Karnataka High Court
M/S Acer India Pvt Ltd vs Union Of India on 20 March, 2018
Author: S.Sujatha
Bench: S.Sujatha
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 20TH DAY OF MARCH, 2018
BEFORE:
THE HON'BLE MRS. JUSTICE S.SUJATHA
WRIT PETITION No.64539/2016 (T - TAR)
BETWEEN:
M/s ACER INDIA PVT. LTD.,
EMBASSY HEIGHTS, 6TH FLOOR,
NO.13, MAGRATH ROAD
BANGALORE-560103
REP. BY ALOK BUBEY ... PETITIONER
[BY SRI G.SHIVADASS, ADV.]
AND:
1. UNION OF INDIA
REP. BY ITS SECRETARY
DEPARTMENT OF REVENUE
NORTH BLOCK, NEW DELHI-110001
2. JOINT DIRECTOR OF FOREIGN TRADE
KENDRIYA SADAN, KORAMANGALA
BANGALORE-560075.
3. DEPUTY DIRECTOR GENERAL
OF FOREIGN TRADE,
MINISTRY OF COMMERCE,
DIRECTORATE GENERAL OF FOREIGN TRADE,
UDYOG BHAVAN, NEW DELHI-110107
4. ADDITIONAL DIRECTOR GENERAL
OF FOREIGN TRADE
MINISTRY OF COMMERCE
DIRECTORATE GENERAL OF FOREIGN TRADE,
UDYOG BHAVAN, NEW DELHI-110107
-2-
5. ASSISTANT COMMISSIONER
OF CENTRAL EXCISE,
PUDUCHERRY DIV. I,
PUDUCHERRY-460124. ...RESPONDENTS
[BY Ms. VAISHALI SHAH, ADV. FOR SRI CHINMAY J. MIRJI, ADV.
FOR R-1 TO R-4;
SRI C.V.PRAHALADA RAO, ADV. FOR SRI Y.HARI PRASAD, ADV.
FOR R-5.)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF
THE CONSTITUTION OF INDIA, PRAYING TO QUASH LETTER
DATED 31.03.2016 ISSUED BY DEPUTY DIRECTOR GENERAL
OF FOREIGN TRADE NEW DELHI ENCLOSED AS ANNEXURE-A.
THIS PETITION COMING ON FOR PRELIMINARY HEARING
IN 'B' GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER
Petitioner has challenged the communication dated 31.3.2016 issued by the Deputy Director General of Foreign Trade, New Delhi at Annexure-A to the writ petition inter alia seeking for declaration that petitioner is eligible for refund of the Terminal excise duty ('TED' for short) paid in respect of goods supplied to Export Oriented Units ('EOU' for short) during the period from June 2009 to October 2009 in terms of Para 8.3 of the Foreign Trade Policy 2009-14 ('FTP', for short). -3-
2. Petitioner is a private Limited company engaged in the business of manufacture and sale of computer systems having its head office at Bangalore and the manufacturing unit at Pondicherry. During the period June 2009 to October 2009, the petitioner supplied computer systems to EOU on payment of TED. The supply of goods to EOU is deemed export in terms of 8.2(b) of FTP and supplier is entitled to claim refund of TED from the Regional authority in terms of 8.3(c) of FTP. Accordingly, the petitioner filed refund application dated 31.12.2009 before respondent No.2 for refund of TED which has been rejected by 3rd respondent on the ground that refund of TED cannot be granted where ab- initio exemption is available from payment of excise duty. Respondent No.3 directed the petitioner to approach the concerned Excise Authority for refund of duty. As directed by respondent No.3, the petitioner approached the Central Excise department for refund of TED. As no response was received, appeal was -4- preferred before respondent No.4. Thereafter petitioner was issued with show cause notice dated 28.5.2014 by respondent No.5 proposing to reject the refund application on the ground that refund of TED has to be filed before the Regional authority. Respondent No.5 passed the original order rejecting the refund application of the petitioner as proposed, against which an appeal was preferred by the petitioner. In the meanwhile respondent No.3 issued letter dated 31.3.2016 affirming that refund of TED is not available in cases where exemption is available ab-initio. Respondent No.3 has issued communication reaffirming the rejection of claim for refund of TED by Regional Authorities. Hence this writ petition.
