Refund of Terminal Excise Duty to DTA suppliers: credit-paid duty must be reversed, not refunded in cash.

A DTA supplier supplying goods to an EOU is entitled to refund of Terminal Excise Duty under the Foreign Trade Policy, which operates independently of the CENVAT regime. Where TED was paid in cash, the refund is to be granted in cash in accordance with the policy. Where TED was discharged by utilising CENVAT credit, the commensurate amount is not refundable in cash and must instead be reversed to the CENVAT credit account. The later GST regime does not displace this substantive entitlement, and the refund claim must be worked out in the manner recognised by law.

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Issues: Whether a DTA supplier of goods to an EOU, having paid Terminal Excise Duty by utilising CENVAT credit, is entitled to refund under the applicable Foreign Trade Policy and, if so, the manner in which such refund is to be granted.

Analysis: The controlling principle was already settled by the Supreme Court decision in Sandoz Private Limited. The entitlement of a DTA supplier to refund of TED flows from the Foreign Trade Policy, which operates independently of the CENVAT regime under the Central Excise framework. Where TED was paid in cash, refund is payable in cash in accordance with the policy. Where TED was paid by utilising CENVAT credit, the commensurate amount is not refundable in cash but has to be reversed to the CENVAT credit account of the concerned entity. The later GST regime did not displace this substantive entitlement, and the refund claim had to be given effect in accordance with law.

Conclusion: The respondent was entitled to refund of TED, and in a case of payment through CENVAT credit, the refund had to be worked out in the manner recognised by law.

Ratio Decidendi: A DTA supplier supplying goods to an EOU is entitled to refund of TED under the applicable Foreign Trade Policy, and if the duty was paid through CENVAT credit, the refund must be given by reversal of commensurate credit rather than cash.

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