Deemed export refund for EOU supplies survives CT3 exemption procedure under the Foreign Trade Policy, 2009.

Supplies by a DTA unit to a 100% EOU are treated as deemed exports under the Foreign Trade Policy, 2009, and where the supplies are not made against international competitive bidding, the policy provides refund of terminal excise duty. The refund is to be worked out under the policy provisions governing deemed exports, and the availability or non-availment of the excise exemption procedure under the CT3 mechanism does not displace that policy-based entitlement. The CENVAT regime operates independently of Foreign Trade Policy benefits, and prior judicial support was treated as reinforcing the refund claim.

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Issues: Whether supplies made by a DTA unit to a 100% EOU constitute deemed exports under the Foreign Trade Policy and, if so, whether the supplier is entitled to refund of terminal excise duty notwithstanding the exemption procedure under the CT3 mechanism.

Analysis: Supplies to EOUs were treated as deemed exports under Para 8.2(b) of the Foreign Trade Policy, 2009. Under Para 8.3(c), the benefit for deemed exports, where supplies are not made against international competitive bidding, is refund of terminal excise duty. The refund entitlement is to be worked out under Paras 8.4 and 8.5. The Court followed the view that the exemption procedure under the excise notification and CT3 mechanism does not displace the policy-based refund right, and that the CENVAT regime operates independently of the foreign trade policy benefits. The prior decision of the Division Bench of the Delhi High Court, which had quashed an identical rejection based on the same resolution, was treated as binding and persuasive support for the refund claim.

Conclusion: The supplier was entitled to refund of terminal excise duty under the Foreign Trade Policy, 2009, and the impugned rejection could not be sustained.

Final Conclusion: The writ petition was allowed and the refund claim was directed to be processed under the 2009 policy within the time specified by the Court.

Ratio Decidendi: Where supplies to an EOU are deemed exports under the Foreign Trade Policy and are not made against international competitive bidding, the policy grants refund of terminal excise duty, and that entitlement is not defeated by the availability or non-availment of the excise exemption procedure.

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