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2018 (7) TMI 868

Refund of Terminal Excise Duty (TED) - Whether the petitioner who has manufactured and supplied goods (after payment of excise duty via the CENVAT credit route) to a 100% Export Oriented Unit (EOU) is entitled to claim refund of Terminal Excise Duty (TED)? - Held that:- Apart from anything else what emerges from the record is that the PRC’s decision is neither consistent nor even handed. Though the petitioner obtained refund of TED for the quarter April, 2011 to June, 2011 and July, 2011 to .....

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the petitioner could or could not get refund under the CENVAT Credit Rules or under the provisions of the Central Excise Act is not relevant for adjudicating upon the issue at hand. The Court, for adjudicating the issue at hand required to look at only the relevant provisions of the FTP. - The argument that since excise duty was not paid via cash but was paid by utilizing the CENVAT credit route and hence, the petitioner would not be entitled to claim refund is unsustainable as there is no .....

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a company by the name of Motherson Sumi Systems Ltd. (MSSL). The petitioner is in the business of manufacturing excisable goods such as PVC insulated wires and cables. Over the years, the petitioner has been supplying these goods to other divisions of MSSL, which have a status of a 100% EOU. These goods are supplied by the petitioner on payment of excise duty, albeit, via CENVAT credit route. Since, according to the petitioner, supplies made to EOUs are classified as deemed export under the For .....

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fund of TED amounting ₹ 83,64,802.86; an amount which was paid by it at the time of clearance of goods. The rejection of the petitioner s application by respondent no. 3 was based on the decision taken by the PRC/ PIC at its meeting held on 04.12.2012. 2.4 In view of the fact that the PRC had at its meeting held on 09.09.2014, cleared its request for refund of TED against supply of goods made to 100% EOUs, an application was filed with respondent no.4 on 23.09.2014 for refund of TED for Oc .....

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ated 10.12.2014, furnished the relevant information to respondent no.4. 2.9 It appears that there was no movement in the matter, which propelled the petitioner to send reminders to respondent no.3 on 19.03.2015 and 16.04.2015. 3. The record shows that, resultantly, on 17.04.2015, respondent no.4 forwarded the petitioner s claim for refund of TED to respondent no.3 for necessary action. 3.1 Once again, the petitioner, after waiting for nearly 7 months, took up the matter with respondent no.5 by s .....

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ith law. 3.4 Accordingly, the petitioner filed a reply dated 08.02.2016 with respondent no.3. The petitioner was also granted a personal hearing by respondent no.3 on 15.03.2016. Thereupon, respondent no.3 passed the impugned order dated 21.04.2016, whereby, the petitioner s request for refund of TED was declined. The reasons given for rejecting the petitioner s request for refund of TED qua goods supplied to a 100% EOUs were briefly as follows: - i) Firstly, since, ab initio exemption from exci .....

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t of the same, the respondents counsel sought accommodation to obtain instructions vis-à-vis the said trade notice. The matter was posted for further proceedings on 06.02.2018, when arguments were heard and judgment was reserved. Counsel for the parties were given time to file written submissions. 5. Since then, written submissions have been filed by both sides. The petitioner, during the course of hearing, was represented by Mr. V. Lakshmi Kumaran assisted by Mr. Yogendra Aldak and Mr. K .....

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h 8.4 of the very same FTP. In support of the aforesaid submission reliance was placed on the judgment of this Court rendered in Kandoi Metal Powders Mfg. Co. Pvt. Ltd. v. Union of India, 2014 (302) E.L.T. 209 (Del.). iii) The respondents having granted the petitioner refund of TED for the two quarters of 2011 i.e. April, 2011 to June, 2011 and July, 2011 to September, 2011, could not have denied the refund of TED for the quarter spread over October, 2011 to December, 2011. The respondents were .....

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graph 8.4 of FTP 2009-2014 and secondly, the said circular, if at all, can have effect only prospectively. In this behalf, the submission made was that the circular which is beneficial to the assessee can apply retrospectively and that which is oppressive or against the interest of assessee can apply only prospectively. For this proposition, reliance was placed on the judgment of the Supreme Court in Suchitra Components Ltd. v. Commissioner of Central Excise, 2008 (11) S.T.R. 430 (S.C.). vi) The .....

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d CENVAT credit. While Rule 18 of the Central Excise Act, 1984 provides for rebate of duty in case of export. ix) Lastly, even if it is assumed without admitting that exemption was available on goods supplied by a DTA supplier to an EOU, the collection of duty by the respondents would be without authority of law as it would be contrary to Article 265 of the Constitution. 7. On the other hand, on behalf of respondents the following broad submissions were made: - i) The petitioner was not entitled .....

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uty by a DTA supplier of goods upon the EOU furnishing a CT-3 form to a DTA supplier. (ii) The fact that TED refund was granted to the petitioner for two quarters would not necessarily lead to a conclusion that the petitioner ought to be granted refund for the third quarter as well. As to why a decision was taken not to grant the petitioner refund for the subsequent quarter, was considered by the respondent no.1 in its meeting held on 17.03.2015. Respondent no.1, for good reason, has declined to .....

