Gujarat High Court
Gujarat State Electricity Corporation ... vs Union Of India on 29 June, 2018
Author: M.R. Shah
Bench: M.R. Shah, Sonia Gokani
C/SCA/15706/2011 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 15706 of 2011
For Approval and Signature:
HONOURABLE MR.JUSTICE M.R. SHAH Sd/
and
HONOURABLE MS JUSTICE SONIA GOKANI Sd/
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1 Whether Reporters of Local Papers may be allowed to see No
the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of the No
judgment ?
4 Whether this case involves a substantial question of law as No
to the interpretation of the Constitution of India or any
order made thereunder ?
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GUJARAT STATE ELECTRICITY CORPORATION LTD.
Versus
UNION OF INDIA
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Appearance:
MR MIHIR THAKORE, SR. ADVOCATE for MR SANDIP SINGHI with MR SHAMIK BHATT for SINGHI &
CO. (2725), ADVOCATE for the Petitioner
MR HARIN RAVAL, SR. ADVOCATE with MS MAITHILI D MEHTA (3206), ADVOCATE for Respondent
No. 1
NOTICE SERVED for the Respondent(s) No. 2 - 4
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CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MS JUSTICE SONIA GOKANI
Date : 29/06/2018
CAV JUDGMENT
(PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0] By way of this petition under Article 226 of the Constitution of India, petitioner - Gujarat State Electricity Corporation Limited has prayed for an appropriate writ of certiorari, order or direction quashing and setting aside the impugned letters viz. File No.05 /40 /81 /89 /AM 11 /Mics /CLA /778187; File No. 05 /40 /81 /99 /AM11 /Mics. /CLA / 778174; File No.05 /40 /81 /102 /AM11 /Mics. /CLA /778179; File Page 1 of 64 C/SCA/15706/2011 CAV JUDGMENT No.05 /40 /81 /15 /Mics. /CLA /778183; File No.05 /40 /81 /224 /Mics. /CLA /778332 all dated 21.03.2011 issued by the respondent No.3 for denying export duty drawback to the petitioner. The petitioner has also prayed to issue a writ of certiorari or any other appropriate writ, order or direction quashing the para 3 of the minutes of meeting of the Policy Interpretation Committee being PIC No.10/AM11 dated 15.03.2011.
[1.1] The petitioner has also prayed for an appropriate writ of mandamus or any other appropriate writ of mandamus or any other appropriate writ, order or direction, directing the respondents to grant the deemed export duty drawback claims to the petitioner in terms of Approval Orders Nos. 05 / 40 / 81 / 224 / AM10 / CLA /703095 dt.30.03.2010; 05 / 40 / 83 / 00015 / AM11 / CLA / 707425 dt.21.04.2010; 05 /40 /81 / 89 / AM11 / CLA / 728820 dt.30.07.2010; 05 / 40 /81 /99 / AM11 / CLA /732356 dt.17.08.2010; 05 /40 /81 / 102 /AM11 /CLA /733209 dt.20.08.2010 and 05 /40 /81 /224 /AM10 /CLA /735559 dt.01.09.2010;
[2.0] Facts leading to the present Special Civil Application in nutshell are as under:
[2.1] That the petitioner is a Company incorporated under Companies Act, 1956 having its registered office at Vidyut Bhavan, Race Course Road, Vadodara. That the petitioner is a power generation company which has implemented various nonmega power projects.
[2.2] It is the case on behalf of the petitioner that the petitioner was incorporated with the objective to initiate the process of restructuring of power sector in the State of Gujarat. That the petitioner has been notified as State Generating Power Plant by Government of Gujarat with the purpose of improving efficiency in the State's Electricity Generation Activities.Page 2 of 64 C/SCA/15706/2011 CAV JUDGMENT
[2.3] That one of the power plant owned and operated by the petitioner is 135 MW capacity Gas based Combined Cycle Power Plant at Utran, Surat, Gujarat. That the petitioner sought to explain the existing power plant in order to general additional 370 MW of power. It is the case on behalf of the petitioner that for the purpose of above expansion, the petitioner sought to procure equipment, facilities, other material etc. by way of imports. For the purpose of selecting vendor for the above supplies i.e. equipment, facilities, other material etc. the petitioner followed the International Competitive Bidding process. That pursuant thereto the petitioner entered into a contract with the successful bidder Alstom (Switzerland) Limited, Brown Boveri Strasse 7, CH5401 Baden, Switzerland (hereinafter referred to as "Alstom") dated 27.04.2007 for the supply of offshore equipment and spare parts to the petitioner for expansion of existing power project. It is the case on behalf of the petitioner that the scope of the contract was for the supply of equipments and spare parts which include GT Fields Assembly, HP Feed Water Pumps, Spare parts etc. It is the case on behalf of the petitioner that in respect of the above imports, the bills of entries were in the name of the petitioner and were cleared on payment of appropriate duties of customs. It is the case on behalf of the petitioner that the equipments and spare parts imported by the petitioner were taken to the site of the project where the petitioner under the process of erection, fabrication, assembly to set up a power plant for Utran 370 MW Combined Cycle Power Plant (hereinafter referred to as "Power Project").
[2.4] It is the case on behalf of the petitioner that in respect of the supply of the above plant to the power project, the petitioner applied to the respondent No.3 for claiming the deemed export drawback in respect of the custom duties paid on the imported equipments and spare parts as per the provisions of Chapter 8 of the Foreign Trade Policy (hereinafter referred to as "FTP").Page 3 of 64 C/SCA/15706/2011 CAV JUDGMENT
[2.5] That the petitioner filed five separate applications dated 22.03.2010, 23.03.2010, 23.03.2010, 25.03.2010 and 25.03.2010 respectively, in the prescribed form along with the complete set of documents with the respondent No.3 for seeking deemed export drawback under para 8.3(b) of the FTP.
[2.6] It is the case on behalf of the petitioner that the respondent No.3 vide letter Nos.05 / 40 / 81 / 224 / AM10 / CLA /703095 dated 30.03.2010; 05 / 40 / 83 / 00015 / AM11 / CLA / 707425 dated 21.04.2010; 05 /40 /81 / 89 / AM11 / CLA / 728820 dated 30.07.2010; 05 / 40 /81 /99 / AM11 / CLA /732356 dated 17.08.2010; 05 /40 / 81 /102 /AM11 /CLA /733209 dated 20.08.2010 and 05 /40 /81 / 224 /AM10 /CLA /735559 dated 01.09.2010 communicated to the petitioner that (a) the application for deemed export drawback has been admitted for payment; (b) the case is riped for payment and the cheques would be issued towards settlement of the claims upon receipt of the funds from the DGFT. Thus, according to the petitioner the respondent No.3 allowed the deemed duty drawback claim of the petitioner in terms of para 8.3(b) of the FTP. According to the petitioner the respondent No.3 also sanctioned the drawback amounts in respect of each of the applications and was awaiting funds from the respondent No.2 for disbursement.
[2.7] It is the case on behalf of the petitioner that in pursuance to the application for approval received from respondent No.3, the petitioner issued prereceipt in respect of all the claims. That the petitioner vide letter dated 03.03.2011 addressed to the respondent No.3 furnished the bank details for the purpose of receipt of pending drawback claims.
[2.8] It appears that thereafter a meeting of the PIC was held, under the Chairmanship of the respondent No.2 - DGFT, New Delhi, in order to decide on issues relating to grant of benefits under deemed exports. That Page 4 of 64 C/SCA/15706/2011 CAV JUDGMENT the PIC thereafter had decided not to grant deemed export benefit in cases where the bill of entry in the name of the project authority. It is the case on behalf of the petitioner that as such there is no provision in the FTP for denying grant of deemed export benefit in case of imports where the bill of entries is in the name of project authority. It is the case on behalf of the petitioner that inability of the respondents to grant large number of pending drawback claim owing to inadequate budget provision appears to be the sole basis for the above decision.
[2.9] That thereafter the petitioner had received the impugned letters, all dated 21.03.2011, rejecting the deemed benefit drawback claimed by the petitioner in which para 3 of the impugned minutes to hold that the petitioner is ineligible for deemed export benefits has been referred.
[2.10] Feeling aggrieved and dissatisfied with the denial of the deemed export drawback, the petitioner vide application dated 27.06.2011 addressed to the respondent No.2 filed a written representation requesting to reconsider the decision to deny deemed export drawback and the same be allowed. That as there was no response to the above representation, the petitioner sent the reminder dated 29.06.2011 requesting the respondent No.2 - DGFT to expedite the decision in the matter. However, there was no response from the respondent No.2 and therefore, the petitioner has preferred the present Special Civil Application under Article 226 of the Constitution of India for the above stated reliefs.
[3.0] Shri Mihir Thakore, learned Senior Advocate has appeared with Shri Sandip Singhi, learned advocate for Singhi & Company for the petitioner and Shri Harin Raval, learned Senior Advocate has appeared with Ms. Maithili Mehta, learned advocate appearing on behalf of the respondents.
Page 5 of 64 C/SCA/15706/2011 CAV JUDGMENT[4.0] Preliminary objection raised by the respondents A preliminary objection is raised on behalf of the respondents with respect to the territorial jurisdiction of this Court and also with respect to the locus of the petitioner.
[4.1] It is vehemently submitted by Shri Raval, learned Counsel appearing on behalf of the respondents that no part of cause of action has arisen in the territorial jurisdiction of this Court. It is submitted that the petitioner through its authorized signatory and through the office located at Gujarat Bhavan, New Delhi had filed separate applications for seeking benefit of deemed export drawback, the claim for grant of duty drawback was filed before the Joint Director General of Foreign Trade, New Delhi. It is submitted that pursuant to the same, the impugned communication through the Foreign Trade Development Officer, New Delhi was made from New Delhi. It is submitted that even the PIC meeting was held at New Delhi and the communication for rejection of benefit was also made by the office, Joint Director General of Foreign Trade, New Delhi. It is submitted that hence, since the application was made in New Delhi and the decision has been taken in New Delhi, no part of cause of action arises within the territorial jurisdiction of this Court. In support of his above submissions, he has heavily relied upon the decision of the Hon'ble Supreme Court in the case of Union of India & Ors. vs. Adani Exports Ltd. & Anr. reported in AIR 2002 SC 126.
[4.2] It is submitted that in the aforesaid decision the Hon'ble Supreme Court has held that the question of jurisdiction goes to the root of the matter and therefore, this Court would not have any jurisdiction to entertain or to consider the present petition.
Making above submissions and relying upon above decisions, it is requested to dismiss the present petition for want of territorial jurisdiction.
Page 6 of 64 C/SCA/15706/2011 CAV JUDGMENT[4.3] On the aforesaid preliminary objection raised with respect to the territorial jurisdiction of this Court, it is submitted by Shri Mihir Thakore, learned Counsel appearing on behalf of the petitioner that in the present case the following facts would clearly demonstrate that the cause of action have arisen in the State of Gujarat.
