In Brief
This case concerns whether Export Oriented Units (EOUs) and Domestic Tariff Area (DTA) suppliers are entitled to refund of Terminal Excise Duty (TED) on goods supplied under India's Foreign Trade Policy. The Supreme Court held that EOUs are entitled only to ab initio exemption from excise duty (they must procure goods duty-free) but may avail of refund entitlements of their DTA suppliers upon obtaining a disclaimer and complying with specified formalities. DTA suppliers are entitled to TED refund as deemed exports under the FTP. The modality of refund depends on payment method: if CENVAT credit was utilized, the commensurate amount must be reversed to the credit account; if paid in cash, refund is in cash with 6% p.a. simple interest. The FTP regime operates independently from the Central Excise Act. The impugned Policy Circular merely clarified existing law and applies to all qualifying supplies.
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