SANDOZ PRIVATE LIMITED versus UNION OF INDIA & OTHERS

Citation: [2022] 2 S.C.R. 601 · Decided: 04-01-2022 · Supreme Court of India · Bench: A.M. KHANWILKAR · Disposal: Disposed off

Judgment (excerpt)

A
B
C
D
E
F
G
H
601
[2022] 2 S.C.R. 601
601
SANDOZ PRIVATE LIMITED
v.
UNION OF INDIA & OTHERS
(Civil Appeal No. 3358 of 2020)
JANUARY 4, 2022
[A. M. KHANWILKAR, DINESH MAHESHWARI AND
KRISHNA MURARI , JJ.]
Foreign Trade (Development and Regulation) Act, 1992: FTP
2009-2014 – Chapter 6 and 8 – Claim for refund of TED paid by
DTA unit on goods supplied by DTA unit to EOU unit for
manufacturing goods cleared for export – Held: If the refund claim
is by the EOU, the same needs to be processed by the authorities
under the FTP by reckoning the entitlement of DTA supplier specified
in Chapter 8 of the FTP concerning the goods supplied to it, being
a case of deemed exports – The EOU on its own, however, is not
entitled for refund of TED, as the mandate to EOU is to procure or
import goods from DTA supplier, without payment of duty in view of
the express ab initio exemption provided in terms of para 6.2(b)
read with para 6.11(c)(ii) – However, despite such express obligation
on the EOU, if the EOU has had imported goods from DTA supplier
by paying TED, it can only claim the benefit of refund provided to
DTA supplier under para 8.4.2 read with paras 8.3(c) and 8.5 subject
to obtaining disclaimer from DTA supplier in that regard and
complying with other formalities and requirements – Since the
entitlement of exemption and refund of TED flows from the provisions
of 1992 Act and FTP framed thereunder by the Central Government,
which is an independent dispensation than the one provided in the
1944 Act and the rules framed thereunder, with the avowed purpose
of promoting export and earning foreign exchange, it is the
obligation of Authority responsible to implement the subject FTP, to
deal with refund claim of the concerned entities – For, it is not a
case of refund under the 1944 Act or 2002 Rules or 2004 Rules as
such, but under the applicable FTP – Central Excise Act, 1944 –
s.5A – Central Excise Rules, 2002 – Central Excise Rules, 2004.
Foreign Trade (Development and Regulation) Act, 1992: FTP
2009-2014 – The EOU entities, who had procured and imported
A
B
C
D
E
F
G
H
602
SUPREME COURT REPORTS
[2022] 2 S.C.R.
specified goods from DTA supplier, are entitled to do so without
payment of duty [as in para 6.2(b)] having been ab initio exempted
from such liability under para 6.11(c)(ii) of the FTP, being deemed
exports – Under para 6.11(a) of the FTP, EOU is additionally eligible
merely to avail of entitlements of DTA supplier as specified in Chapter
8 of the FTP upon production of a suitable disclaimer from the DTA
supplier and subject to compliance of necessary formalities and
stipulations – It would not be a case of entitlement of EOU, but only
a benefit passed on to EOU for having paid such amount to the
DTA supplier, which was otherwise ab initio exempted in terms of
para 6.11(c)(ii) of the FTP coupled with the obligation to import
the same without payment of duty under para 6.2(b).
Words and phrases: Benefit and entitlement – Distinction
between – Held: “Benefit”, by its very nature, is an advantage,
help or aid, while “entitlement” is right to have something.
Disposing of the appeals, the Court
HELD: 1. Section 5A of the Central Excise Act, 1944
empowers the Central Government to grant exemption from duty
of excise in respect of specified excisable goods. The exercise
of power to exempt is a beneficial power — which enables the
Central Government to reduce or waive duty on specified goods
on such conditions as may be prescribed. The exemption
notification has statutory force. However, the manufacturers
(including DTA Unit) of specified goods are free to disregard,
the benefit of exemption so provided when it is laced with
fulfilment of pre-conditions by third party (EOU). However, sub-
section (1A) of Section 5A came to be inserted by way of an
amendment w.e.f. 13.05.2005. It was for removal of doubts. It
declared that where an exemption under sub-section (1) in respect
of any excisable good from the whole of the duty of excise leviable
thereon has been granted absolutely, the manufacturer of such
excisable goods “shall not pay the duty of excise on such goods”.
This stipulation ordains that the excise duty is not payable on the
specified goods. However, this stipulation will be attracted if the
excise duty is exempted ab initio (without any pre-condition). Be
that as it may, the governing FTP regime ought to prevail being a
special dispensation under the 1992 Act. [Para 13][622-D; 623-
A-D]
A
B
C
D
E
F
G
H
603
2. The authoriti

Excerpt shown. Read the full judgment & AI analysis in Lexace.