1. the registered office of the petitioner is in Vadodara;
2. the site where the power project was assembled, fabricated, manufactured is in Uttran, Surat District
3. the advertisement published by the petitioner seeking International Competitive Bids (ICB) from various contractors provided as under:
"The bid documents may be collected from GSECL office at Vadodara by paying a sum of Rs.50,000/ (Rupees Fifty Thousand Only) in cash of by Demand Draft in favour of "Gujarat State Electricity Corporation Ltd." payable at Vadodara".
4. The selection of successful bidder on the basis of price quoted was also undertaken by petitioner in Vadodara. Thus, the entire ICB procedure, one of the essential criterions for claiming deemed export duty drawback benefit, took place in the State of Gujarat.
5. The imported goods, whereupon the drawback is being claimed, were received in Uttran, Surat District.
6. The event / activity whereby the petitioner has made the claim for duty drawback i.e. the act of supply of goods to the power project as required under para 8.2(g) of the Foreign Trade Policy 2009 14, has taken place at Uttran, Surat.
It is submitted that the above facts individually and cumulatively clearly establishes that a major part of cause of action has taken place in the State of Gujarat.
Page 7 of 64 C/SCA/15706/2011 CAV JUDGMENT[4.4] Now, so far as the contention on behalf of the respondents that the petitioner has not made specific averments visavis cause of action and that in absence of specific pleadings regarding the same, the petition is liable to be dismissed is concerned, Shri Thakore, learned Counsel appearing on behalf of the petitioner has referred to Order VII Rule 1(f) of the Code of Civil Procedure, 1908. It is submitted that there is no requirement under the Code of Civil Procedure, 1908 to make specific written averments in respect of the jurisdiction. It is submitted that it is sufficient if facts stated in the petition demonstrates that this Hon'ble Court has jurisdiction to entertain the present petition. Learned Counsel appearing on behalf of the petitioner has referred to the averments made in paras (ii), (iii), (vi) and (vii) and averments made in para (xiii) of the petition in support of his submissions that the aforesaid averments would show that this Hon'ble Court has jurisdiction to entertain the present petition.
Making above submissions and relying upon the decision of the Hon'ble Supreme Court in the case of Rajasthan High Court Advocates' Association vs. Union of India reported in (2001)2 SCC 294 and Kusum Ingots & Alloys Ltd. vs. Union of India reported in (2004)6 SCC 254, it is submitted that this Hon'ble Court has jurisdiction to hear the present petition.
Submissions on merits on behalf of the petitioner and the respondents [5.0] Shri Thakore, learned Counsel appearing on behalf of the petitioner has vehemently submitted that the petitioner is entitled to deemed export drawback as per Chapter 8 of the FTP 200914.
It is submitted that as per the provisions of Chapter 8 of the FTP 200914, the supplies to power projects would qualify as deemed export subject to fulfillment of the following conditions:
(1) That the supplies should be made under the procedure of International Competitive Bidding.
(2) That the goods supplied to the project should be Page 8 of 64 C/SCA/15706/2011 CAV JUDGMENT manufactured in India.
[5.1] It is further submitted that admittedly, the petitioner has satisfied both the above conditions as under:
(1) Admittedly, the petitioner have duly followed the procedure under the ICB for procurement of goods viz. Boiler, Turbine and Generator from Alstom. The respondent have not disputed the ICB procedure;
(2) The condition of manufacture in India is also satisfied inasmuch as:
• The imported BTG is taken site where the installation, fabrication etc. takes place resulting in emergence of a power project. It is submitted that the process of connecting BTG and installation of the same at site amounts to manufacture. In support of the above submissions, the petitioner refers to and relies upon the decision of the Hon'ble Supreme Court in the case of Triveni Engineering & Indus. Ltd. vs. CCE reported in 2000(120) ELT 273 (SC) wherein the Hon'ble Court while examining the process of combining steam turbine and alternator by fixing them on a platform and aligning them. The Hon'ble Apex Court held that the above process amounted to manufacture. Learned Counsel appearing on behalf of the petitioner has heavily relied upon para 11 of the decision of the Hon'ble Supreme Court in the case of Triveni Engineering & Indus. Ltd. (Supra).
[5.2] Learned Counsel appearing on behalf of the petitioner has also referred to and relied upon a circular dated 05.12.2000 issued by the DGFT in respect of turnkey contract, it was clarified that all directly supplied items whether imported or indigenous as are used in the Page 9 of 64 C/SCA/15706/2011 CAV JUDGMENT project the condition of manufacture in India, a prerequisite for grant of deemed export benefit is satisfied in view of the fact that the aforesaid activities being undertaken in the project site constituted manufacture as per the definition given in para 3.31 of the EXIM Policy and accordingly the duties (Customs and Central Excise) suffered on such goods shall be refunded through the DBK route.
[5.3] It is further submitted by Shri Thakore, learned Counsel appearing on behalf of the petitioner that the definition of "manufacture" given at para 3.31 of the EXIM Policy prevailing in the year 2000 is similar to the definition of "manufacture" under the FTP at para 9.36 and that the said circular has not been withdrawn. It is submitted that therefore the above circular to be applicable in respect of FTP for the relevant period in question. It is submitted that on the basis of the above circular, the respondents have been granting drawback benefit to various power project owners in respect of direct import since 2000.
[5.4] Learned Counsel appearing on behalf of the petitioner has referred to and relied upon the case of H.P. Energy India Pvt. Ltd. decided by the Norms Committee comprising the respondents. It is submitted that it was held by the Norms Committee that the imported goods viz. turbine, boiler and generator directly supplied to the project shall constitute inputs of the power project. It is submitted that the said Norms Committee considered the power project i.e. "3 MW Hydroelectric Power Generation Plant" as the export product for the purpose of granting deemed export benefit viz. Advance authorization to the goods imported by the project authority. It is submitted that thus historically the respondents have been granting drawback benefit to direct imports of BTG by the project authority.
[5.5] Now, so far as challenge to the impugned minutes of the PIC dated 15.03.2011 more particularly para 3 of the minutes is concerned, Page 10 of 64 C/SCA/15706/2011 CAV JUDGMENT it is vehemently submitted by Shri Thakore, learned Counsel appearing on behalf of the petitioner that the impugned PIC minutes amounts to adding a new ineligible condition for grant of deemed export benefit under Chapter 8, which does not exist. It is submitted that as per section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as "FTDR") read with para 1.13 of the FTP, the Central Government alone has been empowered to amend or legislate provisions in respect of the FTP. It is submitted that therefore impugned PIC minutes are liable to be set aside.
[5.6] It is further submitted that the impugned PIC minutes does not give any reason for declaring directly imported items ineligible for deemed export benefit. It is submitted that provisions pertaining to eligibility of deemed export benefit is provided under Chapter 8 of the FTP. Thus, the new ineligibility condition imposed by way of the impugned PIC minutes is arbitrary, without any basis and contrary to the express provision of Chapter 8 of the FTP and is, therefore, liable to be struck down as ultra vires the FTP.
[5.7] It is further submitted that the respondent No.3 while rejecting the deemed export benefit to the petitioner vide its letters dated 21.03.2011 have simply referred to the impugned PIC minutes without giving any independent finding regarding the ineligibility of the petitioner in terms of Chapter 8 of the FTP. Thus, there is no application of mind on the part of the respondent No.3 while issuing the rejection letters. The impugned letters are, therefore, liable to be set aside on this ground alone.
[5.8] It is submitted that it is pertinent to note that the very same authority i.e. the respondent No.3 had earlier issued approval letters on various dates between March 2010 till September 2010 approving all the deemed export duty drawback claims filed by the petitioner.
Page 11 of 64 C/SCA/15706/2011 CAV JUDGMENT[5.9] It is further submitted that earlier the respondent No.3 had issued the above approval letters after duly processing the application filed by the petitioner and after fully satisfying himself about the eligibility of the petitioner to the deemed export duty drawback benefit. It is further submitted that when the respondent No.3 granted the above approval letters, he was fully aware that the goods / BTG, in respect of whereof the duty drawback benefit is being claimed, were imported directly by the petitioner i.e. the bill of entry was in the name of the petitioner. However, the very same respondent No.3 in respect of the very same facts, subsequently (after the impugned PIC minutes) takes a complete Uturn and holds that the petitioner is not eligible for deemed export duty drawback solely on the basis of the impugned PIC minutes.
[5.10] It is, therefore, submitted that the above ineligibility criteria i.e. in cases of imports if the bill of entry is in the name of the project authority, was not available under the provisions of the Chapter 8 earlier when the petitioner's cases were duly approved by respondent No.3. It is submitted that the said criterion has been introduced for the first time on 15.03.2011 by the impugned PIC minutes. It is, therefore, submitted that the said new ineligibility criteria amounts to adding a new condition to the existing policy by the respondent No.2 (DGFT) which is clearly ultra vires the power conferred on to the respondent No.2 under the FTDR and the FTP. Thus, the impugned PIC minutes and the subsequent rejection letters all dated 21.03.2011 are liable to be struck down.
[5.11] It is further submitted by Shri Thakore, learned Counsel appearing on behalf of the petitioner that even otherwise the impugned decision of the respondent No.3 rejecting the claims of the petitioner of export drawback, impugned in the petition, is bad in law and contrary to the provisions of section 16 of the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as "Act, 1992"). It is submitted that in the present case earlier the respondent No.3 itself Page 12 of 64 C/SCA/15706/2011 CAV JUDGMENT informed the petitioner that the application has been processed after removal of the deficiencies and the case has been admitted for payment and the case has riped for payment and cheques will be issued towards settlement of the claim upon receipt of the funds from the DGFT, New Delhi. It is submitted that the respondent No.3 had issued the approval letters after duly processing the application filed by the petitioner and after fully satisfying himself about the eligibility of the petitioner to the deemed export duty drawback benefit. It is submitted that when the respondent No.3 granted the above approval letters, he was fully aware that the goods / BTG in respect whereof the duty drawback benefit is being claimed were imported directly by the petitioner i.e. the bill of entry was in the name of the petitioner. It is submitted that however the very same respondent No.3 in respect of the very same facts, subsequently had taken a complete Uturn and it is held that the petitioner is not eligible for deemed export duty drawback solely on the basis of the impugned PIC minutes. It is submitted that therefore the impugned decision of the respondent No.3 rejecting the claim of the petitioner of duty drawback benefit can be said to be reviewing its earlier decision and therefore, the same is hit by section 16 of the Act, 1992.
