Writ court cannot pre-empt foreign trade authority's discretion on terminal excise duty refund claims

The writ court could not direct the foreign trade authority to decide a refund claim in a particular manner before any formal rejection order was challenged, because the power to implement and clarify the Foreign Trade Policy lies first with the Directorate General of Foreign Trade. The claim for refund of terminal excise duty on supplies made against International Competitive Bidding, including where duty was paid through CENVAT Credit, required initial examination of the policy and credit rules by the competent authority. The Single Judge's directions were therefore unsustainable, the impugned orders were set aside, and the refund application was remitted for a fresh decision in accordance with law.

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Issues: Whether the writ court could direct the Directorate General of Foreign Trade to decide the refund claim in a particular manner before a formal rejection order was passed, and whether the claim for refund of terminal excise duty paid on supplies made against International Competitive Bidding under the Foreign Trade Policy required first consideration by the competent authority.

Analysis: The supplies were made against International Competitive Bidding and were treated as exempted under the relevant excise notification and the Foreign Trade Policy. The Court held that, once it had found that no formal rejection order was under challenge at the threshold stage, it was not appropriate for the writ court to control the manner in which the statutory authority should exercise its discretion. The power to carry out and clarify the Foreign Trade Policy lies with the Directorate General of Foreign Trade, and the question whether refund of terminal excise duty is available when the duty was paid through CENVAT Credit required examination of the policy and the credit rules by the competent authority in the first instance.

Conclusion: The directions issued by the Single Judge were unsustainable. The refund claim had to be reconsidered afresh by the Directorate General of Foreign Trade in accordance with law.

Final Conclusion: The impugned orders were set aside and the matter was remitted to the competent authority for a fresh decision on the refund application.

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