Terminal excise duty refund turns on actual exemption conditions, not automatic ab initio exemption under competitive bidding supplies.

Supplies made under paragraph 8.2(g) of the Foreign Trade Policy 2009-14 were not automatically or ab initio exempt from excise duty merely because they were made under international competitive bidding. Exemption depended on the applicable excise notification conditions being satisfied, including the linked customs-duty exemption, and the record showed those conditions were not met. The later circular denying refund on an ab initio exemption basis could not control the claim, and the 2018 amendment barring refund for ab initio exempt supplies was substantive and not retrospective for 2009-11 supplies. Where exemption was unavailable and duty had been paid, terminal excise duty refund remained payable.

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Issues: Whether supplies made under paragraph 8.2(g) of the Foreign Trade Policy 2009-14 were wrongly treated as ab initio exempt from excise duty so as to deny terminal excise duty refund; and whether the petitioner was entitled to refund of terminal excise duty for supplies where exemption had not been availed but duty had been paid.

Analysis: The refusal to grant refund proceeded on the assumption that every supply under international competitive bidding was automatically and unconditionally exempt from excise duty. The policy framework did not support that assumption. Under the applicable excise notification, exemption depended on the goods also being exempt from customs duty, and the record showed that the relevant supplies were not covered by such customs exemption. The supplies therefore were not ab initio exempt in the sense used by the respondents, and the circular denying refund on that basis could not govern the claim. The subsequent amendment introducing an express bar against refund for supplies that were exempt ab initio was substantive and could not be applied retrospectively to supplies made during 2009-11. A later circular issued in 2018 also reflected the correct understanding that where exemption under the relevant excise notification was unavailable, refund of terminal excise duty could be granted.

Conclusion: The petitioner was entitled to terminal excise duty refund, and the rejection of its claims was unsustainable.

Final Conclusion: The denial of refund was quashed and the authorities were directed to process and release the petitioner's terminal excise duty refund claims within the stipulated time.

Ratio Decidendi: A supply cannot be treated as ab initio exempt from excise duty merely because it is made under international competitive bidding unless the applicable exemption conditions are actually satisfied; where exemption is unavailable and duty is paid, terminal excise duty refund remains payable under the Foreign Trade Policy as it then stood.

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