[5.12] It is further submitted by Shri Thakore, learned Counsel appearing on behalf of the petitioner that even otherwise the DGFT is estopped from denying deemed export drawback in terms of principles of promissory estoppel and legitimate expectation of the petitioner. It is submitted that the DGFT have been regularly allowing the deemed export drawback to various power projects in the past. It is submitted that the deemed export drawback benefit is one of the key consideration that the power project take into account for the purpose of ascertaining the cost of power generation, which ultimately forms the basis for Page 13 of 64 C/SCA/15706/2011 CAV JUDGMENT entering into power purchase agreements. It is submitted that the petitioner at the time of setting up the power project had legitimate expectation that on fulfilling the conditions prescribed under the FTP, it would be entitled to duty drawback in the respect of customs duties paid on imported goods supplied to the power project. It is further submitted that the petitioner fulfilled all the conditions prescribed in the FTP for claiming deemed export duty drawback and further the Additional DGFT had also admitted petitioner's claim for duty drawback on merits earlier. Thereafter, the DGFT and/or the very respondent No.3 is estopped from denying the deemed export drawback in terms of principles of promissory estoppel and legitimate expectation of the petitioner.
[5.13] Without prejudice to the aforesaid submissions and in the alternative it is submitted by Shri Thakore, learned Counsel appearing on behalf of the petitioner that in any case the impugned PIC minutes can be made effective only prospectively. It is submitted that the said new criteria cannot be applied retrospectively. It is submitted that therefore and accordingly, the impugned rejection letter, all dated 21.03.2011 are liable to be set aside.
In support of his above submissions learned Counsel appearing on behalf of the petitioner has heavily relied upon para 21 of the decision of the Bombay High Court dated 21.07.2014 in the matter of Patel Engineering vs. Union of India in Writ Petition No.6846/2012 and Writ Petition No.8288/2012 in which it is held by the Bombay High Court that the interpretation of the FTP placed by the PIC vide its MOM dated 15.03.2011 would not be applicable in cases pertaining to supplies made prior to 15.03.2011. It is further submitted by learned Counsel appearing on behalf of the petitioner that in the present case (a) the supplies to the project was made prior to 15.03.2011; (b) the petitioner applied for refund of customs duty by way of deemed exports vide its Page 14 of 64 C/SCA/15706/2011 CAV JUDGMENT applications filed on various dates in March 2010 which is prior to 15.03.2011 and (c) the respondent No.3 after verification of petitioner's applications and the supporting documents passed Approval Orders, supra, on various dates from March 2010 till September 2010 i.e. prior to 15.03.2011 dated above impugned order is ultra vires whereas the interpretation placed by the PIC to the FTP vide its MOM dated 15.03.2011 shall be applicable only prospectively.
[5.14] Now, so far as the contention on behalf of the respondent that by allowing the duty drawback of the customs duty paid on imported goods, the petitioner would be unjustly enriched, which has been made relying upon clauses of the Onshore Supply Contract dated 27.04.2007 between the petitioner and the Alstom India Pvt. Ltd., wherein it has been provided that the supplier viz. Alstom shall pass on the benefit of deemed export to the petitioner is concerned, it is submitted by Shri Thakore, learned Counsel appearing on behalf of the petitioner that the petitioner in the present case have claimed duty drawback in respect of imported BTG. It is submitted that it is an undisputed fact that the petitioner had filed by bill of entry for import of BTG and cleared the same from the customs on payment of appropriate customs duty. It is further submitted that the import of BTG is governed by the clauses in the off shore supply of equipment entered into between the petitioner and the Alstom AG, Switzerland. It is further submitted that in case of off shore contract there is no clause requiring the Alstom AG to pass on the benefit of deemed export benefit to the petitioner. It is further submitted that the petitioner has actually discharged the duty of customs in respect of the imported BTG, hence there is no unjust enrichment. Thus, the contention of the respondent is without any basis whatsoever.
Page 15 of 64 C/SCA/15706/2011 CAV JUDGMENT[5.15] It is further submitted that in case of domestic supplies to be undertaken by Alstom India Private Ltd., it is submitted that the petitioner of that petition has not claimed any deemed export benefit in respect of such supply. It is submitted that Alstom India Private Limited have claimed terminal excise duty benefit in respect of various domestic supplies for the project. It is further submitted that the petitioner have not claimed deemed export benefit in respect of domestic supplies.
[5.16] It is further submitted that the respondents have been continuously allowing deemed export duty drawback benefit to various mega and nonmega power project owners in respect of direct imports by the project owners on the basis of its own earlier circular dated 05.12.2000. The impugned PIC minutes, which proposes to insert a new ineligibility criterion is restrictive in nature and is, therefore, liable to be applied prospectively.
It is, therefore, submitted that the orders dated 21.03.2011 issued by the respondent No.3 refusing the grant deemed export duty drawback to the petitioner by applying the impugned PIC minutes retrospectively is bad in law and is liable to be quashed.
[5.17] Now, so far as the contention on behalf of the respondents that deemed export benefit under Chapter 8 of FTP is not available to the recipient of the supplies, it is vehemently submitted by Shri Thakore, learned Counsel appearing for the petitioner that for the aforesaid the respondents have reasoned that the benefit is only available to the supplier and not the project itself.
Shri Thakore, learned Counsel appearing for the petitioner has referred to para 8.3.1 of the Hand Book of Procedures, which provides that even a recipient may claim drawback benefit on production of suitable declaration from suppliers. It is submitted that the clause 8.3.1(i) was amended with effect from 01.03.2011 vide notification Page 16 of 64 C/SCA/15706/2011 CAV JUDGMENT No.35 (RE 2010)/200914. The amended clause reads as follows:
"An application in ANF 8, along with prescribed documents, shall be made by Registered Office or Head Office or a branch office or manufacturing unit of supplier to RA concerned. Where applicant is branch office or manufacturing unit of a supplier, it shall furnish self certified copy of valid RCMC. Recipient may also claim drawback benefits on production of a suitable declaration from supplier, in the format given in Annexure III of ANF8. In case of TED refund, a declaration, in the format given in Annexure II of ANF 8, regarding non availment of CENVAT credit, shall be given, by the recipient of goods, in addition to other prescribed documents."
Thus, the requirement of filling AnnexureIII for claiming duty drawback benefit was introduced with effect from 01.03.2011 and hence not applicable to the petitioner.
[5.18] It is further submitted that the petitioner qualifies as recipient of the power plant and hence entitled to the benefit of duty drawback.
It is submitted that the petitioner had invited bids following the International Competitive Bidding procedure for setting up of power plant at Uttran and the scope of work as per the advertisement inviting bids was that the bidder shall be responsible for the Design, Engineering, Procurement, Construction, Supply, Installation, Commissioning and Testing of the Power Plant and the contractor would be required to execute the whole scope on Fixed Price Turnkey Basis. Thus, it was submitted that the successful bidder is required to supply the entire Power Plant as a product or goods to the petitioner.
[5.19] It is further submitted that through the ICB process, Alstom (Switzerland) Ltd. was selected as the successful bidder for the above Page 17 of 64 C/SCA/15706/2011 CAV JUDGMENT project and Alstom (Switzerland) Ltd. requested the petitioner to consider splitting of the composite into onshore and offshore activities as under:
(a) Offshore supply of goods (BTG) by Alstom (Switzerland) Ltd.;
(b) Onshore supply of goods by Alstom Projects India Ltd.;
(c) Onshore services by Alstom Projects India Ltd.
That the petitioner agreed for the above arrangement and issued letter of intent for each of the above activities.
It is submitted that accordingly the petitioner entered into three different contracts for supply and services with Alstom (Switzerland) Ltd. and Alstom Projects India Ltd. and in respect of Offshore supplies being BTG, the said equipments were supplied by Alstom (Switzerland) Ltd. and sold to the petitioner on High Sea Sales basis. It is submitted that the BTG was cleared by Alstom Projects India Ltd. (under an authorization from the petitioner) from the port and transported to site for installation. It is further submitted that the customs duty in respect of the imported BTG was borne and paid by the petitioner.
That at the site, Alstom Projects India Ltd. used the BTG and other domestically procured goods as inputs and constructed / fabricated a power plant and supplied the said power plant to the petitioner. In this regard, reference is made to circular dated 05.12.2000 and Norms Committee decision dated 16.09.2008.
It is, therefore, submitted that accordingly, Alstom Projects India Ltd., being the supplier of power plant to the petitioner became eligible under para 8.2(g) read with para 8.3(b) and (c) of the FTP for the benefits viz. (a) terminal excise duty in respect of domestically procured inputs used in the power plant; and (b) drawback of customs duty paid on imported inputs viz. BTG on which duty of customs have been paid. In this context, the definition of drawback as defined at para 9.22 of the Page 18 of 64 C/SCA/15706/2011 CAV JUDGMENT FTP has been relied upon by the learned Counsel appearing on behalf of the petitioner. It is submitted that in the present case power plant is goods manufactured in India and when supplied to the petitioner becomes an export product (deemed export) and accordingly, duty chargeable on any imported material / input herein BTG would be allowed as rebate.
It is, therefore, submitted that Alstom Projects India Ltd., being the supplier of the power plant is entitled to the rebate of the customs duty paid on imported BTG and accordingly, the petitioner who is the recipient of the power plant may also claim the duty drawback in respect of the customs duty paid by Alstom Projects India Ltd. subject to a declaration which has been duly issued. It is submitted that thus, the petitioner is entitled to the benefit of duty drawback as recipient of the power plant.
[5.20] It is further submitted by Shri Thakore, learned Counsel appearing on behalf of the petitioner that even otherwise the impugned rejection orders dated 21.03.2011 amounts to review by the respondent No.3 of his earlier Approval Orders, which is not permissible.
It is submitted that in the present case, the petitioner had filed five separate applications dated 22.03.2010, 23.03.2010, 23.03.2010, 25.03.2010 and 25.03.2010 respectively, in the prescribed form along with the complete set of documents with the respondent No.3 for seeking deemed export drawback under para 8.3(b) of the FTP.
It is further submitted that the respondent No.3 vide letter Nos.05 / 40 / 81 / 224 / AM10 / CLA /703095 dt.30.03.2010; 05 / 40 / 83 / 00015 / AM11 / CLA / 707425 dt.21.04.2010; 05 /40 /81 / 89 / AM11 / CLA / 728820 dt.30.07.2010; 05 / 40 /81 /99 / AM11 / CLA / 732356 dt.17.08.2010; 05 /40 /81 /102 /AM11 /CLA /733209 dt.20.08.2010 and 05 /40 /81 /224 /AM10 /CLA /735559 dt.01.09.2010 communicated to the petitioner that (a) the application for deemed export drawback has been admitted for payment; (b) the Page 19 of 64 C/SCA/15706/2011 CAV JUDGMENT case is riped for payment and the cheques would be issued towards settlement of the claims upon receipt of the funds from the DGFT.
