of Atomic Energy. (iv) Tender IS invited through National competitive bidding (NCB) or through ICB. 7.03 Benefits for Deemed Exports Deemed exports shall be eligible for any/all of following benefits in respect of manufacture and supply of goods, qualifying as deemed exports, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... risation holder to another Advance Authorisation holder; (c) Goods Procured by EOU/ EHTP/STP /BTP unit from a unit in DTA; and (d) Supply of goods to UN/International Organisation or project funded by it. 5. The Petitioner contends that contents of Para 8.3 of the old FTP are more or less identical to Para 7.05(ii) of the new FTP. It submits that in terms of the aforesaid provisions, being an eligible claimant under the old FTP (2009-2014), it moved an application, dated 29.10.2014, for refund of Terminal Excise Duty (hereinafter referred to as TED ) amounting to ₹ 12,42,18,219/- paid on the manufacture of the said Trains, before the third respondent. It is submitted that while the benefit of excise exemption is contemplated under the FTP in respect of supplies made under ICB, to debar TED refund, such excise exemption is applicable only if the said goods in respect of ICB supplies are also exempt from Customs Duties. Thus, all supplies against ICB are not automatically exempt from excise duty. Therefore, it is stated that in the present case, since there are no Customs Duties exemptions, the supplies are not exempt from Excise Duty, even though they were supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15-20. 8. Mr. Sujit Ghosh, learned counsel for the petitioner, argues that there is no question of Paras 7.02-B(e)(i) and (ii) and Para 7.05 (ii) (a) of the FTP of 2015-2020 being made applicable to the case of the Petitioner, because the FTP-2015-2020 was introduced only on 01.04.2015 and the supplies made by the Petitioner were during 26.02.2014 to 30.08.2014. Moreover,the Petitioner filed its application for deemed exports on 29.10.2014 for the said period. Therefore, the Petitioner was governed by FTP of 2009-2014 which was extended from 01.04.2014 to 31.03.2015 by Notification No. 69 (RE- 2013)/2009-2014 dated 19.02.2014, specifically para 8.3(c) therein, which was operative during the period 27.08.2009 to 31.03.2015. The Petitioner had resubmitted its application dated 29.10.2014 on 04.05.2017 under the Format of Annexure 7A without prejudice to its submissions that the FTP of 2015-2020 had no application in its case. Moreover, this refiling was only done on the insistence of fourth respondent, who by letter dated 06.02.2017, directed the petitioner to do so. Naturally the provisions, as they stood, at the time when deemed export supplies were actually made by Petitioner, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e supplies made by it. Therefore, the bar prescribed under Para 7.05(ii) is inapplicable. 10. The respondents argue that the provisions of Chapter 8 of the FTP- 2009-14, titled as Deemed Exports are self-contained code in itself which defines what is meant by deemed export and which categories of supplies of goods shall be considered as exports, benefits derived there from and to whom they are available as per the terms in vogue or Para 8.3 of FTP-2009- 14. It is stated that the Department of Economic Affairs by Public Notice No. 1(FT)/DEA/2010 dated 05.05.2010 notified the organizations viz. International Bank of Reconstruction and development (IBRD) and International Development Association (IDA), International Fund for Agricultural Development (IFAD), Asian Development Bank (ADB), Organization of the Petroleum Exporting Countries (OPEC), Yen credit channelized through Japan International Co-operation Agency (JICA) [development component only] and Swedish International Development Agency (SIDA) for the purpose of deemed export benefits under para 8.2(d) of FTP, 2009-14 subject to the condition that the supplies to projects were made under ICB procedure only. To give eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se provisions have been clarified vide Policy Circular No.16 dated 15.03.2013 issued by the DGFT. The respondents also submit that this policy circular has not introduced any new conditions/provisions; it has merely clarified the provisions of Para 8.3(c) of FTP-2009-14, which has already been in existence. It is also urged that no provision in the Handbook of the Procedure or the Foreign Trade policy permits an exporter to make a choice on the method of seeking benefit regarding the TED. It is no where mentioned that the exporter may first opt the benefit provided for in FTP- 2009-14, by reading various provisions of FTP-2009-14, in a harmonious manner. 14. It is also admitted that Para 8.3(c) extends the benefits under deemed exports for the supplies which qualify as deemed exports. The qualified Deemed Exports are undoubtedly eligible for the corresponding benefits, as applicable under Para8.3(c), one of the benefits is the TED. Para 8.3 (c) of FTP-2009-14 covers both TED refund as well as exemption from TED for different types of cases. TED refund is allowed where TED exemption is not available. 15. The respondents state that providing exemption from payment of duty, rath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for relevant certificates to be issued by the concerned personnel of DMRC certifying that the goods concerned were used in Phase-I and specific corridors of Phase II. 18. It is quite clear therefore, that both the central excise and customs exemption notifications would spell out that no customs duty exemption to goods supplied to the Chennai Metro Rail Project was given to the petitioner; it cannot be said that such exemption was ever enjoyed by it. Therefore, the respondents argument that excise duty was exempt ab initio in respect of supplies made under the contracts funded by JICA, to the Chennai Metro, are factually incorrect. The exemption was not ab initio (i.e. per se) exempt; it was conditional upon availability of customs duty exemption, by virtue of Note 41 to the Excise Duty exemption notification. However, the customs duty exemption notification restricted duty exemption only to supplies made to specified contracts relating to the Delhi Metro Rail Corporation. Thus, the respondent authorities, in the opinion of the court, proceeded on an entirely erroneous premise. 19. There is no doubt that in terms of the Export Import Policy and Hand Book of procedures, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new FTP came into force are concerned, the goods would be covered by the provisions and the benefits extended by it. In the present case, the Petitioner manufactured and supplied 6 train sets between 26.02.2014 and 30.08.2014 and claims benefit of the old policy in W.P.(C) 10544/2017. They were covered by the old foreign trade policy and consequently covered by the excise and customs duty notifications which did not grant ab initio exemption. Consequently, the Petitioners claims to TED refund could not have been rejected. 23. As far as W.P.(C) 10558/2017 is concerned, the supplies were made to Chennai Metro during the period 31.10.2014 to 04-03-2015. Para 7.05(ii)(a) of the new FTP is applicable from the date FTP 2015-2010 came into force. The restrictive condition in regard to denial of TED refund is to be considered in the light of the new FTP. Para 7.05(ii) of the new FTP provides however supply of goods which are exempted ab initio from payment of terminal excise duty would be ineligible to get refund of TED . Like in the case of the previous FTP, the petitioner s case falls outside the restriction contained in the opening language of the said para since the supplies made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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