No refund of terminal excise duty if the recipient of deemed exports takes cenvat credit

By Vijay Kumar

The DGFT has amended the Handbook of Procedures (Vol. I) of the Foreign Trade Policy, 2004-2009, to stipulate that

"The deemed export benefits will be available to the supplier of goods provided the recipient of goods does not take CENVAT credit of duty on such goods."

While submitting the application for refund of terminal excise duty a Non-availment of CENVAT credit Certificate from the Jurisdictional Excise Authority of the recipient of goods, where CENVAT credit is available on the goods supplied is also to be furnished.

It is not specified as to who this jurisdictional excise authority is and in the absence of that, there are bound to be problems. As such Central Excise officers will not be too willing to give certificates due to fear of future persecution. It would be prudent to specify the designation of the officer who is required to give this certificate and there should be a circular from the CBEC directing the Central Excise officers to issue this certificate.

The DGFT's stipulation also does not seem to be without hitches. What will happen if the cenvat credit is taken after the certificate is issued and terminal excise duty is refunded? Can it be demanded from the recipient? There is no law barring him from taking credit just because his supplier is a deemed exporter. Can he be asked to give an undertaking that he will never take credit? May be DGFT does not actually want to refund any duty!. DGFT PN 32/2004- 2009

Benefit of notification cannot be granted merely on the ground of sympathy - Supreme Court of India - see our citation 2004-TIOL-101-SC-CT.