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TMI Blog2020 (3) TMI 1012X X X X Extracts X X X X X X X X Extracts X X X X ..... uly, 2018, has now identified the issue viz-a-viz the non-refund of excise duty paid by the suppliers. This circular in our view now recognizes the provisions of the FTP in the right perspective, that exemption from TED was not available for certain supplies even though the same were under ICB. There is thus no impediment in granting the refund to the Petitioner - In view of the above discussion, the impugned circular has no application to the case of the petitioner and it is lawfully entitled to refund of TED in terms of para 8.3 (c) read with para 8.4.4. (iv) of the FTP. The impugned orders/letters denying refund of TED are hereby quashed. The respondents are directed to process petitioner s claim for TED refund in respect of the applications enumerated in paragraph 3 of this order and release the amounts which they are entitled to in respect of the supplies made hereunder within a period of eight weeks from today - Petition allowed. - W.P.(C) 10512/2019 & CM APPL. 43487/2019 - - - Dated:- 12-3-2020 - MR. MANMOHAN AND MR. SANJEEV NARULA JJ. Petitioner Through: Mr. Sujit Ghosh, Ms. Mannat Waraich and Mr. Toshin Bishnoi, Advocates. Respondents Through: Ms. Shiva La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms of para 8.3 (c) read with 8.4.4 (iv) under chapter 8 of the Foreign Trade Policy (hereinafter FTP ) and submitted five applications for refund of TED, all dated 28th February, 2014 before Additional Director General of Foreign Trade, IP Estate, New Delhi. The details of such applications are as follows: (i) Application no. MFE/CTC-168VIJ, dated 28.02.2014 for supplies made to BHEL Noida for setting up of Thermal Power Project (3x250 MW) (ii) Application no. MFE/CTC-160/NIJ-132 dated 28.02.2014 for supplies made to Lanco Infratech Gurgaon for setting up of a Thermal Power Project (2x507 .5 MW) (iii) Application no. MFE/WE-802VIJ dated 28.02.2014 for supplies made to OIL India Limited for Petroleum Mining Lease (iv) Application no. MFE/CTC-166VIJ dated 28.02.2014 for supplies made to BHEL Noida for setting up of Thermal Power Project (1500 MW) (v) Application no. MFE/SKID-132VIJ dated 28.02.2014 for supplies made to BHEL Hyderabad for setting up of Thermal Power Project (1500 MW) 4. As per the Project Authority Certificate (hereinafter PAC ) in respect of some of the applications enumerated at serial No. (i), (ii), (iv) and (v) above, the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of this Court in M/s Alstom Transport India Limited (supra) to the notice of Deputy Director General of Foreign Trade. Nevertheless, there was no favorable outcome. Aggrieved with the rejection of the claims, Petitioner has now approached this Court by way of the instant petition. 7. Ms. Mannat Waraich, learned counsel for the petitioner has placed strong reliance on the judgment of this Court in M/s Alstom Transport India Limited (supra) to contend that the issue raised in the present petition is squarely covered and the respondents therefore have no lawful justification to refuse the refund. It is further argued that the respondents understanding of the circular dated 15th March, 2013 is flawed upon an erroneous assumption of facts and law. Respondents have wrongly presumed that all supplies under ICB are ab initio exempted. In fact there are several supplies which are not exempted from the payment of excise duty since they are not exempted from levy of customs duty. Resultantly, such supplies do not qualify for ab initio exemption and thus the rejection of refund claims based on an erroneous understanding of law is completely misconceived and untenable in law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch 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. Benefits of deemed exports shall be available under paragraphs (d), (e), (f) and (g) only if the supply is made under procedure of ICB. However, in regard to mega power projects, the requirement of ICB would not be mandatory, if the requisite quantum of power has been tied up through tariff based competitive bidding or if the project has been awarded through tariff based competitive bidding. (emphasis supplied) 10. Para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the policy circular No. 16 dated 15th March, 2013 which reads as under: Policy Circular No. 16 (RE-2012/2009-14) Dated: 15th March, 2013 To, All Regional Authorities All Development Commissioners, SEZ. Subject: Clarification regarding TED Refund where TED exemption is available. It has come to the notice of this Directorate that some RAs of DGFT and the Offices of Development Commissioners of SEZ are providing refund of TED even in those cases where supplies of goods, under deemed exports, is ab-initio exempted. 