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mendment to paragraph 8.3 was only clarificatory and not retrospective in nature. (iv) Furthermore, in support of the respondents stand reliance was placed on Excise Notification No.22/2003-CE dated 31.03.2003 and Excise Circular No.10/2009-Cus dated 25.02.2009. According to the respondents, a perusal of the said notification would show that goods supplied by the DTA unit to an EOU which was categorized as deemed exports were exempted from payment of excise duty. The argument was, when ab initio .....

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ee separate applications with the Joint Director of Foreign Trade for refund of TED. The period and the amount of refund sought qua each of the applications, as it emanates from the record, is as follows: - Sl. No. Period Amount (in Rs.) a). April to June, 2011 20,21,241.00 b). July to September, 2011 96,95,182.00 c). October to December, 2011 83,64,802.86 iv) The applications for April to June, 2011 and July to September, 2011 were rejected, in the first instance, by the licensing authority vid .....

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as W.P.(C) No.8160/2013. The said writ petition was disposed of by this Court vide order dated 27.03.2014. This Court remanded the matter to the DGFT to decide the appeal, as according to it, the provisions of Section 15(1) of the 1992 Act were wide enough to entertain an appeal against the order of the original/ licensing authority. Accordingly, vide order dated 23.07.2014, after recording in detail the submissions advanced on behalf of the petitioner, the court directed that the matter be plac .....

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3.09.2014. However, on the said application an endorsement was made that PRC s decision dated 09.09.2014 pertains to only those cases qua which writ petition was filed by the petitioner. ix) Consequently, the petitioner escalated the matter to the Chairman, PRC vide communication dated 11.10.2014 wherein, inter alia, it was pointed out that notification No.4 dated 18.04.2013 could not impact its application for refund of TED for quarter October, 2011 to December, 2011. x) Despite information and .....

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monstrate in view of the provisions which obtain in the FTP of 2009-2014. 9.2 Therefore, before I proceed further, let me advert to the relevant provisions of the FTP 2009-2014. 9.3 Chapter 6 of the FTP 2009-2014 pertains to EOUs. Para 6.2(b) of the FTP 2009-2014, on which great emphasis has been placed by the respondents, inter alia, provides that an EOU may import and/ or procure from DTA or bonded warehouses in DTA/ International exhibition, held in India, goods which include capital goods, t .....

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inter alia, provides that goods supplied by the main contractor or a sub-contractor to an EOU will be regarded as deemed exports. Paragraph 8.3 which adverts to the benefits available against deemed exports, and is most crucial for the purposes of this case, is extracted in its entirety hereafter: - 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 co .....

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goods would be eligible for refund of TED in terms of paragraph 8.3(c) of the FTP provided the recipient of the goods does not avail of CENVAT credit or rebate on such goods. 11.1 A declaration to that effect in the prescribed form is required to be filed by the applicant while seeking refund. In other words, the DTA supplier can seek refund only if the EOU has not availed of CENVAT credit or rebate on such goods. 12. As indicated above, paragraph 8.3 of the FTP 2009-2014 was amended vide notif .....

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tification No.4 dated 18.04.2013 brought about an amendment in clause (c). The amendment brought about is to the effect that refund of TED would be given only if exemption is not available. Furthermore, exemption from TED was made available, inter alia, qua supply of goods by a DTA unit to an EOU. Clearly, the amendment sought to do away with the provision in the unamended clause (c) of para 8.3 of the FTP 2009-2014 which granted exemption from TED only where supplies were made against ICB, with .....

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t period for which the claim was made. The fact that the petitioner could or could not get refund under the CENVAT Credit Rules or under the provisions of the Central Excise Act is, in my view, not relevant for adjudicating upon the issue at hand. The Court, for adjudicating the issue at hand, is in my opinion, required to look at only the relevant provisions of the FTP. 15. I may also note that the petitioner has contended that it was not possible for it to avail of exemption from Central Excis .....

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ed to claim refund is unsustainable as there is no bar in law in paying duty by utilizing CENVAT credit (See paragraph 17 of Jayaswal Neco Ltd.). 15.2 For the very same reason, I am not impressed by the argument advanced on behalf of the respondents that the refund of TED would result in monetization of CENVAT credit. The object of the FTP is to provide impetus to export either by direct physical export or via the deemed export route. In case refund of TED is not given qua deemed export, it woul .....

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andoz Pvt. Ltd. can have no application to the facts of this case as in that case a 100% EOU had approached the Court to seek refund and not the DTA supplier. In any event, the said judgment can have only persuasive value for this Court. 19. Thus, for the foregoing reasons I am inclined to allow the writ petition. Accordingly, the impugned communication dated 21.04.2016, issued by respondent no.3, whereby the petitioner s claim for refund was declined is set aside. The respondents are directed t .....

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