It is further submitted that while the above approval orders were pending disbursement or execution, the MOM was issued wherein it was, inter alia, decided that in case of imports where the bill of entry is in the name of the project authority, deemed export benefit would not be available.
It is further submitted that immediately the respondent No.3 (very same officer which approved the duty drawback) passed the impugned rejections orders vide letters viz. 05 /40 /81 /89 /AM11 /Mics /CLA /778187; File No. 05 /40 /81 /99 /AM11 /Mics. /CLA / 778174; File No.05 /40 /81 /102 /AM11 /Mics. /CLA /778179; File No.05 /40 /81 /224 /Mics. /CLA /778332 and File No.05 /40 /81 / 15 /Mics. /CLA /778183, all dated 21.03.2011, rejecting the deemed benefit drawback claim of the petitioner. It is submitted that the said letters referred to para 3 of the impugned MOM to hold that the petitioner is ineligible for deemed export benefits. It is, therefore, submitted that the respondent No.3 sought to redetermine the eligibility of the petitioner to the deemed export benefit on the basis of the impugned MOM.
It is submitted by the learned Counsel appearing on behalf of the petitioner that the above impugned orders passed by the respondent No.3 are ultra vires the FTDR and is liable to be struck down.
In support of his above submissions, learned Counsel appearing on behalf of the petitioner has heavily relied upon the decision dated 15.03.2014 of the Division Bench of this Court in the case of Alstom India Ltd. vs. Union of India & Anr. rendered in Special Civil Application No.11031/2013 more particularly paras 31, 32 and 32.1 of the aforesaid decision. It is submitted that the decision of the Division Bench of this Court in the case of Alstom India Ltd. (Supra) will be applicable to the present case. It is submitted that in the present case the Page 20 of 64 C/SCA/15706/2011 CAV JUDGMENT respondent No.3 has already passed an order approving the deemed export duty drawback to the petitioner vide approval orders. However, by way of impugned order the respondent No.3 redetermined the eligibility of the petitioner to deemed export benefit by solely relying on the impugned minutes of meeting of the PIC dated 15.03.2011 and has sought to recover the same from the petitioner. It is submitted that these actions of the respondent No.3 amounts to review of its own order, which is not permissible under the FTDR. It is, therefore, submitted that the impugned orders passed by the respondent No.3 to withdraw the deemed export benefit already approved in favour of the petitioner is clearly ultra vires the provisions of the FTDR and is, therefore, liable to be struck down.
[5.21] It is further submitted that the rationale behind specifying supplies to certain projects as deemed export and allowing the deemed export benefit is to promote such projects. It is submitted that under Chapter 8 only certain critical projects being specified in respect whereof supplies of goods have been treated as deemed export and for which deemed export benefit have been made available. The projects are as under:
(i) Projects financed by multilateral or bilateral agencies;
(ii) Fertilizer plants;
(iii) Projects where Ministry of Finance permits import of goods at zero customs duty;
(iv) Power projects and refineries;
(v) Projects funded by UN Agencies; and
(vi) Nuclear power projects
[5.22] It is further submitted that apart from the above stated
projects, no other projects are entitled to the deemed export benefit. It is, therefore, submitted that the object of specifying certain selected projects for granting deemed export status and further grant Page 21 of 64 C/SCA/15706/2011 CAV JUDGMENT corresponding benefits is for the benefit of the project. The objective in such cases is not to provide benefit to supplier alone, as has been contended by the respondents.
[5.23] It is further submitted that it has been further contended by the respondent that the benefit of deemed export duty drawback is applicable only in respect of supplies from domestic suppliers. In cases where supplies are made from outside India, the benefit is not allowed.
It is submitted that the submission of the respondent is fallacious and is clearly contrary tot he intent of the FTP. It is submitted that one of the conditions for granting deemed export duty drawback benefit is that the supplies to the project should be made under International Competitive Bidding procedure. The term International Competitive Bidding itself suggest that the supplies / supplier are not restricted to domestic supplies / supplier and even supplier could be a foreign supplier so long as the ICB procedure is followed for selecting the supplier.
[5.24] It is further submitted by Shri Thakore, learned Counsel appearing on behalf of the petitioner that even the impugned PIC minutes and the impugned letters denying duty drawback to the petitioner is contrary to the object of FTP and against the public interest inasmuch as denial of drawback would result in higher cost of power generation and consequent increase in price of power to the consumer. It is further submitted that underlying purpose of allowing deemed export benefits to supplies made to power projects situated in India is to promote investments in the power sector in order to meet the huge demand of power in the Country. It is further submitted that the condition that all supplies to the power project shall be under an ICB procedure is to ensure that the cost of power generation is minimum and consequently, the power so generated is made available at competitive price to the consumer. Thus, the overall object of granting deemed Page 22 of 64 C/SCA/15706/2011 CAV JUDGMENT export status to power projects and the corresponding drawback benefit is to ensure that the cost of project is mitigated and is free from all taxes thereby serving the larger public interest.
[5.25] Now, so far as the submissions on behalf of the respondents that the object of FTP is to provide level playing field to the Indian manufacturers and the object of the deemed export benefit is to encourage manufacturing in India, relying upon the "preamble" to the FTP is concerned, it is vehemently submitted by Shri Thakore, learned Counsel appearing on behalf of the petitioner that a perusal of the preamble of the FTP would reveal that one of the objectives is also to facilitate technological and infrastructural upgradation of all sectors of Indian economy, especially through import of capital goods and equipment, thereby increasing value addition and productivity. It is submitted that power project is one of the important sectors of Indian economy. Thus, import of capital goods and equipment for power project to enhance value addition and efficiency is certainly in line with the objective of the FTP as laid out in the preamble hereinabove.
[5.26] It is further submitted that the respondents have further contended that the objective of the FTP is to provide level playing to the domestic manufacturers / suppliers visavis foreign suppliers. It is further submitted that the objective is to promote manufacturing in India. In this context, it is submitted that under Chapter 8, for the purpose of claiming the benefit the project authority are mandatorily required to follow the ICB process. The ICB process ensures that both domestic suppliers and foreign suppliers participate in the bidding process and the supplier quoting the lowest price would be selected. Thus, level playing field for domestic manufacturer is "built in" Chapter 8 of the FTP.
[5.27] Now, so far as the contention on behalf of the respondents Page 23 of 64 C/SCA/15706/2011 CAV JUDGMENT that under the Customs Act, complete exemption is provided only to Mega Power Project, whereas nonmega power project enjoys only concessional duty of basis custom duty and that the petitioner is attempting to claim complete exemption through the deemed export benefit route, which is not permissible is concerned, it is submitted by Shri Thakore, learned Counsel appearing for the petitioner that the aforesaid has no merits whatsoever and is liable to be rejected.
[5.28] It is submitted that Notification No.21/2002 is a notification under Customs Act, which falls within the purview of Ministry of Finance whereas the Foreign Trade Policy is formulated administered by the Ministry of Commerce. It is submitted that both the Ministries have their own objective and reasons for granting benefit and the two cannot be compared.
It is further submitted that the concessional benefit to nonmega power project under the aforesaid customs notification is totally different from the benefit giving under the Foreign Trade Policy and the petitioner is entitled to claim both the benefits. In this context, it is submitted that under Chapter 8 at para 8.2(f) covers supply of goods to project even in cases where such goods are fully exempted from customs.
"(f) Supply of goods to any project or purpose in respect of which the Ministry of Finance, by a notification, permits the import of such goods at zero customs duty"
Thus, in respect of goods imported for specified projects, where the customs duty is exempted, such supplies also enjoys the deemed export benefits. Thus, both customs duty benefit and benefit under the FTP (deemed export benefits) could be simultaneously availed and there is no bar against the same.
[5.29] It is further submitted that it is relevant to point out that Chapter 8 grants benefits to 2 categories of supplies to projects under para 8.2(f) and para 8.2(g).
Page 24 of 64 C/SCA/15706/2011 CAV JUDGMENTIt is submitted that para 8.2(f) covers supply of goods to specified projects or purpose for which the Ministry of Finance have granted complete exemption from customs duty. In such cases, if the supplies to such projects are made under ICB, the benefit of deemed export duty drawback benefit is available. It is further submitted that para 8.2(g) covers supply to power projects and refineries not covered in (f) above i.e. import of goods for such project (power project and refineries) have not been fully exempted by the Ministry of Finance on import of such goods. The benefit of deemed export benefit is also available in this case subject to the following ICB procedure.
It is, therefore, submitted that Chapter 8 envisages both the situation for grant of duty drawback i.e. (a) where the goods are fully exempted from customs duty; and (b) where the goods are not exempted from customs duty. It is further submitted that the case of the petitioner falls under the later category and therefore is entitled to the benefit of deemed export duty drawback. It is submitted that thus, the fact that in respect of nonmega power project there is no exemption from customs duty in respect of goods imported for such project is not a relevant consideration to deny the benefit.
[5.30] It is further submitted that the concessional rate of duty of nonmega power projects under the customs notification is an unconditional benefit. Thus, the project authority availing the benefit of the said notification has the ability to import the capital goods from a vendor of its choice without any fetters on pricing etc. However, a Project owner desirous of availing the deemed export benefit of duty drawback under the FTP is mandatorily required to follow the ICB procedure and is required to grant contract to the lowest bidder. The Project owner under the FTP, desirous of claiming deemed export benefit, do not have the liberty of picking and choosing vendors of his own choice. Thus, it is submitted that there is a big difference between the benefit under the customs law and that under the FTP.
Page 25 of 64 C/SCA/15706/2011 CAV JUDGMENT[5.31] It is further submitted on behalf of the petitioner that DGFT is estopped from denying drawback in terms of principles of Promissory Estoppel and legitimate expectations of the petitioner.
It is submitted that DGFT have been regularly allowing deemed export drawbacks to various power projects in the past and accordingly, the drawback benefit is one of the key considerations that the power projects take into account for the purpose of ascertaining the cost of power generation, which ultimately forms the basis for entering into power purchase agreements. It is submitted that the petitioner at the time of setting up the power project had legitimate expectation that on fulfilling the conditions prescribed under the FTP, it would be entitled to duty drawback in the respect of customs duties paid on imported goods supplied to the power project. It is further submitted that the petitioner fulfilled all the conditions prescribed in the FTP for claiming deemed export duty drawback and further the Additional DGFT had also admitted petitioner's claim for duty drawback on merits. It is, therefore, submitted that the DGFT/Additional DGFT are now estopped from denying the drawback benefit to the petitioner on the basis of conditions laid down in the PIC meeting, which are extraneous to the provisions of FTP. The impugned minutes of meeting as well as the impugned letters are liable to be set aside on this ground alone.
