Payment of Terminal Excise Duty altogether is not a valid reason for denying Refund: Madras HC [Read Judgment]

Madras High Court

A single bench of the Madras High Court held that payment of Terminal Excise Duty (TED) altogether cannot be a valid reason for denying refund to the assessee under the excise law. The Court was considering a bunch of writ petitions filed by the Lenovo (India) Pvt Ltd. against the Excise authorities.

The sole issue raised by the petitioners was whether they are entitled to refund of Terminal Excise Duty. The authorities rejected the application for refund filed by the petitioners by relying up on the policy circular which states that in cases where the relevant taxes should not have been collected at the beginning, if there has been an error or oversight committed, then the agency collecting the tax would refund it, rather than seeking reimbursement from another agency. On the basis of the above circular, the authorities took a stand that refund cannot be allowed for payment of tax in respect of supplies, the supply of goods under invalidation letter issued against the Advance Authorisation; supply of goods under ICB and supply of goods to EOU. According to them, such supplies are ab-initio exempted from payment of excise duty.

Justice T.S Sivagnanam noticed that the issue was covered by the decision of the Delhi High Court in the case of Kondoi Metal Powers Mft. Co. Pvt. Ltd., V. Unkon Of India [2014 (302) E.L.T. 209(Del). Later, the decision was followed by the Calcutta High Court in a recent decision.

In view of the above, the Single bench allowed the Writ petitions and held that subsequent amendment was made to the existing regime which in effect liberalised the position further and exempted payment of TED altogether cannot surely be a reason for denying the scheme for refund of payment already made.

Read the full text of the Judgment below.