FTP - Refund of Terminal Excise Duty - Clearance to EOU - Deemed export entitled for refund of TED: High Court
By TIOL News Service
NEW DELHI, FEB 25, 2014: THE petitioner challenges the respondents' action in denying its refund claim in terms of the provisions of the Foreign Trade Policy 2009-14 framed under the Foreign Trade (Development and Regulation) Act, 1992.
The petitioner inter alia manufactures metal powders, which suffers excise duty. It claims to have supplied manufactured goods to 100% Export-oriented Units ( EOUs ) in consonance with the said Foreign Trade Policy (FTP). Claiming that it was entitled to refund of Terminal Excise Duty (TED) for the supplies made during two relevant periods - January 2012 to March 2012 and April 2012 to June 2012 - the writ petitioner made applications in this regard to the third respondent. The applications for refund were made on 29.08.2012 and 16.11.2012. The third respondent denied these refund claims by separate orders dated 19.10.2012 and 02.11.2012. In compliance with the provisions of the policy, the petitioner wrote to the second respondent, claiming relaxation, by two letters dated 27.12.2012 and 28.12.2012. These two were turned down on 14.05.2013.
It is contended by the petitioner that its unit and the supplies are entitled to be treated as "deemed export" - as defined by para 6.11 of the 2009 policy in question. Elaborating on this, it is submitted that by para 8.1, "deemed export" refers to categories of supplies outlined in para 8.2. The petitioner in this context relies on para 8.2(b) and goes on to claim the benefits of deemed export unit in terms of para 8.3(c). It is submitted that the benefit entitled to such deemed export units is spelt out in para 8.4. The relevant provision, i.e. the first column which deals with para 8.2 mentions the category falling within para 8.2(b). It is submitted that the benefit of exemption outlined in para 8.3(c) follows as a consequence of the affirmative mentioned in column (c) of para 8.4. The counsel highlighted that with effect from 01.04.2013, the policy has been further relaxed in that such category of units do not have to even deposit or pay TED but are entitled to claim complete exemption.
The High Court observed,
It would be seen that supplies made to EOUs in terms of para 8.2(b) are entitled to be regarded as deemed exports. The benefits for deemed exports include inter alia exemption from TED where supplies are made against ICB (a term which means "International Competitive Bidding"). In the present case, concededly, the petitioner did not make any supplies against the ICB. Therefore, it would be covered by latter part of para 8.3(c), i.e. cases where refund of TED will be given. This intention is given effect by the second entry in column (a) of para 8.4 read with corresponding benefits spelt-out in column (c ) which states that entitlement in terms of para 8.3 to refund is permissible. The eligibility for refund, therefore, would be in terms of these provisions and the unit has to apply for such refund under para 8.5.
The authorities in this case appear to have proceeded to make an order adverse to the petitioner and proceeded to hold that the petitioner was disentitled to the benefit of refund in view of some clarification given by the Policy Interpretation Committee, in its meeting of 04.12.2012 to the effect that "refund of CENVAT credit provisions are available under Excise rules and CENVAT rules which should be availed of rather than claiming refund". This reasoning appears to have prevailed with the Policy Relaxation Committee as well in this case. This Court is unable to comprehend the rationale of the decision of the second and third respondents who also seem to have suggested that the petitioner should approach the DGFT for appropriate relief or clarification. Neither of the authorities dispute that the petitioner supplied goods to the EOU at the relevant time. Its entitlement, therefore, was defined in terms of the existing policy, i.e. refund in terms of paras 8.2, 8.3, 8.4 and 8.5 of the 2009 policy as discussed above. That a subsequent amendment was made to the existing regime which in effect liberalized the position further and exempted payment of TED altogether cannot surely be a reason for denying the scheme for refund of payment already made. The Court also is unable to see the reason why the respondents were of the view that refund claim or benefit under the CENVAT regime under the Central Excise Act or the other statutory schemes framed under it is available. In this Court's opinion, that regime operates in its own terms and is independent of the rights and liabilities of the petitioner and the respondents under the import-export policies framed under the 1992 Act. This Court notices that its reasoning is fortified by the decision of the Division Bench of the Calcutta High Court in JDGFT v. IFGL Refractories Limited . There, the Court ruled that once the supply of goods falls within the category of deemed export, the unit would be entitled to refund of TED.
In view of the above discussion, the impugned orders are hereby quashed. The respondents are hereby directed to process and pass appropriate orders in accordance with the 2009 policy in respect of the petitioner's refund claims made through its applications dated 29.08.2012 and 16.11.2012 within three months from today. The writ petition is allowed in the above terms.
(See 2014-TIOL-230-HC-DEL-EXIM)