[5.32] It is further submitted that the petitioner have acted on the basis of the promise made by the Government notified in the FTP for grant of duty drawback to supplies made to power projects. Further, admittedly the petitioner have fulfilled all the conditions laid down in the FTP for claiming deemed export duty drawback. It is, therefore, submitted that decision as per para 3 of the impugned minutes of meeting of the PIC and the subsequent rejection letters issued by Additional DGFT to deny the legitimate drawback claims of the Page 26 of 64 C/SCA/15706/2011 CAV JUDGMENT petitioner on extraneous grounds are bad in law in view of the principles of Promissory Estoppel. The impugned minutes and the subsequent letters are liable to be set aside on this ground alone.
In support of his above submissions, Shri Thakore, learned Counsel appearing for the petitioner has heavily relied upon the following decisions of the Hon'ble Supreme Court.
(1) Motilal Padampat Sugar Mills Co. Ltd. vs. The State of Uttar Pradesh & Ors.
AIR 1979 SC 621 (2) State of Punjab vs. Nestle India Ltd. & Anr.
(2004)8 SCC 465 (3) MRF Ltd., Kottayam vs. Asstt. Commissioner (Assessment) Sales Tax & Ors.
(2006)8 SCC 702 [5.33] It is further submitted by Shri Thakore, learned Counsel appearing on behalf of the petitioner that Central Government in exercise of its powers under section 5 of the FTDR have vide Notification No.1 (RE2012)/20092014 dated 05.06.2012 amended the FTP whereby para 8.2(g) whereby supplies to nonmega power project was defined as deemed export, was deleted. It is submitted that thus by way of legislative action, the Central Government formally withdrew benefit of deemed export benefit to nonmega power project. It is submitted that in view of the above amendment the impugned PIC minutes to deny deemed export benefit to nonmega power project is nothing but an attempt on the part of the respondents to usurp the powers of the Central Government and confer upon themselves the power to legislate. It is submitted that therefore, the impugned PIC minutes are liable to be set aside.
At the time when the matter was heard by this Court pursuant to the directions of the Hon'ble Supreme Court of India dated 06.04.2015 Page 27 of 64 C/SCA/15706/2011 CAV JUDGMENT in Transfer Petition (Civil) No.429/2015, learned Counsel appearing on behalf of the petitioner had reiterated what was submitted earlier and has further submitted that as per the provisions of Chapter 8 of FTP 20092014 the supplies to power project would qualify as deemed export subject to fulfillment of the following conditions :
(i) That the supplies should be made under the procedure of International Competitive Bidding
(ii) That the goods supplied to the project should be manufactured in India It is submitted that in the present case the petitioner has satisfied both the above conditions. It is submitted that in the present case the condition of manufacture in India is also satisfied inasmuch as the imported BTG is to taken site where the installation, fabrication etc. takes place resulting in emergence of a power project. It is submitted that the process of connecting BTG and installation of the same at site amounts to manufacture.
In the context of "manufacture", the petitioner also refers to a circular. The petitioner has referred to and relied upon Circular dated 05.12.2000 issued by the DGFT in respect of turnkey contract in support of his above submission that by the aforesaid circular it was clarified by the DGFT that all directly supplied items whether imported or indigenous as are used in the project the condition of manufacture in India, a prerequisite for grant of deemed export benefit is satisfied in view of the fact that aforesaid activities being undertaken at the project site constitute manufacture as per the definition given in para 3.31 of the EXIM Policy and accordingly the duties (Customs and Central Excise) suffered on such goods shall be refunded through the DBK Route.
In support of his above submissions, learned Counsel appearing on behalf of the petitioner has relied upon the following chronology of definition of "manufacture" and relevant provisions of "Deemed Export"
Page 28 of 64 C/SCA/15706/2011 CAV JUDGMENTsince the year 2000.
"Export Import Policy - 19972002 (w.e.f. 1.4.1997 - 31.3.2002) Chapter 3, definition "3.31 Manufacture means to make, produce, fabricate, assemble, process or bringing into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, repacking, polishing, labelling and segregation, manufacture for the purpose of this policy also include agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining"
Chapter 10, Deemed Export "10.1 Deemed exports refers to those transactions in which the goods supplied do not leave the country.
10.2 The following categories of supply of goods by the main / sub contractors shall be regarded as Deemed Exports under this Policy, provided the goods are manufactured in India:
(f) Supply of goods to any project or purpose in respect of which the Ministry of Finance, by a notification, permits import of goods at zero customs duty coupled with extension of benefits under this Chapter for domestic supplies; and
(g) Supply of goods to Power, Oil and Gas sectors including refineries, not covered in (f) above"
Export Import Policy - 20022007 (w.e.f. 1.4.2002 - 31.3.2007) Chapter 9, Definitions "9.37 Manufacture means to make, produce, fabricate, assemble, process or bringing into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, repacking, polishing, labelling, reconditioning, repair, remaking, refurbishing, testing, calibration, re engineering. Manufacture for the purpose of this policy also include agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining"
Chapter 8, Deemed Export "8.1 Deemed exports refers to those transactions in which the goods supplied do not leave the country and payment for such supplies is received either in Indian rupees or in free foreign exchange. 8.2 The following categories of supply of goods by the main / sub contractors shall be regarded as Deemed Exports under this Policy, provided the goods are manufactured in India:
Page 29 of 64 C/SCA/15706/2011 CAV JUDGMENT(f) Supply of goods to any project or purpose in respect of which the Ministry of Finance, by a notification, permits import of such goods at zero customs duty coupled with extension of benefits under this Chapter for domestic supplies; and
(g) Supply of goods to power projects and refineries, not covered in
(f) above"
During the tenure of the above EXIM Policy, the Central Government, in September 2004, reintroduced the policy under a new nomenclature being Foreign Trade Policy (FTP). The relevant provisions of the FTP regarding manufacture and deemed exports have been extracted hereunder:
Foreign Trade Policy - 20042009 (w.e.f. 1.9.2004 - 31.3.2009) Chapter 9, Definitions
"9.37 Manufacture means to make, produce, fabricate, assemble, process or bringing into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, repacking, polishing, labelling, reconditioning, repair, remaking, refurbishing, testing, calibration, re engineering. Manufacture for the purpose of this policy also include agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining"
Chapter 8, Deemed Export "8.1 Deemed exports refers to those transactions in which the goods supplied do not leave the country and payment for such supplies is received either in Indian rupees or in free foreign exchange.
8.2 The following categories of supply of goods by the main / sub contractors shall be regarded as Deemed Exports under this Policy, provided the goods are manufactured in India:
(f) Supply of goods to any project or purpose in respect of which the Ministry of Finance, by a notification, permits import of such goods at zero customs duty coupled with extension of benefits under this Chapter for domestic supplies; and
(g) Supply of goods to power projects and refineries, not covered in
(f) above"
The benefits of deemed export shall be available under paragraph ...(f) and (g) only if the supply is made under the procedure of International Competitive Bidding"
Page 30 of 64 C/SCA/15706/2011 CAV JUDGMENTForeign Trade Policy - 20092014 (w.e.f. 1.4.2009 - 31.3.2014) Chapter 9, Definitions "9.37 Manufacture means to make, produce, fabricate, assemble, process or bringing into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, repacking, polishing, labelling, reconditioning, repair, remaking, refurbishing, testing, calibration, re engineering.
Manufacture for the purpose of FTP shall also include agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining"
Chapter 8, Deemed Export "8.1 Deemed exports refers to those transactions in which the goods supplied do not leave the country and payment for such supplies is received either in Indian rupees or in free foreign exchange.
8.2 The following categories of supply of goods by the main / sub contractors shall be regarded as Deemed Exports under this Policy, provided the goods are manufactured in India:
(f) Supply of goods to any project or purpose in respect of which the Ministry of Finance, by a notification, permits import of such goods at zero customs duty coupled with extension of benefits under this Chapter for domestic supplies; and
(g) Supply of goods to power projects and refineries, not covered in
(f) above"
The benefits of deemed export shall be available under paragraph ...(f) and (g) only if the supply is made under the procedure of International Competitive Bidding"
[5.34] It is submitted that from the bare perusal of the above chronology of EXIM Policy and the Foreign Trade Policy, it is clear that the definition of "manufacture" has continued to remain unchanged since 1997. It is submitted that policy to allow benefit of deemed export to nonmega power projects have also continued to remain the same till June 2012.
[5.35] It is submitted that in view of the foregoing, it is submitted that the circular dated 05.12.2000 interprets the definition of Page 31 of 64 C/SCA/15706/2011 CAV JUDGMENT manufacture as contained in para 3.31 of then EXIM Policy 19972002. It is submitted that the definition of manufacture has continued to remain the same till the FTP 20092014 and the said circular has not been withdrawn till date. Thus, the interpretation as per the above circular viz. that the activity of assembly, fabrication, testing at site amounts to manufacture as required under the deemed export policy would be squarely applicable to the requirement of manufacture as per Deemed Export provisions of the FTP 20042009, whereunder the petitioner had applied for duty drawback.
Making above submissions and relying upon above decisions, it is requested to allow the present petition and grant the reliefs as prayed for.
[6.0] Present petition is vehemently opposed by Shri Harin Raval, learned Senior Advocate appearing on behalf of the respondents. As observed hereinabove, a preliminary objection is raised with respect to territorial jurisdiction of this Court. The preliminary object raised is already referred to hereinabove.
[6.1] Shri Raval, learned Counsel appearing on behalf of the respondent - authorities has heavily relied upon the statement of object and reasons of the FTDR. It is submitted that the FTDR has been enacted to provide an adequate legal framework for the development and promotion of India's Foreign Trade. It is submitted that the goal of the new trade policy are to increase the productivity and competitiveness and to achieve a strong export performance. It is submitted that one of the objects is that such basic law, governing foreign trade must serve as an instrument to create an environment that will provide strong impetus to export.
Page 32 of 64 C/SCA/15706/2011 CAV JUDGMENT[6.2] It is submitted that FTP 200409 is framed as statutory policy framed in exercise of power conferred under section 5 of the FTDR. It is submitted that section 6(2) confers statutory power on the Director General to advise the Central Government in the formation of the foreign trade policy and it also provides that the Director General shall be responsible for carrying out the policy.
[6.3] It is further submitted that the responsibility to carry out the policy envisaged statutorily by section 6(2) clearly invests statutorily an Authority in the Director General of Foreign Trade to interpret the policy since interpretation of the policy is embedded in the function of carrying out the policy.
[6.4] It is further submitted that the powers with which the Director General of Foreign Trade has been clothed under section 6(2) are all powers so as to enable him to discharge statutory responsibility of carrying out the policy and that such power expressly flows from section which includes within its ambit to the function to interpret the policy. It is humbly submitted that such power is also implicit in the statutory provisions to give furtherance to the purposes of the Act and to interpret the policy correctly and in accordance with law to achieve objects of the policy.
