AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (12) TMI 77
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..... The policy (hereafter referred to as ""ExIm Policy"") was published on 31.03.1997 for the period 1997-2002. It was amended on 1.4.1999. One of the amendments in Chapter 2 defined what are deemed exports as those transactions in which goods supplied do not leave the country (paragraph 10.1). Paragraph 10.2 defined the categories for such deemed exports. Paragraph 10.2 (g) included the category of supply of goods to the Power, Oil and Gas sector including Refineries not covered in (f). One of the benefits available under paragraph 10 for deemed exports was terminal excise duty refund [paragraph 10.3 (c)]. The paragraph 4.11 of the policy - effective for 1999-2000 is reproduced below: - "Procedure 4.11 The Director General of Foreign Trade may, in any case or class of cases, specify the procedure to be followed by an exporter or importer or by any licensing, competent or other authority for the purpose of implementing the provisions of the Act, the Rules and Orders made thereunder and this Policy. Such procedures shall be included in the Handbook (Vo.I), Handbook (Vol.2) and ITC (HC) Classifications of Export and Import Items, and published by means of a Public Notice. Such proced....
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.... in unassembled/disassembled condition as well as plants, machinery, accessories, tools, dies and such goods which are used for installation purposes till the stage of commercial production and spares to the extent of 10% of the FOR value to fertiliser plants; (f) supply of goods to any project or purpose in respect of which the Ministry of Finance, by a notification, permits the import of such goods at zero customs duty coupled with the extension of benefits under this chapter to domestic supplies; (g) supply of goods to the power and refineries not covered in (f) above and coal, hydrocarbon, rail, road, port, civil aviation, bridges and other infrastructure projects provided minimum specific investment is Rs. 100 crores or more; (h) supply of marine freight containers by 100% EOU (Domestic freight containers-manufacturers) provided the said containers are exported out of India within 6 months or such further period as permitted by the Customs; and (i) supply to projects funded by UN agencies. The benefits of deemed exports shall be available under paragraph (d) (e) (f) and (g) only if the supply is made under the procedure of International Competitive Bidding (ICB). 10.....
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....supply of goods to the power sectors would be ineligible for deemed export benefits i.e. terminal excise duty refund under paragraph 10.3(c) by virtue of paragraph 10.11 of the Hand Book of Procedure which did not enable such benefit or refund. In view of this communication, the BHEL insisted - in a letter of 28.6.2000 - upon the payment of terminal excise duty. The petitioner submits that it repeatedly sought clarification from the DGFT but was unsuccessful in eliciting any appropriate response. In this premise, it is urged that the withdrawal of terminal excise duty refund benefit is both beyond the power conferred under paragraph 4.11 of the ExIm Policy and Section 5 of the Act. It is besides urged that such alteration is arbitrary and violative of the principle of promissory estoppel which is part of article 14 of the Constitution of India. 7. Learned counsel Mr. Manish Kumar besides reiterating the grounds argued that the judgment of the Supreme Court in Director General of Foreign Trade and Ors. v. Kanak Exports and Ors. (2016) 2 SCC 226 is conclusive in this regard. Learned counsel particularly highlighted paragraph 97, 98 & 99 of the said judgment which reads as follows: -....
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....are co-related with the duty. It is further stated that the five years policy was announced in 1992 for the first time; the second five-year policy was announced in 1997. Both these contain certain basic policy elements and detailed provisions regarding entitlement of sector specific benefits spelt out in the Hand Book of Procedures of 1997-2002. The Hand Book, therefore, had to be read as part of the policy effectuating it. The Deemed Export Promotion Benefit Scheme (DEPB) is given in the policy but its rates are calculated on the basis of the customs duty available on inputs enumerated in Appendix 28 of the Hand Book. The policy defines for duty neutralization but that does not imply that each and every project gets DEPB benefits. Only those listed in the Appendix apply. For instance REP license through the scheme for gems and jewellery is given in the policy but REP rates are given in Appendix 30 of the Handbook. It is submitted that deemed export benefits are co-related with the incidence of duty. In this regard, it is stated that since under the policy three benefits of deemed exports were given, i.e., 10.3 (a) (b) and (c) to supplies against advance intermediate license and f....
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....exploration project and such supplies are made under ICB or limited global tender, without reference to bid evaluation methodology. The domestic supplier shall be eligible for the benefits given in paragraph 10.3 (c) and (d) only with further stipulation that the refund of Terminal Excise Duty under paragraph 10.3 (c) would be restricted to the amount that would have been payable as excise @ 3%. Supplies under paragraph 10.2 (g) of the policy to the new refineries being set up during the Ninth plan period, shall be entitled for deemed export benefits provided items and equipments are covered under customs notification No.55/97 dt.13.6.97, as amended from time to time and such supplies are made under ICB or limited global tender without referring to bid evaluation methodology. The domestic supplier shall be eligible for the benefits given in paragraph 10.3 (a) (b) and (d) of the policy." 12. It is quite clear that firstly the eligibility - called entitlement by the petitioner to the refund and terminal duty as a deemed export benefit was introduced for the first time through an amendment of the Hand Book of Procedures. Thus, the question of its being ultra vires the Act or the Pol....