High Court Orders Refund Processing for Deemed Exports, Emphasizes Policy Compliance

The High Court allowed the petition, quashing the communication from the Deputy Director of Foreign Trade and directing the authorities to process the refund claim within two months. The Court held that subsequent amendments exempting Terminal Excise Duty payment could not deny refunds already made, emphasizing entitlement to refunds for deemed exports under the Foreign Trade Policy 2009-14. The judgment highlighted the importance of adhering to the policy in force during the relevant period and ensuring rightful refund entitlements despite subsequent policy changes.

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Issues:
Challenge to communication seeking declaration of eligibility for refund of Terminal Excise Duty (TED) paid for goods supplied to Export Oriented Units (EOU) under Foreign Trade Policy 2009-14.

Analysis:
1. The petitioner, a Private Limited Company, supplied computer systems to EOU during June 2009 to October 2009, paying TED. The petitioner filed a refund application, rejected by the authorities citing ineligibility due to ab initio exemption from excise duty.

2. The petitioner argued that amendments restricting refund eligibility were made after the relevant period. Citing relevant case laws, the petitioner contended that the circular clarifying the policy was ultra vires and could not be applied retrospectively.

3. Respondents argued that the circular clarified that no refund should be provided for supplies ab initio exempted from excise duty. Referring to the Bombay High Court judgment, they claimed the amendment was clarificatory and retroactive.

4. The High Court analyzed the benefits and eligibility criteria under the FTP 2009-14 for deemed exports. It held that subsequent amendments exempting TED payment could not deny refunds already made. Citing judgments from Calcutta, Delhi, and Madras High Courts, the Court emphasized entitlement to TED refund for deemed exports.

5. The Court noted that the Bombay High Court's view on the circular's clarificatory nature differed from the Delhi High Court's interpretation. It emphasized that amendments to the FTP indicated a prospective liberalization of policy.

6. Consequently, the Court allowed the petition, quashing the communication from the Deputy Director of Foreign Trade. It directed the authorities to process the refund claim in accordance with the 2009 Policy within two months, emphasizing the prospective nature of policy amendments.

7. The judgment highlighted the importance of adhering to the policy in force during the relevant period and ensuring the rightful refund entitlements for deemed exports, despite subsequent policy amendments.

Conclusion:
The High Court's decision emphasized the need to interpret policy provisions in line with the period of relevant transactions, ensuring fairness and adherence to established legal principles governing refund entitlements for deemed exports under the Foreign Trade Policy.

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