[6.5] It is further submitted that Para 1.1 of the Foreign Trade Policy states that the Foreword spells out broad framework. It is further submitted that the Foreword dated 23.08.2010, by the Hon'ble Minister for Commerce and Industry states that Foreign Trade Policy for the period 200914 was announced on 27.08.2009 at a time when the world was emerging from the shadow of the economic period, the worst we have seen in the last 7 decades. It further states that in the said backdrop Page 33 of 64 C/SCA/15706/2011 CAV JUDGMENT that the given objective for the Foreign Trade Policy was to arrest the declining export and reverse the trade. It envisages marked diversification strategy to reach out to nontraditional destinations as the traditional markets in the world witnessed a sharp contradiction in demand. It also stated that Government was committed to encourage technology upgradation and export. It is submitted that the power to interpret provisions contained in the Foreign Trade Policy flows statutorily and also under para 2.3 of the Foreign Trade Policy. It is, therefore, within the jurisdiction, power and authority to interpret the provisions of Chapter VIII or in other words to interpret that what is meant by a "deemed export" and who is entitled to claim benefit of such deemed export. It includes within it the power to clarify whether the particular transaction is or is not a deemed export so as to qualify for seeking any of the benefits mentioned therein.
[6.6] It is further submitted that determination of eligibility in terms of the existing policy does not amount to any amendment in the existing policy, but merely amounts to interpretation thereof. It is submitted that the power conferred upon Director General of Foreign Trade under para 2.3 of the Foreign Trade Policy in regard to interpretation of policy is wide enough to determine eligibility of any person claiming the benefit thereof. It is a part of performance of the statutory functions of implementation of policy as conferred and mandated by section 6(2) of the Act. It, therefore, necessarily follows on bare perusal of the statutory regime that the Director General of Foreign Trade has power to specify the procedure to be followed by a person who wants to be conferred with the benefit under the said policy.
[6.7] It is further submitted that Chapter VIII titled as "deemed export" is a self contained code in itself.
Page 34 of 64 C/SCA/15706/2011 CAV JUDGMENT[6.8] It is further submitted that the said chapter defines what is the deemed export and in para 8.1 clearly states that "deemed exports refer to those transactions in which goods supplied do not leave the country and the payment for such supplies is received either in Indian rupees or in free foreign exchange."
[6.9] It is further submitted that a bare perusal of para 8.1 clearly reflects the statutory intent of link of deemed export with the supply of goods. It is submitted that it is further evident from para 8.2 of the Foreign Trade Policy which says that the mentioned categories of supply of goods by main/sub--contractor shall be regarded as deemed export under the Foreign Trade Policy provided the goods are manufactured in India.
[6.10] It is further submitted that a meaningful reading of para 8.2 as 'deemed export' is supply of goods and necessarily such goods have to be manufactured in India. In other words, the most essential eligibility for sustaining claim of deemed export benefit is that the goods which are supplied have to be manufactured in India. It is submitted that from the bill of entry it is evidently clear that goods in respect of custom duty at concessional rate of 5% was paid in respect whereof duty draw back is claimed are neither goods manufactured in India nor it is within the ambit of definition of deemed export. It is submitted that the perusal of para 8.2(ix) makes it clear that it is only the supply of goods to the power project and not the power project itself which shall be reckoned as a good for being regarded as deemed export. In other words, supply of goods is what attracts the eligibility for sustaining a claim and not the power project itself.
[6.11] It is further submitted that para 8.3 of the Foreign Trade Policy provides that deemed export shall be eligible for all/any of the benefits mentioned therein in respect of manufacture and supply of Page 35 of 64 C/SCA/15706/2011 CAV JUDGMENT goods qualifying as deemed export and that too subject to several terms and conditions mentioned in the Handbook of Procedure Vol.1.
[6.12] It is further submitted that advance authorization for annual requirement/duty free import authorization can only be entitled to be obtained by the supplier for the inputs imported in the manufacture of final goods supplied. It necessarily, therefore, implies that the import will be free of duty of inputs which go into the manufacture of goods to be supplied to the power project. It is submitted that second benefit is deemed export draw back and deemed export draw back will take its colour from the definition of the term 'draw back' as defined in clause 9.2.2 of the Foreign Trade Policy to mean in relation to any goods manufactured in India and exported, to mean the rebate of duty chargeable to any imported material or excisable materials used in the manufacture of such goods in India. It is submitted that it further states that goods include imported spares supplied with capital goods manufactured in India. Therefore, it is very clear that deemed export draw back benefit can only be claimed in relation to goods manufactured in India and that in relation to the inputs. It is submitted that it is very clear that this is an alternate to the benefits entitled under para 8.3A. It is submitted that under para 8.3C the entitlement is to the exemption from payment of terminal excise duty or in other words for refund of terminal excise duty. It is submitted that para 8.4.4(i) provides that in respect of supplies made under para 8.3D, F and G of Foreign Trade Policy supplier shall be entitled to benefits listed in para 8.3A, B & C whichever is applicable. It is thus clear that it is the supplier who alone is entitled and eligible and not the person who is supplied with the goods, i.e. not to buyer or the importer. It is submitted that the petitioner is the person who is the recipient of the supply or the importer and, therefore, in view of para 8.4.4(i), he is not eligible to claim any of the benefits. It is submitted that in para 8.4.4(iv), it is clear that it is only the supplier who is eligible for benefits listed in 8.3A and 8.3B of the Page 36 of 64 C/SCA/15706/2011 CAV JUDGMENT Foreign Trade Policy whichever is applicable. In fact, subpara (iv) of para 8.4.4 merely elaborates the issues.
[6.13] It is submitted that therefore the deemed export drawback benefit can only be claimed in relation to goods manufactured in India and that in relation to their inputs. It is submitted that this is an alternate to the benefits under para 8.3A. It is submitted that under para 8.3C, the entitlement is to the exemption from payment of terminal excise duty or in other words for refund of terminal excise duty. It is submitted that para 8.4.4(i) provides that in respect of supplies made under para 8.3D, F, G of the FTP, supplier shall be entitled to benefits mentioned in para 8.3A, B and C whichever is applicable. It is submitted that thus it is clear that it is the supplier who alone is entitled and eligible and not the person who is supplied with the goods i.e. not to the buyer or the importer.
[6.14] It is submitted that the petitioner is the person who is the recipient of the supply or the importer and therefore, in view of para 8.4.4(i), petitioner is not eligible to claim any of the benefits. It is submitted that in para 8.4.4(iv), it is clear that it is only the supplier who is eligible for benefits listed in para 8.3A and 8.3B of the FTP whichever is applicable. It is submitted that infact, para (iv) of para 8.4.4 merely elaborates the issues.
[6.15] It is submitted that in respect of eligibility for refund of terminal excise duty, a separate provision is contained in para 8.5 for which we are not concerned in the present petition. It is submitted that the provisions relied upon by the petitioner in para 8.3(i) to contend that recipient may claim benefit of provisions of Hand Book of Procedures is inapplicable, inasmuch as the correct provision which governs suppliers under category mentioned in paragraph 8.2(g) is in fact para 8.3(iv). It is submitted that it no where permits the recipient to Page 37 of 64 C/SCA/15706/2011 CAV JUDGMENT file a claim.
[6.16] It is further submitted that in regard to Para 8.3.6 of HOP, it is submitted that it is a specific provision governing the making of application for transactions covered under 8.2(g). It is submitted that it is trite law that when there is a general provision and a specific provision, the specific provision will prevail over the general provision. It is submitted that provision in para 8.3.1(i) is a general provision, whereas the provision in paragraph No.8.3.1(iv) is a specific provision.
[6.17] It is further submitted that para 8.3.6 clearly provides that subject to the procedure laid down in Handbook of Procedure, the Customs and Central Excise Draw Back Rules, 1995 shall apply mutatis mutandis to deemed export under Rule 16 of the Customs and Central Excise Duties Draw Back Rules, 1995 even where an amount of draw back and interest, if any has been paid erroneously or if the amount which was paid is in excess of what is claimed in the entitlement, Claimant is duty bound on demand by the proper officer to repay the amount so paid erroneously or in excess and on failure of the claimant to repay the amount, it is recoverable in the manner laid down in section 142(i) of the Customs Act, 1962.
[6.18] It is submitted that the underlying object of the Foreign Trade Policy is to augment export and the fact that the transactions under present Foreign Trade Policy to be classified as deemed export, in itself postulates with the necessary ingredients as envisaged by the Statute for a transaction to be an export as defined under Section 2(e) has to necessarily exist.
[6.19] It is submitted that Foreign Trade Policy is aimed to create manufacturing capability, value addition, employment opportunities and the underlying intent is to provide a level playing field to and confer Page 38 of 64 C/SCA/15706/2011 CAV JUDGMENT indigenous manufacturers benefits on them and not upon a person who imports or is supplied with such goods.
[6.20] It is further submitted that on a bare perusal of Section 25 of Customs Act, it is evident that if the intent was to confer benefits upon an importer of goods, then the easiest way was to exercise power of exemption under section 25 by granting total exemption from duty for goods imported by nonmega power project.
[6.21] It is submitted that the underlying intent and idea to classify certain transactions to be deemed export is to give them a status of export so as to make eligible or a manufacture of such goods including contractor or subcontractor to get benefit of duty draw back and thereby compete with persons who would supply imported goods. It is submitted that nature and emphasis of the scheme and the importance thereof lines in the fact that when locally manufactured goods are supplied, then they are deemed to be export and thereby idea is to provide level playing field to permit such manufacturer/supplier to draw back duty supplied by him on any inputs of such goods which are ultimately supplied to nonmega power project.
[6.22] It is further submitted that the contention of the petitioner that the transaction in question qualifies to be eligible to be regarded as deemed export is stated to be rejected, inasmuch (i) the essential ingredients which must necessarily be present are nonexistent; (ii) the goods are not manufactured in India; (iii) the benefits sought to be availed of does not bind supplier or contractorAlstom by manufacturer;
(iv) the benefit conferred under Chapter VIII is keeping in mind central scheme of the Act i.e. supplier who alone is entitled to the benefits.
