2001 (5) TMI 56 - HC - Central Excise

Court grants petitioner refund of terminal Excise Duty at 12% interest, overturns DGFT denial.

IFGL REFRACTORIES LTD. Versus JOINT DIRECTOR GENERAL OF FOREIGN TRADE

The Court granted the petitioner a refund of terminal Excise Duty with interest at 12% per annum, overturning the DGFT's denial. The Court held that the ... Export - Interpretation of statute Issues Involved:1. Refund of terminal Excise Duty.2. Entitlement under the Export and Import Policy.3. Jurisdiction of the Court.4. Interest on the refund claim.Summary:Refund of Terminal Excise Duty:The petitioner, a manufacturer supplying refractory items to Vishakhapatnam Steel Plant (VSP) under an Advance Intermediate Licence, sought a refund of terminal Excise Duty amounting to Rs. 84,91,806/- with interest at 24% per annum. The petitioner had previously received refunds for earlier quarters but was denied for subsequent ones by the Director General of Foreign Trade (DGFT). The DGFT argued that the petitioner was entitled to an ab initio exemption of Excise Duty u/r 13 of the Central Excise Rules, 1944, and Notification No. 49/94, which the petitioner had not availed.Entitlement under the Export and Import Policy:The petitioner contended that supplies made under the 'Duty Exemption Scheme' should be regarded as 'Deemed Exports' per paragraph 122 of the Exim Policy, entitling them to a refund of terminal Excise Duty. The DGFT's rejection was based on the Handbook of Procedures, which did not explicitly provide for such refunds under Advance Intermediate Licences. The Court held that the Handbook cannot override the substantive rights conferred by the Exim Policy, which has statutory force u/s 5 of the Foreign Trade (Development & Regulation) Act, 1992. The petitioner has a substantive right to the refund as per paragraph 122(c) of the Exim Policy.Jurisdiction of the Court:The Court asserted its jurisdiction, noting that the impugned order by the DGFT was passed pursuant to a previous order of the Court. The petitioner's claim for refund was within the territorial jurisdiction where the business is situated, and the Court was the appropriate forum for the petitioner to approach.Interest on the Refund Claim:The Court directed the DGFT to refund Rs. 84,91,806/- to the petitioner but modified the interest rate from 24% to 12% per annum, citing Supreme Court decisions (AIR 1984 SC 320, AIR 1987 SC 2257). The interest was to be computed from the date of the impugned order.Conclusion:The impugned order was set aside, and the petitioner was granted the refund of terminal Excise Duty with interest at 12% per annum. The petitioner was also awarded costs assessed at 200 gms to be paid by the respondents.