AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 713
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.... to supply 33 train sets to CMRL. The Petitioner manufactured and supplied 6 Train sets between 26.02.2014 & 30.08.2014. It is aggrieved by and seeks appropriate directions to the respondents (officials of the Directorate General of Foreign trade, and the Central Excise department) to refund the amounts of terminal excise duty Rs. 12,42,18,219/- collected from it, and further seeks quashing of part of Para 7.05(ii)(a) of the Foreign Trade Policy 2015-2020 ("New FTP") and quashing of limited portions of Para 8.3(c) and Para 8.4(d) of the New FTP. 2. The relevant facts of this case are that the CMR project was funded by the Japan International Cooperation Agency ("JICA"), which was notified by the Department of Economic Affairs, Ministry of Finance, Government of India by Notification No. 1 (FT)/DEA/2010, New Delhi, dated 05.05.2010 for the purpose of 'Deemed Export' benefits under the purview of para 8.2(d) of the old FTP. JICA's name also figured in Appendix 13 of the old FTP. JICA was removed from Appendix 13 after introduction of the new FTP with effect from 01.04.2015. Under Section 5 of the FTDR Act, the Central Government is empowered from time to time to formulat....
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....ed condition as well as plants, machinery, accessories, tools, dies and such goods which are used for installation purposes till stage of commercial production, and spares to extent of 10% of FOR value to fertilizer plants; (f) Supply of goods to any project or purpose in respect of which the MoF, by a notification, permits import of such goods at zero customs duty; (g) Supply of goods to power projects and refineries not covered in (f) above; (h) Supply of marine freight containers by 100% EOU (Domestic freight containers-manufacturers) provided said containers are exported out of India within 6 months or such further period as permitted by customs; (i) Supply to projects funded by UN Agencies; and j) Supply of goods to nuclear power projects through competitive bidding as opposed to ICB. Benefits of deemed exports shall be available under paragraphs (d), (e), (f) and (g) only if the supply is made under procedure of ICB." 3. Paras 8.3 and 8.4 of the old FTP, as were in force during the period when supplies were made (26.02.2014 to 30.08.2014) by the Petitioner cover the benefits to be extended to 'Deemed Exports' are extracted as follows:- "Paragraph 8.3 Be....
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....ufacturer: (a) Supply of goods against Advance Authorisation/Advance Authorisation for annual requirement IDFIA; (b) Supply of goods to EOU/STP/EHTP/ BTP; (c) Supply of capital goods against EPCG Authorisation; (d) Supply of marine freight containers by 100% EOU (Domestic freight containers-manufacturers) provided said containers are exported out of India within 6 months or such further period as permitted by customs; B. Supply by main/sub-contractor (s): (e) (i) Supply of goods to projects financed by multilateral or bilateral Agencies/ Funds as notified by Department of Economic Affairs (DEA), MoF, where legal agreements provide for tender evaluation without including customs duty. (ii) Supply and installation of goods and equipment (single responsibility of turnkey contracts) to projects financed by multilateral or bilateral Agencies/Funds as notified by Department of Economic Affairs (DEA), MoF, for which bids have been invited and evaluated on the basis of Delivered Duty Paid (DDP) prices for goods manufactured abroad. (iv) Supplies covered in this paragraph shall be under International Competitive Bidding (ICB) in accordance with procedures of those Agencies/F....
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.... given in HBP and ANF-7A: (a) Advance Authorisation/Advance annual authorisation for requirement IDFIA. (b) Deemed Export Drawback. (b) Refund of terminal excise duty, available if exemption is not available. 7.04 Benefits to the Supplier /Recipient Categories of supplies as per Para 7.02 Benefits on supplies, as given in para 7.03 above, whichever is applicable. Para 7.03 (a) Advance Authorization Para 7.03 (b) Duty Drawback Para 7.03 (c) Terminal Excise Duty (a) Yes (for intermediate supplies against an invalidation letter) Yes (against ARO or Back to Back letter of credit) * Exemption in case of Invalidation Letter. * Refund in case of ARO or back to back letter of credit. * No exemption/refund against supply to DFIA as CVD is not exempted. (b) Yes Yes Exemption (c) Yes Yes Refund (d) Yes Yes Refund (e) Yes Yes Exemption (f) Yes Yes Exemption, if supplies under ICB. Refund, if supplies under tariff based competitive bidding. (g) Yes Yes Exemption (h) Yes Yes Refund 7.05 Conditions for refund of terminal excise duty (i) Supply of goods will be eligible for refund of terminal excise duty as per Para 7.03 (c) of....
