EOU clearances to DTA purchasers: special export scheme overrides general excise collection rules and refund stays subject to unjust enrichment

A special EOU scheme under the EXIM Policy and Handbook of Procedures prevailed over the general Central Excise collection framework, so duty on clearances by a 100% EOU to DTA purchasers against foreign exchange payment was held payable by the DTA purchaser, not the EOU. The claimed provisional assessments were not substantiated on the record, so the clearances were treated as non-provisional. Because the assessees failed to show that the duty incidence had not been passed on, refund remained subject to the doctrine of unjust enrichment and could not be granted mechanically.

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Issues: (i) Whether, in the case of clearances by a 100% EOU to DTA purchasers against payment in foreign exchange and after permission of the Development Commissioner, the duty is payable by the EOU or by the DTA purchaser under paragraph 9.26 of the Handbook of Procedures, 1997-2002. (ii) Whether the clearances in question were provisional. (iii) Whether refund could be granted without applying the doctrine of unjust enrichment.

Issue (i): Whether, in the case of clearances by a 100% EOU to DTA purchasers against payment in foreign exchange and after permission of the Development Commissioner, the duty is payable by the EOU or by the DTA purchaser under paragraph 9.26 of the Handbook of Procedures, 1997-2002.

Analysis: The EOU scheme under the EXIM Policy and the Handbook of Procedures was treated as a special and composite scheme. Clearances under paragraph 9.10(b) were regarded as deemed exports, and paragraph 9.26 specifically fastened the duty and tax burden on the DTA purchaser. The general charging and collection provisions in the Central Excise Rules could not override this special arrangement. Applying the principle of generalia specialibus non derogant, the specific EOU provisions were held to prevail, and the legal fiction attaching to such clearances had to be carried to its logical conclusion.

Conclusion: Duty on the impugned clearances was not payable by the 100% EOU and was payable by the DTA purchaser; this issue was decided in favour of the assessee.

Issue (ii): Whether the clearances in question were provisional.

Analysis: The material on record did not establish that the assessments were provisional. The claim of provisionality was not substantiated by the assessees.

Conclusion: The clearances were held not to be provisional; this issue was decided against the assessee.

Issue (iii): Whether refund could be granted without applying the doctrine of unjust enrichment.

Analysis: Since the assessments were not provisional, the burden to rebut the presumption of passing on the duty incidence remained on the assessees. The record was found insufficient to show that the duty burden had not been passed on, so refund could not be sanctioned mechanically or suo motu.

Conclusion: Refund was held to remain subject to proof against unjust enrichment; this issue was decided against the assessee to that extent.

Final Conclusion: The substantive duty liability on the specified EOU clearances was shifted to the DTA purchaser, but the assessees failed on provisional assessment and on the bar of unjust enrichment, so refund relief was confined by those requirements.

Ratio Decidendi: A specific EOU dispensation in the EXIM policy and Handbook of Procedures prevails over the general Central Excise collection scheme, and where that special scheme fastens duty liability on the DTA purchaser, the corresponding legal fiction must be given full effect.

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