Court rules in favor of Export Oriented Unit in refund claim under Policy Circular

The court found in favor of the petitioner, a 100% Export Oriented Unit, in their claim for refund under Policy Circular No.16 (RE-2012/2009-14). The court emphasized the violation of natural justice principles in rejecting the refund applications based on cryptic communications and the need for a personal hearing and detailed order. It directed the authorities to provide a fair opportunity for the petitioner to present contentions, highlighting the insufficiency of relying solely on the policy circular for rejection. The court ordered a new comprehensive speaking order within 8 weeks, stressing the importance of due process in refund application adjudication.

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Issues:
Claim of refund by petitioner under Policy Circular No.16 (RE-2012/2009-14) dated 15.3.2013 issued by Director of Foreign Trade - Rejection of refund applications by authorities based on cryptic communications - Violation of principles of natural justice in disposal of refund application - Request for personal hearing and speaking order - Reliance on policy circular for rejection of refund application - Need for competent authority to consider rival contentions.

Analysis:
The petitioner, a 100% Export Oriented Unit (EOU), sought relief declaring Policy Circular No.16 (RE-2012/2009-14) as ultra vires and sought writs of Certiorari and mandamus for refund claims. The petitioner's export activities involved supplies from a DTA unit without claiming Cenvat credit, relying on deemed exports benefits under the Foreign Trade Policy. Despite regular refund grants, two applications were rejected through cryptic communications, citing the policy circular dated 15th March, 2013.

The court noted the absence of proper speaking orders in the refund application disposal, violating principles of natural justice. Emphasizing the need for a personal hearing and a detailed order, the court directed the authorities to provide the petitioner with a fair opportunity to present contentions. The court highlighted that reliance solely on the policy circular for rejection was insufficient, urging the competent authority to address all raised contentions in a comprehensive speaking order.

Acknowledging the parties' agreement to a personal hearing and a detailed order issuance, the court clarified that a fresh order must not solely rely on previous cryptic communications. It mandated the authorities to pass a new order promptly within 8 weeks, ensuring a thorough consideration of all contentions, including the validity of the policy circular in denying the refund. The judgment concluded by disposing of the writ petition without costs, emphasizing the importance of due process and reasoned decision-making in refund application adjudication.

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