TaxTMI 
TaxTMI 
2018 (7) TMI 713
X X X X Extracts X X X X
X X X X Extracts X X X X
....rn was appointed by APIL, as a sub-contractor 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 Govern....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rices for goods manufactured abroad; (e) Supply of capital goods, including in unassembled/disassembled 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 (26.02.2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Para 7.02 covered the categories of deemed exports and Para 7.03 and 7.04 covered the benefits available to Deemed Exports and Para 7.05 categorically covered the conditions for refund of Terminal Excise Duty. The said new provisions are extracted as follows: "7.02 Categories of Supply Supply of goods under following categories (a) to (d) by manufacturer and under categories (e) to (h) by main/subcontractors shall be regarded as "Deemed Exports": A. Supply by manufacturer: (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 ev....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n No. 12/2012 -Customs dated 17.3.2012, as amended from time to time. (ii) The project should have a capacity of 440 MW or more. (iii) A certificate to the effect is required to be issued by an officer not below the rank of Joint Secretary to Government of India, in Department of Atomic Energy. (iv) Tender IS invited through National competitive bidding (NCB) or through ICB. 7.03 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 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 inte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Duty, even though they were supplied under ICB. Therefore, the Petitioner claims it cannot be denied TED refund. 6. Counsel for the Petitioner explained that attested copies of Central Excise invoices were not available because the Superintendent before whom the requisite application was made stated that such requirement was not in consonance with the prevailing guidelines for the purpose. Reliance is placed on the Superintendent's letter dated 22.04.2016 in that regard. The petitioner has relied on a copy of the payment certificate issued by the M/s Chennai Metro Rail Limited submitted along with the requisite Cenvat declaration. The petitioner was thereafter asked, by letter dated 06.02.2017 to submit documents including ANF-7 A (the format that comes under the purview of the new FTP), Payment Certificate as per Appendix-7D, Annexure -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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re actually made by Petitioner, would apply in determining its eligibility and not provisions that were introduced subsequently after 8 months. The impugned orders have missed out this fundamental principle and have applied Paras 7.02(b)(e)(i), 7.02(b)(e)(ii) and 7.05(ii)(a) instead of para 8.3(c) of the old FTP solely to non-suit the Petitioner. Hence they are liable to be set aside. A copy of the notification dated 19th February, 2014 extending the period of FTP beyond 31st March, 2014 "until further orders" under Section 5 of the Foreign Trade (Development & Regulation) Act, 1992, is relied on. 9. Mr. Ghosh argues that arguendo para 7.05(ii)(a) of the new FTP is applicable to the case of the Petitioner, the restrictive covenant qua denial of TED refund prescribed under the same does not apply to it and consequently it could not have been denied its refund 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 languag....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ICB procedure only. To give effect to the DEA's Public Notice, DGFT by Public Notice No.67 on 25th May, 2010 incorporated 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. However, 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 only two agencies, viz. International Bank of Reconstruction and Development (IBRD) and International Development Association (IDA). 11. It is argued that under para 8.3 of FTP 2009-14, deemed export supplies were eligible for any/all of the following benefits in respect of manufacture and supply of goods qualifying as deemed exports subject to terms and conditions as in HBP Vol.l: (a) Advance 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 Authoriza....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ption from payment of duty, rather than paying duty first and then taking a refund, is a facilitating measure provided by the Government as it reduces paper work of Exporter/ Government Authorities, funds of the supplier are not blocked and reduces transaction cost. In spite of this the supplier in the present case had not chosen to avail exemption. Therefore, its claim in these proceedings is unjustified. Analysis and Findings 16. The above facts show that Department of Economic Affairs by Public Notice No. 1(FT)/DEA/2010 dated 05.05.2010 notified the organizations, viz. IBRD, IDA, IFAD, ADB, OPEC, JICA, SIDA for the purpose of deemed export benefits under para 8.2(d) of FTP, 2009-14 subject to the condition that the supplies to projects were made under ICB procedure only. To give effect to the DEA's Public Notice DGFT by Public Notice No.67 on 25th May, 2010 incorporated 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 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Policy and Hand Book of procedures, the primary power of interpretation is with the authorities specified in that instrument. In the light of these provisions which are a matter of record, the question which to be decided is whether the terminal excise duty refund, claimed by the petitioner was not available. 20. The Supreme Court's ruling in Director General of Foreign Trade and Ors. v. Kanak Exports and Ors. (2016) 2 SCC 226 has now authoritatively settled the issue that provisions of the Export Import Policy and the related Handbook are statutory. Therefore, any clarification issued by any official: howsoever high in rank she or he might be, cannot override the policy. The benefit claimed is refund of TED on account of the supplies in question made under the internationally funded contract, which is described in Para 8.2 (d) of the FTP 2009-14. Para 8.3 stated that (c) "Refund of terminal 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 ....