2001 (5) TMI 56 - HC - Central Excise

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

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 ... Deemed exports - Refund of terminal Excise duty - Duty Exemption Scheme / Advance Intermediate Licence - Handbook of Procedures cannot override Exim Policy - Exemption under Rule 13 and Notification No. 49/94 - Judicial direction to public authority to give relief - Interest on refund at 12% per annumDeemed exports - Refund of terminal Excise duty - Duty Exemption Scheme / Advance Intermediate Licence - Handbook of Procedures cannot override Exim Policy - Whether the petitioner supplying refractory items to an advance licence holder under the Duty Exemption Scheme is entitled to refund of terminal Excise duty under paragraph 122(c) of the Exim Policy despite the Handbook of Procedures not expressly providing the procedure. - HELD THAT: - The Court held that paragraph 122 of the Exim Policy grants a substantive right to refund of terminal Excise duty in respect of deemed exports and that the Handbook of Procedures, being procedural, cannot whittle down or override the substantive promise made by the Policy. The Exim Policy contemplates either exemption from duty or refund where duty has been paid so that exporters effectively receive duty-free inputs; the petitioner, having acted on the Policy and paid duty, acquired the substantive right to claim refund under paragraph 122(c). The absence of an express procedural provision in the Handbook for advance intermediate licence cases does not remove the substantive right; DGFT should have considered the claim on that basis rather than denying relief solely because the Handbook did not spell out the procedure. Consequently the petitioner was held entitled to refund of terminal Excise duty for the relevant period. [Paras 31, 32, 33, 34, 35]Petitioner entitled to refund of terminal Excise duty under paragraph 122(c) of the Exim Policy notwithstanding the Handbook's omission.Exemption under Rule 13 and Notification No. 49/94 - Judicial direction to public authority to give relief - Whether DGFT correctly refused the refund claim on the ground that the petitioner was entitled to exemption under Rule 13/Notification No. 49/94 and therefore should have sought remedy from Central Excise authorities. - HELD THAT: - The Court found that DGFT misdirected itself in treating the petitioner as entitled to exemption under Rule 13 read with Notification No. 49/94 and in concluding that refund did not arise for that reason. The Excise Authority had already found on facts that the petitioner's goods were not intermediate goods qualifying for duty-free removal and the petitioner had paid duty. DGFT lacked power to upset that factual determination and, having regard to the petitioner's payment of duty and the Policy entitlement to refund, should have adjudicated the refund claim instead of directing the petitioner to seek redress exclusively from Central Excise. The Court therefore set aside the impugned order of DGFT. [Paras 26, 30, 31, 36]DGFT was misdirected in relying on exemption under Rule 13/Notification and its order refusing refund on that basis was set aside.Interest on refund at 12% per annum - Rate and commencement of interest payable on the refund directed in favour of the petitioner. - HELD THAT: - The Court declined the petitioner's claim for interest at 24% per annum, holding there is no law to award interest at that rate. Relying on precedents, the Court awarded interest at 12% per annum, to be computed from the date of passing of the impugned DGFT order until payment. [Paras 38]Interest awarded at 12% per annum from the date of the impugned order.Judicial direction to public authority to give relief - Whether the High Court could itself direct payment of the refund and costs. - HELD THAT: - Relying on authority permitting courts, in a proper case, to give directions which the public authority should have given, the Court directed DGFT to pay the refund due to the petitioner. The Court also awarded costs to the petitioner assessed at 200 grams (to be paid by the respondents). [Paras 38, 39]Court directed payment of the refund by DGFT and awarded costs to the petitioner.Final Conclusion: Impugned DGFT order set aside; petitioner entitled to refund of terminal Excise duty for the period from October, 1994 to June, 1995, payment directed by DGFT in the sum adjudged by the Court, with interest at 12% per annum from the date of the impugned order and costs assessed at 200 grams payable by the respondents. 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.