3. Learned counsel Sri.G.Shivadass appearing for the petitioner submitted that during the period of impugned supplies (June 2009 to October 2009) para 8.3 to 8.5 of FTP did not restrict refund of TED where -5- ab-initio exemption is available. The provisions of para 8.3 and 8.4 of FTP have been amended vide DGFT Notification No.4(RE-2013)/2009-2014 dated 18.4.2013 to provide such categories of supply which are exempt ab initio will not be eligible to receive refund of TED and the amendment to the policy is only with effect from the date of Notification. It is submitted that clarification given in the Circular dated 15.3.2013 is contrary to the interpretation to the provisions of FTP and is, therefore ultra vires the policy. It is, however, with effect from the date of notification and cannot be given effect retrospectively since relevant period in the present case pertains to the period prior to the issuance of the notification dated 18.4.2013. In support of his contentions, learned counsel placed reliance on the following decisions:
1. MOTHERSON SUMI ELECTRIC WIRES -V- UOI reported in [2015(319) ELT 441 (Del) -6-
2. KANDOI METAL POWDERS Mfg. Co. PVT. LTD.
V/S. UNION OF INDIA AND OTHERS, reported in 2014-TIOL-230-HC-DEL-EXIM
3. RAJA CROWNS AND CANS PVT LTD -V- UOI reported in 2015(317) ELT 40 (Mad)
4. M/s. LENOVO INDIA PVT. LTD. V/S. UNION OF INDIA AND OTHERS reported in 2016-TIOL-2833- HC-MAD-CX
5. JDGFT -V- IFGL REFRACTORS LTD. reported in 2001(132) ELT 545(Cal)
6. IFGL REFRACTORS LTD -V- JDGFT reported in 2001 (132) ELT 545 (Cal)
7. CCE, AHMEDABAD -V- RELIANCE INDUSTRIES LTD. reported in 2015 (321) ELT 392(SC)
4. Learned counsel Ms.Vaishais Shah, appearing for respondent Nos. 2 to 4 would submit in terms of interpretation of policy of FTP 2009-2014, clause 2.3 Chaper II contemplates, if any question or doubt arises in respect of interpretation of any provision contained in FTP, or classification of any item in ITC (HS) or HBP-v1 or HBP-v2, or Schedule or DEPB Rates (including content, scope or issue of an authorization there under) -7- said question or doubt shall be referred to DGFT whose decision thereon shall be final and binding. DGFT Circular dated 15.3.2013 clarifies that in respect of supplies, no refund of TED should be provided by RAs of DGFT\Offices of Development Commissioners of SEZ, because such supplies are ab-initio exempted from payment of excise duty. Placing reliance on the Judgment of the High Court of Judicature at Bombay in Sanedoz Private Limited -v- The Union of India (W.P.No.2927/2015 DD 1.8.2016), it was submitted that amendment to clause 8.3. of FTP is clarificatory and is accordingly retroactive in nature.
5. Heard the learned counsel appearing for the parties and perused the material on record.
6. Benefits for deemed export before the amendment in terms of para 8.3 and 8.4 of FTP reads as follows:
-8-
"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.
8.4 Benefits to the Supplier Following table shows the benefits available to different categories of supplies as mentioned in Para 8.2 above. In respect of such supplies supplier shall be entitled to the benefits listed in paragraphs 8.3(a), (b) and (c) -9- of the Policy, whichever is applicable. Relevant sub- Benefit available as given in Para 8.3, para of 8.2 whichever is applicable.
