Goods supplied to 100% EOUs on payment of Central Excise duty - Supplier unit entitled for refund of terminal excise duty notwithstanding contrary clarification by Policy Interpretation Committee: High Court
By TIOL News Service
CHENNAI, DEC 23, 2014: THE petitioner is a registered manufactures of 'Printed Coffee Cans' and they have been clearing the said cans on payment of applicable central excise duty. During the period from 01.01.2010 to 31.03.2010, the petitioner cleared certain quantity of cans to three 100% Export Oriented Units (EOU) on payment of central excise duty. The petitioner contended that supplies made to EOU is construed as 'Deemed Exports' in terms of Para 8.2(b) of the Foreign Trade Policy and in terms of Para 8.4.2, such supplies to EOU shall be entitled to the benefits listed in paragraphs 8.3(a) to (c) of the Foreign Trade Policy, whichever is applicable. Based on the Foreign Trade Policy, the petitioner claimed refund of terminal excise duty of Central Excise Duty of Rs.12,50,738/-, Rs.2,73,089/- and Rs.29,93,042/- which according to them was paid during the supplies which were made to the three EOUs. The third respondent (JDGFT) rejected the refund claimed by order dated 09.09.2010 on the ground that the supplies made to 100% EOUs are exempted from the payment of terminal excise duty under the CT3 procedures. Aggrieved by the same, the petitioner filed a representation before the second respondent which is a Committee constituted for the purpose of interpretation of the policy guidelines. The said request made by the petitioner came to be disposed of by the second respondent by the impugned order.
Vide the impugned order dated 04.12.2012, Committee held that in terms of Para 6.11(2)( II) of the Foreign Trade Policy, read with CBEC Circular No.851/9/2007 dated 03.05.2007 supply of goods to EOU is exempted for payment of Terminal Excise Duty, hence, the supplier was not required to pay any duty while removing the goods for supplying the same to EOU. Further, it was stated that in terms of Para 6.2(b) of the Foreign Trade Policy, EOU may import goods from DTA unit without payment of duties hence EOU was not required to pay duty. Further, it was stated that refund of CENVAT credit provisions are available under the Excise Rule and CENVAT Rules hence refund of such credit by DGFT does not arise.
After hearing both sides, the High Court held:
It is seen that an identical set of facts, the Division Bench of the Delhi High Court in Kandoi Metal Powders Manufacturing Company Private Limited V. Union of India and others reported in 2014-TIOL-230-HC-DEL-EXIM took a decision in favour of the manufacturer. In fact, in the said case arose out of a decision taken pursuant to the resolution dated 04.12.2012 which is impugned in this writ petition. Therefore, the cause of action in the case before the Delhi High Court was the impugned resolution. Therefore, the decision rendered by the Delhi High Court binds the respondents and the Delhi High Court quoted with the approval in the decision of the Division Bench of the Calcutta High Court in JDGFT V. IFGL Refractories Limited.
Thus, following the above referred decision, the Writ Petition is allowed and the impugned order is quashed and the third respondent is directed to process the refund claim in accordance with the 2009 Policy by taking into consideration the petitioner's refund application dated 16.08.2010 and pass appropriate orders in accordance with law, within a period of three months from the date of receipt of a copy of the order.
(See 2014-TIOL-2323-HC-MAD-CX)
