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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 ..... bles for gas pipeline projects. The present dispute emanates out of a contract dated 20.12.2004, bearing No. BkTPP/12/(MP-3: INDIAN SUPPLY)/04-05, executed between Bharat Heavy Electricals Ltd. ("Main Contractor") and West Bengal Power Development Corporation Limited ("Project Authority") for supply of equipment and materials towards the establishment and setting up of Bakreswar Thermal Power Project, West Bengal. The Main Contract was entered into through the process of International Competitive Bidding ("ICB"). As per the conditions stipulated in the Main Contract, a Vendors List was issued on 11.02.2005. The list contains details of work orders for supply of materials for the purpose of establishing the Project. The Appellant is one such party whose name is mentioned against work orders to be executed. Subsequently, the Project Authority issued a Project Authority Certificate ("PAC") dated 05.04.2005, confirming BHEL to be the Main Contractor for the purpose of supplying materials and equipment to the Project. The document also mentions that the Project is to be sponsored by an international agency, i.e. the Japanese Bank for International Cooperation (JBIC) and that the process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instance is the Japanese Bank for International Cooperation, Japan (JBIC). The Appellant's name was mentioned against work orders in the Vendors List dated 11.02.2005, in the capacity of an approved vendor. 6. In order to avail deemed export benefits arising out of payment of excise duty on the completion of supply of materials to the Project, the Appellant filed three applications seeking refund of Terminal Excise Duty ("TED") to the tune of Rs. 42,50,643/- along with an interest of 18% per annum under the provisions of Foreign Trade Policy 2009-14. 7. The Main Contractor/BHEL issued a Certificate bearing reference no. PE/MM/PG-II/BKR/P-297/06/PAC-01 on 25.04.2007, stating inter-alia, that the Appellant was recognized as a sub-contractor under the Main Contract. 8. On 13.11.2008, the Appellant preferred an application before the appropriate authority being the Zonal Joint DGFT with a request to refund the Terminal Excise Duty, which the Appellant claims was erroneously paid to the Excise Department. 9. The Zonal Joint DGFT sent a letter of reference to the DGFT vide a letter dated 07.02.2011, seeking clarifications on whether the Appellant whose name was not mentioned as a su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on 07.12.2012. It was clarified in the course of proceedings of the Meeting that if the names of suppliers of goods were endorsed in the Project Authority Certificate before the date of supply of materials, they would be eligible for deemed export benefits, irrespective of their name appearing as a sub-contractor or a sub-vendor. 14. Being aggrieved by rejections of their request for refund of payment of TED by the authorities, the Appellant filed a petition bearing W.P.(C) 6438/2013 before this Hon'ble Court on 05.10.2013. This Court on 03.12.2015 directed the Respondent No. 2/DGFT herein, to grant a personal opportunity of hearing to the Appellant. The Appellant Authority was also directed to consider as to whether the Orders in the case of M/s Gammon India Ltd and M/s Voltamp Transforms Ltd. passed on 29.05.2012 and 10.07.2012 would be applicable in the case of the Appellant or not. 15. In compliance with the Order dated 03.02.2015 passed by this Court, the DGFT/Respondent No.2 granted a personal opportunity of hearing to the Appellant. The case of the Appellant was rejected by the DGFT and it was held that in terms of Para 8.6.2 of the FTP 2009-2014, the name of a sub-cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te factual circumstances that the Appellant finds themselves in. 19. The Appellant preferred Writ Petition bearing No. W.P. (C) 1712/2021 with prayers to issue directions for quashing the Appellate Order dated 14.05.2018, delivered by the Respondent No. 1/Ministry of Commerce and Industry. The Order passed by the Ld. Single judge in W.P. (C) 1712/2021, dated 27.04.2022 rejected the Appellant's case for grant of refund. 20. It is in light of culmination of the aforesaid facts and after multiple rounds of adjudication that the present LPA has been preferred by the Appellant herein before this Bench, with the following prayers:- (i) To set aside the impugned Order dated 27.04.2022 passed by the ld. Single Judge of this Hon'ble Court in Civil Writ Petition No. 1712/2021. (ii) Allow the LPA formulating a substantial question of law thereby directing the Respondents to refund TED for Rs. 42,50,643/- under Foreign Trade Policy 2004-09, in light of Policy Circular No. 11/2015-20 dated 23.07.2018 22. Heard learned Counsels appearing for the Parties and perused the material on record. 