TaxTMI 
TaxTMI 
2018 (1) TMI 1064
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....ng to the petitioner, it is entitled to refund of TED on the supplies made to 100% EoUs as in terms of paragraph 8.2 (b) of the Foreign Trade Policy 2009-14 (hereafter 'the FTP'), the supply of goods to EOUs would qualify as 'deemed exports' and thus in terms of paragraph 8.3(c) read with paragraph 8.5 of the FTP, the same were eligible for refund of TED. 4. The respondents dispute the same as according to the respondents, the supplies made by the petitioner were exempt from payment of excise duty and refund of TED under the FTP is available only in respect of those supplies that are otherwise exigible to excise duty. Respondents further claim that the petitioner had paid the excise duty by utilising Cenvat Credit and the procedure adopted by the petitioner to first utilize Cenvat Credit for payment of excise duty and then seeking a refund of the same amounts to circumventing the Cenvat Credit Rules and the FTP. 5. Briefly stated, the relevant facts necessary to address the controversy involved in the present petition are as under:- 5.1 The petitioner is a manufacturer of Motor Vehicle Parts (Back Plates) and its unit is located in a Domestic Tariff Area (DTA). The petitio....
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....f supply of goods by main/subcontractors shall be regarded as 'Deemed Exports' under the FTP, provided goods are manufactured in India: (a) Supply of goods against Advance Authorisation/Advance Authorisation for annual requirement/DFIA; (b) Supply of goods to EOU/STP/EHTP/BTP; (c) Supply of capital goods to EPCG Authorisation holders; xxxx xxxxx xxxx 8.3 Benefits for Deemed Exports Deemed exports shall be eligible for any/all of following benefits in respect of manufacture and supply of goods qualifying as deemed exports subject to terms and conditions as in HBP v1:- (a) Advance Authorisation/Advance Authorisation for annual requirement/DFIA. (b) Deemed Export Drawback. (c) Exemption from terminal excise duty where supplies are made against ICB. In other cases, refund of terminal excise duty will be given. Exemption from TED shall also be available for supplies made by an Advance Authorization holder to a manufacturer holding another Advance Authorization if such manufacturer, in turn, supplies the product(s) to an ultimate exporter. 8.5 Eligibility for refund of terminal excise duty/drawback 'Supply of goods will be eligible for r....
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....8.3 (a), (b) & (c) of the Policy, whichever is applicable.' Relevant sub-para of 8.2 Benefit available as given in Para 8.3, whichever is applicable (a) (b) (c) (a) Yes (for intermediate supplies against an invalidation letter) Yes (against ARO or Back to Back letter of credit) Exemption in case of invalidation Refund in case of ARO or back to back letter of credit (b) Yes Yes Exemption (c) Yes Yes Refund (d) Yes Yes Exemption (f) Yes Yes (i) Exemption (ii) Exemption, if ICB. Refund, if without ICB. (h) No Yes Refund (i) Yes Yes No (j) Yes Yes Refund 8. The respondents contend that the aforementioned notification was only clarificatory and it was never the intention of the Central Government to allow refund of TED on goods supplied to EOUs that was exempt from charge of excise duty. The said contention is unpersuasive. First of all, the tenor of the notification dated 18.04.2013 does not indicate that it is clarificatory; on the contrary, it expressly provides that the notification is being issued in exercise of powers conferred under Section 5 of the Act to make ....
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....fund of TED in certain cases. It is not disputed that the goods supplied by the petitioner to the EOUs constituted 'deemed exports' and thus, the petitioner had a vested right to claim refund of excise duty in respect of goods supplied during the period prior to 18.04.2013 in terms of the then applicable FTP. 12. This Court is also not persuaded to accept the policy circular issued by the DGFT (Policy Circular No. 16 (RE-2012/2009-14) dated 15.03.2013) seeking to clarify that no refund of TED should be provided in cases where the supplies of goods are ab initio exempted from payment of excise duty, is binding. The same is clearly beyond the powers of the DGFT. 13. Section 6 of the Act provides for appointment and functions of the DGFT and is set out below:- '6. Appointment of Director General and his functions. (1) The Central Government may appoint any person to be the Director-General of Foreign Trade for the purposes of this Act. (2) The Director-General shall advise the Central Government in the formulation of the export and import policy and shall be responsible for carrying out that policy. (3) The Central Government may, by Order published in the Of....
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....n providing output service, which is exported, can be utilised by the manufacturer or provider of the output service in a specified manner. Rule 5 of the Cenvat Rules is set out below:- 'Rule 5 Where any input or input service is used in the manufacture of final product which is cleared for export under bond or letter of undertaking, as the case may be, or used in the intermediate product cleared for export, or used in providing output service which is exported, the CENVAT credit in respect of the input or input service so used shall be allowed to be utilized by the manufacturer or provider of output service towards payment of, (i) duty of excise on any final product cleared for home consumption or for export on payment of duty; or (ii) service tax on output service, and where for any reason such adjustment is not possible, the manufacturer or the provider of output service shall be allowed refund of such amount subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification: Provided that no refund of credit shall be allowed if the manufacturer or provider of output service avails of drawback allowed u....
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.... case. 21. In Joint Director general of Foreign Trade v. IFGL Refractories Ltd.: 2002 (143) ELT 294 (Cal) - which was also referred to by this Court in Kandoi Metal Powders Mfg Co. Pvt. Ltd's case - the Calcutta High Court had held once the policy provides for refund of TED, the said right could not be taken away for want of a procedure under the Hand Book of Procedures. The court further held that 'In case of refund of terminal excise duty, the concerned authority is DGFT to whom petition has been moved for refund of terminal excise duty. Therefore, there's no question to approach the excise department for refund of any excice duty'. 22. Mr. Narula's contention that the said decision did not refer to the policy circular dated 15.03.2013 and, therefore, ought to distinguished cannot be accepted. A plain reading of the said decision indicates that the Division Bench had taken note of the policy circular dated 15.03.2013. More importantly, the reasons as indicated in the said circular were rejected. The relevant extract of the said decision is as under:- '9. The authorities in this case appear to have proceeded to make an order adverse to the petitioner and proceeded to hold....
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....the view expressed by this Court in Kandoi Metal Powders Mfg. Co. Pvt. Ltd. (supra). The Bombay High Court was of the view that the Court was unable to comprehend 'the rationale of the decision of the second and third respondents'. The Court was also of the view that the policy circular dated 15.03.2013 was merely clarificatory and the DGFT had the power to interpret and implement the policy. This is different from the view of this Court in Kandoi Metal Powders Mfg. Co. Pvt. Ltd. (supra), wherein the Court had opined that Cenvat regime under Central Excise operates in its own terms and is independent of the rights and liabilities of the parties under the FTP. This Court is also unable to concur with the view of the Bombay High Court that the Policy Circular dated 15.03.2013 clarifies an obvious position. Plainly, in such case, there was no requirement to amend the FTP. 24. Mr. Narula had also referred to the decision of the Division Bench of this Court in Union of India and Ors. v. Alstom India Limited: 2015 (325) ELT 72 (Del) and on the strength of the said decision contended that the Division Bench had not accepted the earlier decision in Kandoi Metal Powders Mfg. Co. Pvt. Ltd....