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TMI Blog2022 (9) TMI 758X X X X Extracts X X X X X X X X Extracts X X X X ..... empts the requirement of payment of terminal excise duties for supplies made under ICB contracts for projects sponsored by foreign agencies. The Main Contract was signed under the process of International Competitive Bidding, and the Project at Bakreswar Thermal Power Plant was sponsored by a notified foreign agency, being the JBIC. The finding of the Ld. Single Judge in W.P.(C) 1712/2021 that the claim of refund of Terminal Excise Duty is dependent upon the name of the Appellant being duly endorsed by the Project Authority, and that the Appellant has been unsuccessful in showing any provision under the Foreign Trade Policy 2004-09 in terms of which endorsement of certification by the main contractor was envisaged sufficient for the purpose of refund of Terminal Excise Duty and, therefore, in the absence of such certification, the benefits as contemplated in Clause 8.6.2 of the FTP 2009-14 cannot be extended to the Appellant herein does not require any interference. Application dismissed. - LPA 476/2022&CM APPL. 35496/2022 - - - Dated:- 14-9-2022 - HON BLE THE CHIEF JUSTICE SATISH CHANDRA SHARMA, C.J. AND HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD JUDGMENT Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat supply of materials to projects funded by foreign sponsoring agencies such as the JBIC are to be treated as Deemed Exports. Clause 8.2(d) of the FTP 2009-14 is reproduced below:- 8.2 Following categories of supply of goods by main/subcontractors shall be regarded as Deemed Exports under FTP, provided goods are manufactured in India: (d) Supply of goods to projects financed by multilateral or bilateral Agencies/Funds as notified by Department of Economic Affairs (DEA), MoF under International Competitive Bidding (ICB) in accordance with procedures of those Agencies/Funds, where legal agreements provide for tender evaluation without including customs duty. 4. The Project Authority Certificate further states that the supplies in lieu of the Main Contract are to be made to a project sponsored by a foreign agency notified by the Department of Economic Affairs, Ministry of Finance, and that said supplies have to be made through the procedure of International Competitive Bidding approved by the said foreign agency. For reference, clause 1(a) of the Project Authority Certificate is reproduced as under: - It is certified :- (a) That supplies under contract No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned as that of a sub-contractor in the Main Contract. 10. The Policy Interpretation Committee of the Respondent No. 2/DGFT in their meeting No. 10 dated 15.03.2011 rejected the claim for refund of excise duty, in terms of paragraph 5 of the Minutes of Meeting. The clarification is reproduced as under:- It was clarified that any supply made directly to the Project Authority by any entity other than the main contractor or the sub-contractor (details of such sub-contractor must have been endorsed in the contract and such endorsement must have been done prior to supply by the said sub-contractor) shall not be eligible for the deemed export benefits. 11. The Policy Relaxation Committee of the Respondent No.2/DGFT denied the Appellant s request for refund in the meeting No. 39/AM13, held on 12.02.2013, on account of two reasons firstly, that requirements as per clause 8.6.2 of the FTP 2009-14 was not satisfied on account of their name not being included as a sub-contractor in the Main Contract or in documents consequent thereto and secondly, that the supply of materials was made under an ICB contract which exempted payment of excise duties ab-initio. On these grounds, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DGFT is that in terms of paragraph 8.3(c) of the FTP, supplies made for contracts made through the International Competitive Bidding process are ab-initio exempted from refund of Terminal Excise Duty. 16. Against this Order, an appeal was preferred before the Respondent No. 1/Appellate Authority/Ministry of Commerce and Industry. The Respondent No.1 upheld the findings delivered in the DGFT s Order thereby rejecting the case for request of refund vide an Order dated 14.05.2018. Subsequently, the Appellant filed fresh applications before the Respondent No.1/Ministry of Commerce and Industry and Respondent No. 2/DGFT on 05.11.2018 (with enclosed copies of the Policy Circular dated 23.07.2018 and the Clarification Letter dated 05.10.2018) and 06.11.2018 respectively, for considering their request for refund of payment of Terminal Excise Duties. 17. It is stated that the Ministry of Commerce and Industry/Respondent No. 1 issued a Policy Circular no. 11/2015-20 dated 23.07.2018 clarifying that JBIC funded projects would also be entitled to the benefit of deemed exports. It is further stated that a clarification letter bearing no. WBPDCL/Corp./SGMP3/BKTPP/3979 was issued by the Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f multiple rounds of adjudication, been rejected by concerned authorities without completely perusing all the material placed on record supporting their claim of eligibility to be eligible for availing deemed export benefits in terms of clauses 8.2(d), 8.6.2, 8.3(c) and other provisions made in exercise of the FTP 2009-14. Clauses 8.6.2 and 8.3(c) of the FTP 2009-14 are reproduced as under- 8.6.2 Supplies made by an Indian sub-contractor of an Indian or foreign main contractor directly to the designated projects/Agencies, shall also be eligible for deemed export benefits provided name of sub-contractor is indicated either originally or subsequently in the main contract (but before the date of supply of such goods) and payment certificate is issued by project authority in the name of sub-contractor as in Appendix 22C of HBP v1 and secondly, in terms of paragraph 8.3(c) of the FTP. 8.3 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 subject to terms and conditions as in HBP v1:- ..