2. There are three categories of supplies where supply of goods, under deemed exports, are ab-initio exempted from payment of excise duties. These are as follows: (i) Supply of goods under Invalidation letter issued against Advance Authorisation [Para 8.3 of FTP]; (ii) Supply of goods under ICB [Para 8.3(c) of FTP]; and (iii) Supply of goods to EOUs [Para 6.11(c) (ii) of FTP] 3. Prudent financial management and adherence to discipline of budget would be compromised if refund is provided, in cases, where exemption is mandated. In fact, in such cases the relevant taxes should not have been collected to begi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere the requisite conditions, as provided in the aforesaid customs notification stand fulfilled. This position is not factually disputed by the respondents. Para 8.2 (f) of the FTP covers supply of goods to any project or purpose in respect of which the Ministry of Finance by a notification permits imports of such goods at zero customs duty. In contrast, para 8.2 (g) of the FTP covers supplies of goods to power projects and refineries which are not covered under para 8.2 (f) of the FTP. Thus, in effect para 8.2 (g) applies to those cases where there is no notification for import of goods at zero customs duty and effectively are not exempted. All the refund claims of the petitioner, excluding the one noted at serial No. (iii) of para 3 of this order, are covered under the category of para 8.2 (g) of the FTP and such supplies were not entitled to exemption from customs duty. As a result, they do not fulfill the prescribed condition No. 19 and are consequently not entitled to excise exemption under Entry No. 91 of the excise notification. Further, for such supplies, the project owners have clearly specified that the supplies made are under para 8.2 (g) of the FTP in the following term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Refund of terminal excise duty will be given if exemption is not available. Exemption from TED is available to the following categories of supplies: (i) Supplies against ICB; (ii) Supplies of intermediate goods, against invalidation letter, made by an Advance Authorisation holder to another Advance Authorisation holder; and (iii) Supplies of goods by DTA unit to EOU/EHTP/STP/BTP unit. Thus such categories of supply which are exempt ab initio will not be eligible to receive refund of TED. Contrasting this with the erstwhile provision, it can be noticed that by virtue of the notification No. 4 dated 18th April, 2013, a condition was incorporated stipulating that categories of supplies which are exempt ab initio would not be eligible to receive refund of TED. In the present case, the supplies were made during the period from 15th December, 2009 to 10th February, 2011 and thus during the relevant period, there was no such condition in the FTP. It may also be noted that the aforenoted notification is substantive and not clarificatory and therefore cannot be applied retrospectively. Thus, even in this situation, in our view, the petitioner is entitled to refund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt /DFIA. (b) Deemed Export Drawback. (c) 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 Authorization if such manufacturer, in turn, supplies the product(s) to an ultimate exporter. 4. The supplies to the projects funded by JICA notified vide DGFT's Public Notice No.67 dated 25th May, 2010 were made against ICB and hence were eligible for ab-initio exemption from payment of terminal excise duty under para 8.3(c) of FTP. 2009- 14. However, several representations were received stating that the supplies to projects funded by JICA were not getting exemption from TED from Jurisdictional excise authorities. The issue was taken up with Department of Revenue. At field level, the exemption from payment of Terminal Excise Duty for supplies to these agencies other than IBRD, IDA and ADB were not available under relevant excise notifications even though the supplies were under ICB. Further, since the projects were under ICB, the RAs were not consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The relevant portion of the said judgment reads as under: 19. 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. xxx xxx xxx 22. For a fuller appreciation of the issue, it was necessary for the respondent authorities to determine whether under the relevant central excise notification ..... X X X X Extracts X X X X X X X X Extracts X X X X
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