[6.23] It is submitted that the provisions of Foreign Trade Policy admit of no other construction than one to state that the benefit is Page 39 of 64 C/SCA/15706/2011 CAV JUDGMENT available to none other than supplier. It is submitted that admittedly, the petitioner is not supplier. It is humbly submitted that the claim is to seek undue benefit i.e. refund custom duty in the guise of draw back since the products that are imported are not inputs to any final product manufactured in India, but they are final product. It is submitted that the reliance placed by the petitioner on the definition of manufacturer as defined under para 9.3.6 is wholly misplaced in law, inasmuch as such definition cannot be relied upon to say that what is manufactured is the power plant. It is submitted that this manufacture will speak in aid to a supplier or a contractor who has, for example, assembled the turbine which is final product on which benefit of deemed export under Chapter VIII are eligible to be granted cannot be fabricated, manufactured of produced, but for on the site. It is submitted that the inputs which go into such manufacture or the turbine are entitled to various benefits. In other words, the final product is turbine and not power project. It is submitted that the deeming fiction provided under para 9.3.6 is to further the object of the policy which is to confer the benefits on the suppliers. In case instead of manufacturing it in his premises, it is either manufactured, commissioned or erected (i.e. the product) at the power plant site. It is trite law that any particular provision of a statute or policy will not be so interpreted to further the purpose and intent of the policy.
[6.24] It is further submitted that the expression term of contract referred in the list of the dates by themselves are sufficient to indicate the disentitlement of the petitioner to claim benefits.
It is submitted that Clause (h) at page 38 clearly states that the contractor appointed under onshore service contract date 24.07.2007 would be responsible for the customs clearance and equipment, spare parts and materials received at the port of landing for (i.e. in India) in accordance with the terms and conditions and Page 40 of 64 C/SCA/15706/2011 CAV JUDGMENT covenants supplied to the CIF i.e. Cost Insurance Freight in other words, it clearly implies that duty will have to be borne by the petitioner. It is submitted that the present claim for draw back is in fact a distinguish claim for refund of customs duty which is otherwise not refundable under the provision of customs act. Thus the question of refund of such customs duty under the guise of deemed export does not arise at all.
[6.25] It is further submitted that the contention on behalf of the petitioner that the benefit of duty drawback is denied on the ground of unavailability of fund has no substance. It is submitted that infact in the counter at page 24, para 77, it is clearly averred that after settling the claim, an amount of Rs.1303.19 Crores remain unutilized which were surrender to the Ministry of Commerce.
[6.26] It is further submitted that even the contention that the custom duty the beneficiary is going to the power project is the red herring inasmuch as firstly, the amount of custom duty factored in contract price settling in view of the covenants onshore contract, it is clear that the liability to pay dues is on the supplier i.e. Alstom. It is submitted that the rate at which electricity is to be supplied is governed by the tariff fixed by the Gujarat Electricity Regulatory Commission under the provision of the Indian Electricity Act, 2003 and all capital expenditure expenses, running post, duties, taxes are always factored while fixing the tariff. It is submitted that it is not a case either averred or set up or pleaded by the petitioner that the levy of this concessional rate of custom duty detrimental or prejudicial affecting the fixation of tariff.
[6.27] Now, so far as the alternative contention on behalf of the Page 41 of 64 C/SCA/15706/2011 CAV JUDGMENT petitioner that the impugned decision of PIC and/or the policy has to be applied prospectively, it is vehemently submitted by Shri Raval, learned Counsel appearing on behalf of the respondents that the aforesaid contention is unsustainable in law, inasmuch as the interpretation qua is the applicability of provisions as policy to transactions which lay a claim for grant of benefit and therefore, have to be made applicable from the very beginning.
[6.28] Now, so far as the contention on behalf of the petitioner that the respondent No.3 has no power to review its own decision and/or that the power to review has to be expressly conferred is concerned, it is submitted by Shri Raval, learned Counsel appearing on behalf of the respondents that in the facts and circumstances of the present case, inasmuch as the power to review has to be expressly conferred only if there is an exercise of quasijudicial power. It is submitted that the principle that the power to review must be conferred by statute either specially or by necessary implication is applicable only where the government exercise quasijudicial powers vested in it by the Statute and not purely to administrative decision. In support of his above submissions, he has relied upon the decision of the Hon'ble Supreme Court in the case of R.R. Verma vs. Union of India reported in (1980)3 SCC 402 (para 5). It is submitted that in the aforesaid decision while considering the decision cited by the petitioner reported in AIR 1970 SC 1273, it was held that the principles laid down therein would apply where the government exercise quasijudicial power vested in them by statute. It is submitted that it is clearly held that the power to review must be conferred by the statute either specifically or by necessary implication is not applicable to decision which are purely of administrative in nature. It is submitted that in the aforesaid decision it Page 42 of 64 C/SCA/15706/2011 CAV JUDGMENT is held that to extend such principle to pure administrative decision would indeed lead to untoward and startling result. It is submitted that it is held that any government must be free to alternate this policy or decision in administrative matters. It is submitted that therefore the decision relied upon by the learned Counsel appearing on behalf of the petitioner on expressed power of review necessarily be conferred by statute are inapplicable in the facts of the present case.
[6.29] Now, so far as the contention on behalf of the petitioner with respect to promissory estoppel is concerned, it is submitted by Shri Raval, learned Counsel appearing on behalf of the respondents that in the facts and circumstances of the case, the principle of promissory estoppel shall not be applicable. Firstly, there is no promise by the government; secondly, the petitioner has not pleaded that it has acted on such promise; thirdly, the intention of the Foreign Trade Officer cannot be deemed to a promise to the petitioner, inasmuch as before such communication, the petitioner has already acted. It is submitted that as observed and held by the Hon'ble Supreme Court on the applicability of the principle of promissory estoppel, it is held that the doctrine of promissory estoppel is an equitable remedy and had to be applied depending on the facts of its case and not not straight jacketed pigeon holes. It is submitted that it is held that there cannot be any hard and fast rule for applying the said doctrine which is to be evolved and extended itself so as to ensure justice between parties and ensure equity.
In support of his above submissions, he has heavily relied upon the decision of the Hon'ble Supreme Court in the case of Motilal Padampat Sugar Mills Co. Ltd. vs. The State of Uttar Pradesh and Ors. reported in AIR 1979 SC 621 as well as another decision of the Hon'ble Supreme Court in the case of Union of India vs. Godfrey Page 43 of 64 C/SCA/15706/2011 CAV JUDGMENT Philips India Limited reported in (1985)4 SCC 369 as well as the decision of the Hon'ble Supreme Court in the case of State of Punjab vs. Nestle India Ltd. reported in (2004)6 SCC 465. He has also relied upon the decision of the Hon'ble Supreme Court in the case of Hira Tikkoo vs. Union Territory of Chandigarh reported in (2004)6 SCC 765 by submitting that as held by the Hon'ble Supreme Court in the aforesaid decision, where public interest is likely to be harmed, neither the doctrine of "legitimate expectation" nor "estoppel" can be allowed to be pressed into service by any citizen against the State authorities. Relying upon the decision of the Hon'ble Supreme Court in the case of Jit Ram Shiv Kumar vs. State of Haryana reported in (1981)1 SCC 11, it is submitted that no bill of estoppel available to an authority from acting as per the law.
[6.30] It is further submitted by Shri Raval, learned Counsel appearing on behalf of the respondents that grant of benefit under a policy is only an incentive or concession and the beneficiary of an incentive or concession has no legally enforceable right against the government, except to enjoy the benefit of concession during the period of its grant.
[6.31] It is further submitted that as per the settled proposition of law if manner of doing a particular act is prescribed under the statute, the act must be done in that manner or not in any other manner. It is submitted that FTP is a statutory policy and takes its commission from the provisions of section 5 of the FTDR. It is submitted that if the policy envisaged benefit only to a supplier and not to the recipient of the supply, there is no question of benefit being eligible to be granted to a person other than a supplier.
Page 44 of 64 C/SCA/15706/2011 CAV JUDGMENTIn support of his above submissions, he has relied upon the decision of the Hon'ble Supreme Court in the case of Babu Verghese vs. Bar Council of Kerala reported in AIR 1999 SC 1281 (para 31).
[6.32] It is further submitted that the policy envisages deemed drawback benefit only on inputs and, therefore, the policy cannot be sought to be or allowed to benefit the claim for grant of refund of custom duty.
[6.33] It is further submitted that even the principle of legitimate expectation also shall not be applicable to the facts of the case, inasmuch as for the doctrine to apply, the expectation has to be legitimate i.e. in accordance with the policy. It is submitted that if the respondents are right in contending that no benefit can be conferred upon the petitioner who has infact claimed refund of customs duty in the guise of duty drawback, there is no question of invocation of the said principle, inasmuch as the expectation to be refunded the custom duty is not legitimate. It is submitted that firstly, the policy decision does not envisage refund of custom duty; secondly, the petitioner is itself the importer and thirdly, the goods are not manufactured in India.
[6.34] It is further submitted that various communications indicating the confirmation of benefit of duty drawback communicated to the petitioner, are wrongly relied. It is submitted that this was based on a claim which was unsustainable and wrongly made and by overlooking relevant and correct position. It is submitted that this by itself would not give a right or basis for the petitioner to lay an unsustainable claim the question really is whether the petitioner is eligible for benefit of duty drawback on the transaction in question.
Page 45 of 64 C/SCA/15706/2011 CAV JUDGMENT[6.35] Now, so far as the reliance placed upon the decision of the Division Bench of this Court in the case of Alstom India Ltd. V/s. Union of India in Special Civil Application No.11031 of 2013 is concerned, it is submitted that as such it is per incuriam.
It is submitted that section 5 of the FTDR confers power on the Central Government to formulate the Foreign Trade Policy and section 6 of the said Act of 1992 deals with the appointment of the DGFT by the Central Government, who shall advise the Central Government in formulating the import export policy and shall be responsible for carrying out the said policy. Thus, the power to interpret/carrying out the policy confers the power to decide the same, therefore, it would be necessary for the Hon'ble Court to take into consideration paragraph 35 with paragraph 39 of the judgment of Alstom India Ltd. V/s. Union of India in Special Civil Application No.11031 of 2013. It is further required to be taken note of that the decision in interpreting the said Foreign Trade Policy does not amount to an amendment, cannot therefore have negative Article 14 of the Constitution of India.
[6.36] It is respectfully submitted that the contention raised by the petitioner that the said decision of the DGFT amounts to exercise of powers under Section 16 is totally incorrect for the reason that if the Hon'ble Court may consider the scope of Section 16 of the FTDR, then it is amply clear that it applies in a different realm. Thus, the interpretation of the policy is merely giving clarification of the existing provisions.
[6.37] It is further submitted that as such the aforesaid decision of the Division Bench of this Court in the case of Alstom India Ltd. (Supra) cannot be pressed into service and/or relied upon as the said decision is Page 46 of 64 C/SCA/15706/2011 CAV JUDGMENT the subject matter before the Hon'ble Supreme Court and the Hon'ble Supreme Court has admitted the Special Leave Petition.
