Lupin Ltd. vs Union of India

This writ petition filed under section 226 of the Constitution of India seeks the following reliefs:--

"(a) this Hon''ble Court be pleased to declare the said Policy Circular No. 16(RE-2012/2009-14) dated 15.3.2013 issued by the Director of Foreign Trade (Respondent No. 2) as ultra vires, null and void;

(b) this Hon''ble Court be pleased to issue a writ of certiorari or a writ in the nature of Certiorari under Article 226 of the Constitution of India, calling for the records pertaining to the impugned Policy Circular No. 16(RE-2012/2009-14) dated 15.3.2013 issued by the Director General of Foreign Trade (Respondent No. 2) and communication Nos. (i) EOU/TED-70/November-2011/2011-12/3896 dated 26.03.2013 and (ii) EOU/TED-70/Nov-2011/2011-12/6818 dated 20.06.2013 issued by Respondent No. 4, after going into the validity and legality thereof to quash and set aside the same;

(c) this Hon''ble Court be pleased to issue a writ of mandamus or any other appropriate writ, order or direction ordering and directing the Respondents by themselves, their subordinate servants and agents (I) to withdraw and/or cancel the impugned policy Circular No. 16(RE-2012/2009-14)dated 15.3.2013 issued by the Director of Foreign Trade (Respondent No. 2) and communication Nos. (i) EOU/TED-70/November-2011/2011-12/3896 dated 26.03.2013 (ii) EOU/TED-70/Nov-2011/2011-2012/6818 dated 20.06.2013 issued by Respondent No. 4 and (II) to forthwith sanction and grant the Petitioner''s refund of Rs. 6,87,89,737/-along with interest at the rate of 18 per cent per annum claimed vide application dated 8.8.2012."

The reliefs are claimed in the backdrop of the claim of refund by the petitioner. The petitioner claims to be a 100% Export Oriented Unit (EOU) located at Verna, Goa and engaged, inter alia, in the manufacture of goods falling under Chapter 30 of the Schedule to the Central Excise Tariff Act, 1985. The petitioner states that they approached the authorities by referring to the foreign trade policy No. 16(RE-2012/2009-14) because of the activities of supplying goods. The unit of the petitioner uses the goods which have been supplied by another unit of the petitioner called DTA unit which has been supplying goods on payment of Cenvat duty under claim for rebate to the petitioner''s export oriented unit. The export was of the final product by the petitioner''s export oriented unit. Reliance was placed on the policy which contained the concept of deemed exports. Deemed exports are eligible for any/all the benefits in respect of manufacture and supply of goods subject to the terms and conditions appearing in the Handbook of Procedure, Volume 1. Reliance is placed on 8.1, 8.3 and 8.5 of the Foreign Trade Policy whereunder the supply of goods will be eligible for refund of terminal excise duty provided recipient of goods does not avail Cenvat credit/rebate on such goods. Refund application in that behalf has to be disposed off within 30 days from the receipt of complete application. The petitioner clarified that they did not claim or avail Cenvat credit in respect of the duty paid by the DTA unit. Meaning thereby, they did not invoke the provisions of Cenvat Credit Rules, 2004. The petitioner''s DTA unit did not claim the TED refund and a certificate of disclaimer was relied upon. Therefore, the petitioner''s export oriented unit regularly filed the application with respondent No. 3 claiming refund of terminal excise duty paid by the petitioner''s DTA unit on the goods supplied to the petitioner''s export oriented unit. These applications were granted from time to time, except the application dated 8th August, 2013 for Rs. 6,87,89,737/- for the month of November, 2011, which is rejected by the authorities not by a speaking order and after hearing the petitioner but merely by two communications, copies of which are annexed to this writ petition at Annexures D-1 and D-2 at page Nos. 62 & 63. They read as under:--

"EOU/TED-70/November-2011/2011-12/3896 26.03.2013

M/s. Lupin Limited, B-15, Phase-1A, Verna, Salcetta, Goa-403 772.

Sub.: Application for refund of TED claim for the period November-2011-reg.