23. The ld. Counsel for the Appellant submits that supplies made to Domestic Tariff Zones attracts d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeting, it was noted that subject to endorsement of the supplier's name in the Project Authority Certificate, all deemed export benefits were to accrue to the supplier irrespective of their role as a vendor or a sub-contractor in the Main Contract, if such endorsement had happened before the supply of goods. The supplies to the Project were carried out in accordance with the work orders stipulated in the Vendors List dated 11.02.2005. The relevant part of the clarification issued in the PIC meeting mentioned above is reproduced below:- "It is clarified that if the name of supplier of goods is endorsed in the Project Authority Certificate before the supply of goods, supplier shall be eligible for deemed export benefits irrespective of the fact that his name was mentioned as subcontractor or sub-vendor" 25. The Ld. Counsel for the Appellant relies on an Order dated 12.11.2020, delivered by a Co-ordinate Bench of this Hon'ble Court in another factually similarly situated case in W.P. (C) 9899/2020 titled as KEI Industries Ltd. vs Union of India and Ors., which in lieu of the DGFT/Respondent No. 2 Policy Circular dated 23.07.2018, adjudicated in favour of the Petitioner therein by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disputes arising out of interpretation of FTP shall be referred to the office of DGFT for their consideration. In addition, as per para 2.3 of the FTP 2009-14, the Policy Interpretation Committee is chaired by the DGFT who also holds the power to approve the Minutes of Meeting of the PIC. The ld. counsel then draws to the conclusion that the DGFT is well within their powers to implement and execute the provisions of Chapter 8 of the FTP 2009-14. In extension of this power, it is averred that in the facts of the immediate case, the DGFT is the competent authority to interpret also the nature of supplies that would attract and be entitled for claiming deemed export benefits. This power, it is submitted, also includes deciding the questions of grant of refund on the payment of TED. 30. The Ld. Counsel for the Respondents refers to the decision of the PRC meeting No. 39AM/13, dated 12.02.2013 and reiterates the two-pronged reasoning, being firstly that in terms of paragraph 8.6.2, the sub-contractor's name (the Appellant herein) ought to have been directly endorsed in the Main Contract, for the supplies to be made amenable for availing deemed export benefits in terms of Chapter 8 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause 8.3(c) of the FTP 2009-14 provides for either the benefit of exemption, or refund of Terminal Excise Duty subject to the condition of supplies otherwise qualifying for availing deemed export benefits. Referring to the Policy Circular no. 16 dated 15.03.2013, issued by Respondent No. 2/DGFT, it is argued that the said circular only clarifies, and doesn't expand, the scope of clause 8.3(c). It is explained that under the clause, two situations are contemplated -- refund and exemption of TED. Refund may be sought only when exemption is not envisaged and when excise duties have been paid. In concluding their argument, it is reiterated from their submissions that the supplies were made pursuant to an ICB contract exempting the payment of excise duties ab-initio. 35. It is further submitted that the Respondent No. 2/DGFT, in their reply dated 23.12.2012 to the reference letter dated 07.09.2011 clarified that the Project Authority/WBPDCL had to name sub-contractors to the Main Contract before the date the supplies were made. On the strength of the clarification letter dated 23.12.2012, the conclusion drawn is that a sub-contractor appointed by the Main Contractor would not satisfy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Contractor/BHEL does not have the same effect as against appointment in the same role by the Project Authority. 38. In our opinion, the bone of contention in the immediate facts of this case revolve around the issue of the appointment of the Appellant as a sub-contractor by the Project Authority/WBPDCL for the supply of materials to the Project in pursuance of the Main Contract, in light of the provisions of the Foreign Trade Policy 2009-14. In order to be ordained eligible for claiming deemed export benefits, clause 8.6.2 of the FTP 2009-14 lays down the condition of inclusion of a party's name as a sub-contractor under the Main Contract only. The Appellant through the course of proceedings in multiple adjudications before concerned authorities has relied on a slew of documents to support and advance their claim of eligibility for refund of payment of TED. However, none of the documents submitted can confirm the Appellant's status as that of a sub-contractor under the Main Contract, and appointed in such capacity by the Project Authority. At the cost of repetition, it is our view that endorsement of name as a sub-contractor is a necessary pre-requisite to satisfy the criteria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny document issued by the Project Authority that can conclusively confirm their position as a sub-contractor in terms of paragraph 2 of the Project Authority Certificate either originally or subsequently. 42. The DGFT/Respondent No.2 is empowered under Section 6(1) and 6(2) of the Foreign Trade (Development and Regulation) Act, 1992 to advise the Central Government in formulating and implementing the foreign trade policy. 43. 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. The Ld. Single Judge while exercising jurisdiction under Article 226 of the Constitution of India was, therefore, justifie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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