Export policy refund rights cannot be defeated by handbook procedure; terminal excise duty refund carried interest at 12%.

A deemed-export supply under the Export and Import Policy entitled an advance intermediate licence holder to refund of terminal excise duty, because the policy conferred a substantive benefit that could not be curtailed by the absence of a matching procedure in the Handbook of Procedures. The availability of an exemption route under the Central Excise Rules did not defeat the policy-based refund claim where the authority had earlier refused to treat the goods as intermediate goods. The Court also accepted entitlement to interest on the refunded amount, but rejected 24% per annum for lack of legal basis and fixed interest at 12% per annum from the date of the impugned order.

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Issues: (i) Whether the petitioner, as an advance intermediate licence holder supplying inputs for export production, was entitled to refund of terminal excise duty under the Export and Import Policy notwithstanding the absence of a corresponding procedure in the Handbook of Procedures and the availability of an exemption route under the Central Excise Rules; (ii) Whether the petitioner was entitled to interest on the refunded amount, and if so, at what rate.

Issue (i): Whether the petitioner, as an advance intermediate licence holder supplying inputs for export production, was entitled to refund of terminal excise duty under the Export and Import Policy notwithstanding the absence of a corresponding procedure in the Handbook of Procedures and the availability of an exemption route under the Central Excise Rules.

Analysis: The supply was treated as a deemed export under the policy framework. The Court held that paragraph 122(c) of the Export and Import Policy 1992-97 conferred a substantive benefit of refund of terminal excise duty, and that such benefit could not be defeated merely because the Handbook did not separately provide a procedure for the same. The Handbook was treated as procedural in nature and incapable of whittling down the policy right. The Court also found that the Excise authority's earlier refusal to treat the goods as intermediate goods meant that the exemption route was not the basis on which the petitioner could be denied refund. The petitioner having paid duty, and the policy permitting the beneficial route, was entitled to refund.

Conclusion: The petitioner was entitled to refund of terminal excise duty, and the impugned order rejecting that claim was unsustainable.

Issue (ii): Whether the petitioner was entitled to interest on the refunded amount, and if so, at what rate.

Analysis: The Court declined the claimed rate of 24% per annum for want of legal basis, but accepted that the petitioner was entitled to interest on the refunded amount. The rate was fixed at 12% per annum from the date of the impugned order.

Conclusion: Interest was payable at 12% per annum, not at 24% per annum.

Final Conclusion: The writ petition succeeded in substance, the denial of refund was set aside, and the petitioner obtained refund of terminal excise duty with interest at the rate fixed by the Court.

Ratio Decidendi: A substantive benefit conferred by an export policy cannot be denied by a procedural handbook, and where the more beneficial fiscal relief is available, the assessee may be granted that relief if the governing policy so permits.

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