Court grants petition for Terminal Excise Duty refund, emphasizing entitlement & non-retroactive amendments

The court allowed the petition, setting aside the impugned orders and the Policy Circular dated 15.03.2013, directing the respondents to process the petitioner's Terminal Excise Duty (TED) refund claim. The court emphasized the petitioner's clear entitlement to TED refund under the Foreign Trade Policy (FTP) before the amendment on 18.04.2013, stating that subsequent amendments could not retrospectively affect this right. The court also clarified that the Directorate General of Foreign Trade (DGFT) lacked the authority to amend the FTP, emphasizing alignment between DGFT circulars and the FTP.

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Issues Involved:
1. Rejection of the petitioner’s claim for refund of Terminal Excise Duty (TED).
2. Interpretation and applicability of the Foreign Trade Policy (FTP) provisions.
3. Validity of the Policy Circular dated 15.03.2013 issued by DGFT.
4. Retrospective application of amendments to FTP.
5. Jurisdiction and authority of DGFT in issuing policy circulars.

Detailed Analysis:

1. Rejection of the petitioner’s claim for refund of Terminal Excise Duty (TED):
The petitioner challenged the orders dated 05.06.2013, 23.01.2014, and 28.08.2014, which rejected their claim for refund of TED for supplies made to 100% Export Oriented Units (EOUs) from January 2012 to April 2013. The petitioner argued that under paragraphs 8.2(b), 8.3(c), and 8.5 of the FTP 2009-14, supplies to EOUs qualify as "deemed exports" and are eligible for TED refund. The respondents contended that the supplies were exempt from excise duty and that the petitioner’s method of utilizing Cenvat Credit to pay excise duty and then seeking a refund circumvented the Cenvat Credit Rules and FTP.

2. Interpretation and applicability of the Foreign Trade Policy (FTP) provisions:
The court examined paragraphs 8.2, 8.3, and 8.5 of the FTP before and after the amendment on 18.04.2013. Initially, paragraph 8.3(c) provided for TED exemption for supplies against International Competitive Bidding (ICB) and refunds in other cases. The amendment introduced a condition that refunds would only be given if exemption was not available, which the court found to be substantive, not clarificatory. The court held that the petitioner had a vested right to claim TED refund for supplies made before 18.04.2013 under the unamended FTP.

3. Validity of the Policy Circular dated 15.03.2013 issued by DGFT:
The court found that the Policy Circular dated 15.03.2013, which clarified that no TED refund should be provided for goods exempt from excise duty, was beyond DGFT’s powers. Section 6 of the Foreign Trade (Development & Regulation) Act, 1992, limits DGFT’s role to advising the Central Government and carrying out the FTP, not amending it. The court emphasized that any circular inconsistent with the FTP is invalid.

4. Retrospective application of amendments to FTP:
The court reiterated that delegated or subordinate legislation, such as amendments to the FTP, cannot be retrospective unless expressly provided by the statute. Section 5 of the Act does not authorize retrospective changes. Therefore, the substantive amendment to paragraph 8.3(c) of the FTP could not affect the petitioner’s vested rights for the period before 18.04.2013.

5. Jurisdiction and authority of DGFT in issuing policy circulars:
The court clarified that DGFT’s authority does not extend to amending the FTP. Any clarification or circular issued by DGFT must align with the existing FTP. The court cited previous judgments, including M/s Atul Commodities Pvt. Ltd. and Ors. v. Commissioner of Customs and Narendra Udeshi v. Union of India, to support this position.

Conclusion:
The court allowed the petition, setting aside the impugned orders and the Policy Circular dated 15.03.2013, directing the respondents to process the petitioner’s TED refund claim. The court underscored that the petitioner’s entitlement to TED refund under the FTP before the amendment was clear and unambiguous, and any subsequent amendments could not retrospectively affect this right. The pending application was also disposed of.

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