Relevant Benefit available as given in Para 8.3,
sub-para whichever is applicable
of 8.2 (a) (b) (c)
Yes
Yes (against (against
Yes (for
ARO or Back ARO or
(a) intermediate
to Back letter Back to
supplies)
of credit) Back letter
of credit)
(b) Yes Yes Yes
(c) Yes Yes Yes
(d) Yes Yes Yes
(f) Yes Yes Yes
(h) No Yes Yes
(i) Yes Yes No
(j) Yes Yes Yes
7. The eligibility for refund is provided by para 8.5 in the following terms:
8.5 Eligibility for refund of terminal excise duty/drawback Supply of goods will be eligible for refund of terminal excise duty in terms of Para 8.3(c) of FTP, provided recipient of goods does not avail CENVAT credit/rebate on such goods. A declaration to this effect, in Annexure II of ANF 8, from recipient of goods,
- 10 -
shall be submitted by applicant. Similarly, supplies will be eligible for deemed export drawback in terms of para 8.3(b) of FTP of Central Excise Duty paid on inputs/ components, provided CENVAT credit/rebate has not been availed of such duty paid by supplier of goods. A declaration to this effect, in Annexure III of ANF 8, from supplier of goods, shall be submitted by applicant. Such supplies shall however be eligible for deemed export drawback on customs duty paid on inputs/components."
7. The Authorities proceeded to hold that the petitioner was disentitled for the benefit of refund in view of the clarification given by the Policy Interpretation Committee and the Circular No.16 dated 15.3.2013. It is not in dispute that the petitioner supplied goods to the EOU at the relevant time, its entitlement would be as defined in terms of the then existing policy i.e. refund in terms of 8.2 to 8.5 of the policy. Any subsequent amendment made to the
- 11 -
existing policy liberalizing the Scheme and exempting payment of TED cannot be a reason to deny the refund of payment already made by the petitioner. This reason is fortified by the Division Bench Judgment of the Calcutta High Court in IFGL REFRACTORS LTD's case (supra) and Division Bench Judgment of Delhi High Court in KANDOI METAL POWDERS Mfg. Co. PVT. LTD's case (supra), wherein it is held that once the supply of goods fall within the category of deemed export, the unit would be entitled to refund of TED.
8. High Court of Madras has also taken a similar view whereby the Authorities are directed to process the refund claim in accordance with the 2009 Policy. In the judgment of the Madras High Court in the case of M/s. LENOVO INDIA PVT. LTD. V/S. UNION OF INDIA AND OTHERS reported in 2016-TIOL-2833-HC-MAD-CX, the Division Bench judgment of the High Court of Bombay in the case of SANDOZ PRIVATE LIMITED supra, has
- 12 -
been considered and distinguished placing reliance on the Division Bench Ruling of the Delhi High Court in the case of KANDOI METAL POWDERS Mfg. Co. PVT. LTD., supra, refund claim of the assessee has been considered and a direction is issued to the Authorities to process the refund claim in accordance with the 2009 Policy.
9. The judgment referred to by the respondent Nos.1 to 4 in the case of SANDOZ PRIVATE LIMITED, supra, is challenged before the Hon'ble Apex Court and the matter is pending consideration. However, it is true that the Bombay High Court has differed from the view expressed by the Delhi High Court in KANDOI METAL POWDERS Mfg. Co. PVT. LTD, supra in coming to the conclusion that the policy circular dated 15.03.2013 is merely clarificatory and the DGFT had the power to interpret and implement the Policy. This Court finds it difficult to concur with the view of the Bombay High
- 13 -
Court in view of the amendment to the FTP. Amendment to the FTP indicates liberalization of Policy and the same shall be prospective in nature.
In view of the above, the petition is allowed. Communication dated 31.03.2016 issued by the Deputy Director of Foreign Trade, New Delhi at Annexure-A is quashed.
The respondent No.3 shall consider the refund claim of the petitioner in accordance with 2009 Policy and pass appropriate orders in accordance with the law, in an expedite manner preferably within a period of two months from the date of receipt of a copy of this order.
No costs.
Sd/-
JUDGE ln.