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....-I, Annexure -III, ANF-I and a cancelled cheque. The letter also mentioned no refund of TED was admissible as the supply was under ICB which was ab- initio exempt as per Para 7 .02-B( e)(i) & (ii) of FTP, 2015 read with Para 7.05 (ii) (a) of FTP, 2015-20-Supply of goods to projects. The abovementioned letter also directed the Petitioner to file the above said documents within 90 days from the date of issue of the letter, failing which the demand would be considered as withdrawn. The Petitioner responded by its letter dated 04.05.2017 and: (i) Reiterated its submissions on the non-applicability of ab initio exemptions after drawing references to excise and customs notifications. (ii) Refiled its application under the Format of ANF 7 A without prejudice to its submissions that the same did not apply to it given that the period of supplies in its case was covered by the FTP of 2009-14. (iii) Submitted form ANF-1 along with the attested bank statement along with the payment certificate in the form of Appendix 22-C. It also submitted that the Submission of Annexure I and Annexure III with respect to ANF-7A would be submitted as and when the same were issued. 7. It is urged that des....
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....fund claim. This is for the reasons that firstly, Para 7.05(ii) of the new FTP provides "however supply of goods which are exempted ab initio from payment of terminal excise duty would be ineligible to get refund of TED". It is submitted that the present case squarely falls outside the restriction contained in the opening language of the said para since the supplies made by the Petitioner to the Chennai Metro Rail Project were never exempted "ab initio" from the payment of Excise Duty for the reason that the Central Excise Notification, namely Notification No. 12/2012-CE dated 17.03.2012 at S.No. 336 (read with Condition No. 41) provides an excise duty exemption to goods supplied against International Competitive Bidding, provided such goods are also exempt from various Customs Duties. The relevant Customs Notification namely, Notification No. 12/2012-Cus dated 17.03.2012 at S. No. 354 (subject to condition 40) only provides an exemption from Customs Duty to goods supplied to Delhi Metro Rail Corporation Ltd ("DMRC"). Condition 40 in turn prescribes for relevant certificates to be issued by the concerned personnel of DMRC certifying that the goods concerned were used in Phase-I and....
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....Authorisation /Advance Authorization for annual requirement IDFIA. (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. 12. It is submitted that as the supplies to the projects funded by JICA notified by DGFT's Public Notice No.67 dated 25th May, 2010 were made against ICB and hence were eligible for ab-initio exemption from payment of terminal excise duty under para 8.3(c) of FTP, 2009-14. It is stated that to further clarify the matter, the respondents issued the Policy Circular No.16 dated 15.03.2013, with approval of the Director General of Foreign Trade (DGFT) which clarifies the provisions of the Policy which were already in existence. The circular did not introduce any amendment or new provisions or new conditions in the FTP. Any amendment made in the FTP, 2009-14, is duly done only through a Notification issued by the Government....
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....ed these agencies in the Appendix 13 of HBP Vol. I appearing in para 8.2(d) of FTP 2009-14 (amended as on 5.6.2012) to be eligible for deemed export benefits under para 8.3 of FTP 2009. The deemed export benefits for supplies made to the projects funded by these agencies were discontinued in the new FTP 2015-20 notified on 01.04.2015 and benefits were only available in respect of two agencies, viz. International Bank of Reconstruction and development (IBRD) and International Development Association (IDA). 17. The relevant Central Excise Notification, namely Notification No. 12/2012-CE dated 17.03.2012 at S. No. 336 (read with Condition No. 41) provided an excise duty exemption in respect of goods in all chapters of the Central Excise Tariff Act goods supplied against International Competitive Bidding, provided such goods are also exempt from various Customs Duties. This precondition (exemption from payment of customs duties) was by virtue of Note 41 (to the tabular chart of Notification No. 12/2012 CE) i.e. "If the goods are exempted from the duties of customs leviable under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty leviable under se....
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....excise duty will be given if exemption is not available. Exemption from TED is available to the following categories of supplies: (i) Supplies against ICB; (ii) Supplies of intermediate goods, against invalidation letter, made by an Advance Authorisation holder to another Advance Authorisation holder; and (iii) Supplies of goods by DTA unit to EOU /HTP/STP/BTP unit Thus such categories of supply which are exempt ab initio will not be eligible to receive refund of TED". 21. For a fuller appreciation of the issue, it was necessary for the respondent authorities to determine whether under the relevant central excise notification, the goods were (or were not) exempt, or were exempt subject to any condition. Per se exemption, (or to put it, in the language of the respondent's pleadings and notifications, ab initio exemption) could only mean unconditional exemption from payment of duty. In the present case, a combined reading of the central excise exemption notification and the customs duty exemption notification made it clear that such unconditional exemption was not extended to the goods. Rather, unconditional exemption was given only to goods supplied under contracts funded t....