Refund of TED - It is well-settled principle of law that Court cannot direct statutory authority to exercise discretion in particular manner - Single Judge ought not to have directed DGFT to pass an order keeping in mind observations made therein: High Court
By TIOL News Service
NEW DELHI, JULY 29, 2015: THE respondent is engaged in setting up of Power Plants including project engineering, procurement, construction and commissioning for its customers and supply of goods to various contractors and project authorities. M/s NTPCwhich is engaged in the project of setting up a Super Thermal Power Projectin the State of Bihar had awarded a contract to BHEL for the supply of steam generated package by following the procedure of International Competitive Bidding and that the writ petitioner, being a sub-contractor of BHEL supplied boiler components during the period from 23.09.2010 to 31.01.2011 to NTPC on payment of Terminal Excise Duty (TED). According to the company, the goods so supplied against ICB are exempted from duty of excise and, therefore, an application was made for refund of TED.
Alleging that the said claim was erroneously rejected by the Director General of Foreign Trade (DGFT), the company had filed a Writ Petition and which was disposed of by an order dated 11.02.2015 by the Single Judge with a direction to DGFT to pass a suitable order within two weeks in the light of the observations made therein.
In pursuance thereof, DGFT passed an order dated 24.02.2015 rejecting the refund claim of TED. The said order dated 24.02.2015 was challenged and the same was disposed of by the Single Judge by order dated 11.03.2015 - 2015-TIOL-706-HC-DEL-CUS thereby setting aside the order dated 24.02.2015 and directing the respondents to refund the TED to the writ petitioner within two weeks.
Against these orders the UOI is in appeal.
After hearing the submissions made by both sides, the High Court Division Bench inter alia observed -
++ The fact that the supplies that were made by the writ petitioner to NTPC against ICB are exempted from excise duty is not in dispute. It is also not in dispute that similar exemption is provided under Paragraph 8.3(c) of FTP for the supplies made against ICB. However, the writ petitioner had not availed the exemption and the supplies were made to NTPC on payment of TED. Subsequently, the writ petitioner claimed refund of the TED paid and made an application under Paragraph 8.3(c) of FTP. During the process of his application, certain file notings were made that the application for refund was not maintainable and even before any order of rejection was passed, the writ petitioner approached this court . Though the learned Single Judge had rightly held that the interference at that stage is not warranted, certain observations were made interpreting the purport of Paragraph 8.3(c) of FTP and the DGFT was directed to examine the case of the writ petitioner keeping in mind the said observations.
++ This procedure adopted by the learned Single Judge appears to be fallacious in the light of the well-settled principle of law that the Court cannot direct the statutory authority to exercise the discretion in a particular manner. Therefore, we are of the view that having held that the interference of the Court is not warranted in the absence of an order rejecting the claim of the writ petitioner for refund, the learned Single Judge ought not to have directed DGFT to pass an order keeping in mind the observations made therein. [U.P.State Road Transport Corporation &Anr. v. Mohd. Ismail &Ors., (1991) 3 SCC 239 refers]
++ Under Section 6(2) of the FTDR Act, 1992 the Director General of Foreign Trade is made responsible for carrying out the policy meaning thereby that the dispute if any with regard to implementation of the policy has to be resolved/clarified by DGFT. In the light of the power expressly conferred by the statute for carrying out the FTP, it appears to us that the question whether TED paid for the supplies made against ICB, i.e., an exempted item, can be refunded or not is a matter which requires consideration by the DGFT in accordance with law on proper interpretation of the provisions of the FTP.
++ No doubt, the decision taken by the DGFT is amenable to judicial review, however, even before a decision is taken by the DGFT, in our considered opinion, the learned Single Judge ought not to have directed the statutory authority that the decision be taken in a particular manner.
++ It is contended by the appellants that the writ petitioner who failed to avail the exemption for the supplies made against ICB is not eligible to claim refund under FTP. We are of the opinion that the issue raised being a pure question of law, the appellants cannot be precluded from urging the same in the Appeal merely on the ground that they failed to urge it in the writ proceedings.
++ The writ petitioner has not disputed the fact that the TED against the exempted supplies was paid by availing CENVAT Credit Account in terms of the CENVAT Credit Rules, 2004…. The entitlement of an exporter who made the supplies availing CENVAT Credit Account to claim refund under Paragraph 8.3(c) of FTP, according to us needs deeper consideration on proper appreciation of the provisions of the CENVAT Credit Rules vis-à-vis the FTP. It would be appropriate that such exercise, in the first instance, is allowed to be made by the competent statutory authority.
++ We are constrained to interfere with the orders under appeal. Accordingly, both the order dated 11.02.2015 in W.P. No.1331/2015 and the order dated 11.03.2015 in W.P. No.2344/2015 are set aside. Consequently, the order of the DGFT dated 24.02.2015 which was passed in compliance of the directions in W.P.(C) No.1331/2015 shall also stand set aside.
++ The DGFT will now consider the application of the writ petitioner for refund in terms of the provisions of the FTP, 2009-2014 and pass an appropriate order in accordance with law.
Both the appeals were disposed of.
(See 2015-TIOL-1709-HC-DEL-CUS )