Sir,

Kindly refer to your application dated 08.08.2012, 16.01.2013 and 22.03.2013 on the subject cited above.

In this connection we write to inform you that Director General of Foreign Trade, Ministry of Commerce & Industry has issued Policy Circular No. 16 (RE-2012/2009-14) dated 15.3.2013 wherein it is stated that "Prudent financial management and adherence to discipline of budget would be compromised if refund is provided, in cases, where exemption is mandated. In fact, in such cases the relevant taxes should not have been collected to begin with. And, if, there has been an error/oversight committed, then the agency collecting the tax would refund it, rather than seeking reimbursement from another agency. Accordingly, it is clarified that in respect of supplies, as stated at Para 2 above, no refund of TED should be provided by RAs of DGFT/Office of Development Commissioners, because such supplies are ab initio exempted from payment of excise duty". A copy of Policy Circular is also enclosed herewith.

In view of the above your request for refund of TED claim for the period November-2011 is hereby rejected.

"EOU/TED-70/Nov-2011/2011-12/6818 20th June, 2013

M/s. Lupin Limited, B-15, Phase-1A, Verna Industrial Area, Verna Salcetta, Goa-403 772.

Sub : Application for refund of TED claim for the period November 2011-reg.

Sir,

Kindly refer to your applications dated 08.08.2012, 16.01.2013, 22.3.2013 and 17.05.2013 on the subject cited above.

In this connection we write to inform you that your above TED claim has been rejected as per the reason mentioned in our letter dated 26.03.2013 (copy enclosed)."

We have heard Mr. Prakash Shah, learned counsel appearing on behalf of the petitioner and Mr. Singh, learned Additional Solicitor General appearing on behalf of the respondents.

We have perused these communications. The argument of the petitioner is that no reliance could have been placed on the policy or any amendment to the existing policy which came into effect after the petitioner sought the necessary reliefs. The respondents, therefore, could not have addressed such communications in disposing of the refund application by relying on the policy circular dated 15th March, 2013.

We enquired from Mr. Singh as to why the refund application which is stated to have invoked the policy has not been disposed of by passing a speaking order and in compliance with the principles of natural justice, Mr. Singh sought time to take instructions.

The matter was placed today as per the request of the parties. What we have noted is that a claim for refund has been decided on earlier occasions not by such cryptic communications but by passing proper and speaking order. It is in these circumstances that we are of the opinion that a communication of the nature relied upon cannot be termed as an order dealing with and disposing of a refund application.

Minimal request of the petitioner for a personal hearing and a speaking order dealing with all the contentions and objections could have been fulfilled had the respondents complied with the same.

In these circumstances, we expected the respondents not to raise any objection in dealing with the refund application as such and passing a speaking order thereon after hearing the petitioner or its representative. We are happy that the learned Additional Solicitor General has agreed to our suggestion and on instructions stated before us that a personal hearing would be given to the Petitioner and a speaking order will be passed by the Respondents thereafter. We accept these statements as undertakings given to this Court. We direct accordingly.

Mr. Shah submits that the respondents should not merely rely upon the policy circular to reject the refund application or by relying on the same alone reject the same.

We are of the opinion that the rival contentions can be raised for being dealt with by the appropriate/competent authority. We need not consider the same and at this stage. We have no doubt in our mind that once the petitioner is given an opportunity of personal hearing and raising all contentions, then, a speaking order assigning reasons can be passed by the respondents dealing with them. It cannot be that a cryptic communication satisfies the requirement of a proper and speaking order being passed. Therefore, it would be open for the petitioner to raise all contentions, including that the policy circular, a copy of which is annexed to the writ petition as Annexure-B, should not be relied upon to deny the refund. We have further no doubt that in the event such a contention is raised by the petitioner, then, the respondents shall deal with the same while passing a speaking order on the Refund Application. Needless, therefore, to clarify that a fresh order which the authorities must pass, shall not only rely on the communications or the contents of Annexures D-1 and D-2. With the above clarification and direction that a fresh order shall be passed as expeditiously as possible and within a period of 8 weeks from the date of receipt of the copy of this order, this writ petition is disposed of. No order as to costs.