(c) Exemption from terminal excise duty where supplies are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular with the respondent. In view of the said the present petition is disposed of granting liberty to the Petitioner to reply upon the Circular in the Appeal pending before the Appellant Authority. The Appellant Authority shall consider the effect thereof while passing the order. A decision on the Appeal be taken within a period of 8 weeks from today. Needless to say, in case the petitioner is aggrieved of the decision, it shall be open to the petitioner to challenge in accordance with law 26. The Ld. Counsel for Appellant also places strong reliance upon the Clarification Letter dated 05.10.2018, issued by the Project Authority. It is argued that the terms of the letter equate the position of a Vendor as it appears in the Vendors List issued by the Project Authority/WBPDCL, to that of a sub-contractor vis- -vis the Main Contract. The relevant part of the letter is reproduced below: - the term Vendor wherever it appears in the letter Ref. WBPDCL/Ping/Bk TPP-4 5/MP3/Vendor/700, dated 11.02.2005 shall have the same meaning and read as Subcontractor. 27. The approved Vendors List was issued on 11.02.2005, i.e., before the date the Appellant supplied materials to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng is that as per Clause 8.3(c), all supplies made to contracts formulated under International Competitive Bidding process are exempted from payment of excise duties ab-initio. The supplies made by the Appellant to the Main Project were to a Project sponsored by the JBIC, a notified international sponsoring agency. Therefore, it is submitted, that the Appellant wrongfully paid terminal excise duties. 31. The Ld. Counsel for the Respondents then draws the attention of this Court on documentary evidence placed for consideration in multiple rounds of adjudication, specifically the Project Authority Certificate issued on 11.02.2005 and the Main Contract dated 20.12.2004. A perusal of the terms of the Main Contract reveals that the Appellant was never endorsed as a sub-contractor. To buttress this submission, reference is made to Paragraph 2 of the Project Authority Certificate which contains an appended note, providing for a space for names of sub-contractors to be added subsequently. There is nothing on record to show that the name of the Appellant was added originally or subsequently as that of a sub-contractor in the Main Contract. 32. Per contra, the above argument, the Ld. c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Main Contract and appointed in such capacity by the Project Authority. 36. The Ld. Counsel for the Respondents submits that the Appellant has wrongly availed the CENVAT credit facility available to exporters. Further, it is submitted that no provision exists in the FTP or the accompanying Handbook of Procedure that stipulates a unique condition whereby on wrongful payment for supplies exempted from payment ab-initio, the exporter may be permitted to subsequently submit a claim for refund. Doing this, it is submitted that, would amount to circumvention of CENVAT Credit Rules, 2004, inasmuch as it would amount to wrongful encashment of CENVAT Credit. The Ld. Counsel for the Respondent in their submissions proceeds to draw the attention of the Court to E.R.-I forms appended to the application of the Appellant, which reveals that at the time of payment of excise duties, the Appellant availed unutilized CENVAT Credit facilities. Relying on this fact, the argument thus forwarded is that approaching the DGFT for refund would amount to contravention of the provisions of CENVAT Credit Rules, 2004 and consequently the Central Excise Act, 1944, premised on the reasoning that granting a req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsored by foreign agencies. The Main Contract was signed under the process of International Competitive Bidding, and the Project at Bakreswar Thermal Power Plant was sponsored by a notified foreign agency, being the JBIC. We are, therefore, inclined to concur with the submissions of the Respondent in dismissing the claim of Appellant at multiple stages on this ground. 40. The questions placed for consideration before this Court in the current LPA are presented in the following terms:- A. Whether goods supplied by the Appellant in the capacity of Vendor vide Vendor list dated 11.02.2005 issued by the Project Authority (WBPDCL) is eligible for refund of Terminal Excise Duty under deemed exports Scheme of Foreign Trade Policy 2004-2009 on the strength of subsequent Letter dated 05.10.2018 issued by the said Project Authority (WBPDCL) certifying and confirming that the term 'Vendor' wherever it appears in the letter dated 11.02.2005 to have the same meaning and read as Subcontractor. B. Whether the Certificate dated 25.04.2007 issued by the main Contractor BHEL- an agency of Government of India qua contract No. BKTPP/12 (MP-3: Indian supply)/0405dated 20.12.2004 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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