TMI Blog2016 (12) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... d was clearly established even before the entering into of contractual bargain and issuance of the letter of intent. In other words when the petitioner issued the letter of intent on 26.4.1999, it was fully aware of the fact that the benefit was introduced on 22.4.1999 and further that this was conditioned upon the existence of the excise duty incidence that could be refunded to the tune of 3% - if any additional custom duty was imposed, the terminal excise duty refund had to be denied. The Committee was informed by the Department of Revenue that in the power sector, countervailing duty had been increased from 0 to 16 % and, therefore, terminal excise duty could not be given. In the present case, therefore, since there was a justification and even a strong public interest element in the denial of terminal excise duty benefits, the question of its being arbitrary does not arise. This Court is of the opinion that since the duty refund eligibility was linked to the payment of duty, to offset the competitive additions that imported goods would have over domestically manufactured ones, the parity achieved by another policy compelled the government to amend the Hand Book of Procedures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from time to time . 3. Exercising its powers under paragraph 4.11 of the policy, the first respondent, i.e., Director General of Foreign Trade (DGFT) by public notice dated 22.4.1999 further amended paragraph 10.11 to read as follows: - 10.11 The supply of capital goods alone to the power projects in terms of paragraph 10.2 (g) shall be entitled for deemed export benefits provided the same is certified by the Central Electricity Authority and the International Competitive Bidding procedures have been followed for supply of such capital goods to the power projects. The domestic supplier shall be eligible for the benefits given in paragraphs 10.3(c) and (d) only. 4. On 26.4.1999, the petitioner issued a letter of intent to the third respondent Bharat Heavy Electricals Limited (BHEL) for supply of capital goods for manufacture by it in India to supply to its (the petitioner's) power projects. It is urged that the petitioner took into account while considering the competitive bids received. The fact that BHEL was entitled to claim benefit of deemed export and was entitled to refund of terminal excise duty resulting in reduction in the sale price of the goods to the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ICB). 10.3 Deemed exports shall be eligible for the following benefits in respect of manufacture and supply of goods qualifying as deemed exports; (a) Advance Licence for Intermediate supply/deemed export; (b) Deemed Exports Drawback; (c) Refund of terminal excise duty. 5. In the Hand Book of Procedure applicable for period 2000-2001, the benefit of refund of terminal excise duty was omitted. The relevant part of the Hand Book of Procedures applicable for 2000-2001 reads as follows:- 10.11 The supply of capital goods and spares upto 10% of the FOR value of the capital goods to the power projects in terms of paragraphs 10.2(g) shall be entitled for deemed export benefits provided the same is certified by the Central Electricity Authority and the International Competitive Bidding Procedures have been followed, at IPP stage, for supply of such capital goods to the power projects. The domestic supplier shall be eligible for the benefits listed in paragraphs 10.3 (a) or (b) of the Policy. The benefits of deemed exports shall also be available for renovation/modernization of power plants. However, supply of goods required for setting up of any mega powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 98 99 of the said judgment which reads as follows: - 97. Now, we advert to the issue pertaining to Notification dated April 28, 2004. The question here is as to: Whether subsequent Notification dated April 21, 2004, read with Notification dated April 28, 2004, seeking to exclude the export performance related to class of goods covered by para 2 of the Public Notice dated April 28, 2004, by way of Notes 6 to para 3.7.2.1 of the EXIM Policy, would relate back to the date of Public Notice dated January 28, 2004 or is to be given prospective effect from the date of issuance of Notifications on April 21 and 23, 2004. 98. It is no doubt that the Central Government has the power to amend the Policy and, therefore, it could do so vide Notifications dated April 21 and 23, 2004. The only question is as to whether these Notifications are bad in law on the ground that they seek to apply retrospectively. 99. We start with the premise that there was complete justification for excluding the four items insofar as grant of benefit under scheme is concerned. The Union of India has been able to demonstrate the same in full measure. This aspect has already been discussed in deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .e., 10.3 (a) (b) and (c) to supplies against advance intermediate license and for supplies of EoUs/EPZ units and further since supplies against advance intermediate license were exempted from terminal excise duty and supplies to EOUs/EPZ as against CT-3 forms, they were disentitled for terminal excise duty refund. 10. Learned counsel highlights that if the benefit is to be given to the petitioner, the refund would flow despite no duty having been paid by the supplier. Learned counsel relied upon the terms of the counter affidavit to say that this will have grave impact on public interest inasmuch as hundreds of crores of rupees would become eligible for refund irrespective of whether the unit did or did not suffer any duty liability. 11. The short question involved, therefore, is whether paragraph 10.11 of the Hand Book of Procedures to the extent it is challenged is to be declared as arbitrary and ultra vires. The previous discussion would show that the letter of intent in this case was issued on 26.4.1999. The definition of deemed export applied to supplies made to the Power, Oil and Gas sectors including Refineries. Paragraph 10.3 (c) stated that refund of terminal duty w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the Hand Book of Procedures. Thus, the question of its being ultra vires the Act or the Policy would not arise. Secondly, paragraph 10.11 which spelt out the eligibility to receive refund of terminal excise duty itself established the linkage i.e. payment of excise duty as an existing condition and further restricted the quantum to 3%. 13. In this case, the question is whether the withdrawal of benefit under 10.3, i.e., of refund of terminal excise duty is arbitrary or violates the principle of promissory estoppel. As noticed earlier, the linkage between payment of excise by the supplier and entitlement of the deemed export for duty refund was clearly established even before the entering into of contractual bargain and issuance of the letter of intent. In other words when the petitioner issued the letter of intent on 26.4.1999, it was fully aware of the fact that the benefit was introduced on 22.4.1999 and further that this was conditioned upon the existence of the excise duty incidence that could be refunded to the tune of 3%. 14. The Central Government's counter affidavit recounts that the withdrawal of terminal excise duty refund benefits arose because of the rep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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