[6.38] It is respectfully submitted that another aspect which is required to be taken into consideration is the fact that once the Project Authority enters into contract with a firm for supplying/setting up of a project, it is not supposed to import machinery etc. in its own name. Thus, if the Project Authority directly import goods, it cannot be termed as supply by main/subcontractor. PIC in its clarification given in paragraph 3 has clarified that if the Bill of Entry is in the name of project authority then deemed export benefits would not be available (such cases will be ineligible for grant of deemed export benefits). It is submitted that in this context it is emphasized that this clarification was issued because if the goods are being imported directly by the project authority itself and Bill of Entry is filed by the project authority itself, then such supplies do not become deemed exports at all under Chapter 8 of FTP. It is further submitted that deemed export is essentially supply of goods manufactured in India; secondly, deemed Export Policy is basically for import substitution and when the project authority is importing directly then no import substitution is taking place; thirdly, import of capital goods by nonmega power project is subjected to 5% Basic Customs Duty. It is submitted that if project authority is importing the capital goods directly, by filing Bill of Entry in their name, paying 5% customs duty and then taking this duty back as deemed export drawback, by adopting one mechanism or other, then it is defeating the very purpose of imposition of 5% Basic Customs Duty on such import. It is submitted that it is understood that such goods are being sold on High Sea to avoid sale tax/VAT and then Basic Customs Duty paid by project authority is being taken as deemed export drawback. Hence, it was Page 47 of 64 C/SCA/15706/2011 CAV JUDGMENT absolutely clear in the PIC meeting that these claims are not admissible and was being submitted by various applicants absolutely wrongly.
[6.39] Now, so far as the reliance placed upon the circular dated 05.12.2000 on behalf of the petitioner is concerned, it is submitted that as such the said circular shall not be applicable to the facts of the case on hand. It is submitted that even in the said circular it is specifically stated and mentioned that the supplies to the power project would clarify as deemed exports subject to fulfillment to all conditions out of which one condition is that the goods supplied to the project should be manufactured in India. It is submitted that admittedly in the present case the goods imported on which duty drawback is claimed are not manufactured in India. It is submitted that in a single goods which has been imported and used in the project are manufactured in India.
It is submitted that on the contrary the Department of Revenue, Ministry of Finance vide its OM No.605/27/2011DBK dated 08.04.2011 has clarified that;
(1) The power plant was erected and commissioned by the EPC contractors on the project site on which the excise duty was not paid as the same is not leviable on immovable property as per CBEC Circular No.58/1/2002CX dated 15.01.2001.
(2) As per the Customs Act, 'goods' do not include immovable property.
(3) Drawback was not payable in case of such supplies. FTP provides for payment .of drawback on supply of goods. The provisions of the Customs, Central Excise duties and Service Tax Drawback Rules made under the provisions of the customs Page 48 of 64 C/SCA/15706/2011 CAV JUDGMENT apply to deemed export drawback. According to the definition of "goods" given in Section 2(22) of the Customs Act, immovable property cannot be considered as goods. Therefore, Deemed Export drawback of duty paid on inputs of power plant set up at the project site is not available. It is recommended that DGFT may recover drawback wrongly paid in such cases.
[6.40] Now, so far as the reliance placed upon some of the paragraphs in Hand Book of Procedure by the learned Counsel appearing on behalf of the petitioner is concerned, it is vehemently submitted that the Hand Book of Procedures has been created only with the single motive of explaining the procedure that has to be followed in implementing the policy laid down by the FTP. It is submitted that the Hand Book of Procedures is not and cannot be considered an independent source of law. It is contended that the Hand Book of Procedure is subservient to the FTP and is encompassed by the same.
[6.41] It is submitted that the impugned decision has been taken by the PIC - highest body which is conferred with the power of implement the FTP and after careful consideration of all the pros and cons and on considering the object and purpose of Foreign Trade Act and the FTP, a conscious decision has been taken to deny the duty drawback to the petitioner, as prayed by the petitioner. It is submitted that therefore when the policy decision has been taken by the competent authority, who is conferred with the power to take any policy decision in furtherance of the FTP, which powers are statutorily conferred upon the PIC, it is requested to dismiss the present petition.
Territorial Jurisdiction [7.0] It is the specific case on behalf of the respondents that as no cause of action much less part of cause of action has arisen within the Page 49 of 64 C/SCA/15706/2011 CAV JUDGMENT territorial jurisdiction of the High Court of Gujarat, the Gujarat High Court shall not have any territorial jurisdiction to decide the dispute with respect to deemed drawback between the parties. As observed herein above it is the case on behalf of the respondents that the dispute is with respect to rejection of the claim of the petitioner with respect to deemed export duty drawback, which as such have been rejected by the office of the Joint DGFT, New Delhi. It is the case on behalf of the respondents that the petitioner through its authorized signatory and through the office located at Gujarat Bhavan, New Delhi filed separate applications for seeking benefit of deemed export drawback. That even the claim for grant of duty drawback was filed before the Joint DGFT, New Delhi; that pursuant to the said applications / claims, impugned communications through the Foreign Development Officer, New Delhi was made from New Delhi; even PIC meeting was held at New Delhi and the impugned decision of the PIC / minutes of the meeting challenging the present petition is also from the New Delhi office; even the communication for rejection of the benefit has been made by the office, Joint DGFT, New Delhi; all the respondents in the present petition are having their offices at New Delhi. Therefore, relying upon the decision of the Hon'ble Supreme Court in the case of Adani Export Limited (Supra), it is submitted that this Court shall not have any territorial jurisdiction to adjudicate the lease between the parties with respect to the deemed export drawback.
[7.1] On the other hand, making the submissions referred to in para 4.3 above (again not reiterated to avoid repetition) and relying upon the decisions of the Hon'ble Supreme Court in the case of Kusum Ingots and Alloys Ltd. (Supra) and in the case of Rajasthan High Court Advocates Association (Supra)and relying upon the facts stated in paras ii, iii, vi, vii and xiii of the petition it is submitted on behalf of the petitioner that it can be said that part cause of action has arisen within the territorial Page 50 of 64 C/SCA/15706/2011 CAV JUDGMENT jurisdiction of this Court and therefore, this Court shall have jurisdiction.
[8.0] Having heard the learned Counsel appearing on behalf of respective parties on territorial jurisdiction and considering the decision of the Hon'ble Supreme Court in the case of Adani Exports Limited (Supra) relied upon by the learned Counsel appearing for Union of India and the decision of the Hon'ble Supreme Court in the case of Kusum Ingots & Alloys Ltd. (Supra) and Rajasthan High Court Advocates' Association (Supra) relied upon by the learned Counsel appearing on behalf of the petitioners and considering the averments made in the petition more particularly on the territorial jurisdiction of the Courts at Ahmedabad i.e. Gujarat High Court namely in paras ii, iii, vii, viii and xiii of the petition, it cannot be said that no part cause of action has arisen within the territorial jurisdiction of the Gujarat High Court. Considering the nature of controversy and the reliefs sought it can be said that part cause of action can be said to have arisen at New Delhi however, at the same time when the goods in question, on which the duty drawback is claimed, were used in the project in Gujarat, it can be said that part cause of action has also arisen in Gujarat and therefore, it cannot be said that this Court has no territorial jurisdiction. Under the circumstances, preliminary objection/s raised on behalf of the Union of India that this Court has no territorial jurisdiction is hereby overruled.
Decision on merits [9.0] Having heard learned Counsel appearing on behalf of the respective parties and considering the relief sought in the petition it appears that the dispute is with respect to rejection of the claim of the petitioner of deemed export drawback on the goods imported by the petitioner - for supply of offshore equipments and spare parts to the petitioner, supplied by one 'Alstom', which came to be used by the petitioner to set up a power project. The petitioner applied to the Page 51 of 64 C/SCA/15706/2011 CAV JUDGMENT respondent No.3 herein for claiming the deemed export drawback in respect of the custom duty paid on the said imported equipments and spare parts as per the provision of Chapter 8 of the FTP. The said claims have been ultimately rejected by the Joint DGFT, New Delhi considering the decision of the PIC.
[9.1] Number of submissions have been made by the learned Counsel appearing on behalf of the respective parties. However, before considering the other submissions it will be appropriate first to consider whether the petitioner shall be entitled to the deemed export drawback as claimed in terms of provisions of Chapter 8 of the FTP or not?
[9.2] It is the case on behalf of the petitioner that in terms of provisions of Chapter 8 of the FTP read with Circular dated 05.12.2010, the petitioner shall be entitled to the benefits of deemed export drawback inasmuch as (a) the supply of goods to the power project under the contract (with Alstom) was made under the procedure of ICB (International Competitive Bidding); (b) the goods (imported from Alstom) were supplied to power projects and (c) the condition that the goods should be manufactured in India is also satisfied inasmuch as the imported goods were used to set up a power plant involving fabrication, assembly, erection of power plant at the site of the project and the above process shall constitute 'manufacturing' as per the definition given in para 9.36 of the FTP read with Circular dated 05.12.2010 issued by the respondent No.2. On the other hand it is the case on behalf of the respondents and even the PIC that one of the conditions of Chapter 8 which is required for the purpose of grant of deemed export drawback as per the provision of Chapter 8 of the FTP is that the imported goods for which the benefits of deemed export duty drawback is claimed cannot be said to be "manufactured in India". While considering the aforesaid issue / question whether the petitioner shall be entitled to the deemed Page 52 of 64 C/SCA/15706/2011 CAV JUDGMENT export duty drawback under Chapter 8 of the FTP, relevant clauses of Chapter 8 are required to be referred to and considered which are as under:
"8.1 'Deemed exports' refers to those transactions in which the goods supplied do not leave the country and payment for such supplies is received either in Indian rupees or in free foreign exchange.
8.2 Following categories of supply of goods by the main / sub contractors shall be regarded as Deemed Exports under this Policy, provided the goods are manufactured in India:
(g) Supply of goods to power projects and refineries, not covered in (f) above"
Benefits of deemed exports shall be available under paragraphs (d),
(e), (f) and (g) only if the supply is made under procedure of ICB. However, in regard to mega power projects, the requirement of ICB would not be mandatory, if the requisite quantum of power has been tied up through tariff based competitive bidding or if the project has been awarded through tariff based competitive bidding.
8.3 Deemed exports shall be eligible for any/ all of following benefits in respect of manufacture and supply of goods qualifying as deemed exports subject to terms and conditions as in HBP v1:
(a) Advance Authorization / Advance Authorization for annual requirement / DFIA.
(b) Deemed Export Drawback.
(c) Exemption from terminal excise duty where supplies are
made against ICB. In other cases, refund of terminal excise duty will be given. Exemption from TED shall also be available for supplies made by an Advance Authorization holder to a manufacturer holding another Advance Authorization if such manufacturer, in turn, supplies the product(s) to an ultimate exporter.
8.4.4(i) In respect of supplies made under paragraphs 8.2(d),
(f) and (g) of FTP, supplier shall be entitled to benefits listed in paragraphs 8.3(a), (b) and (c), whichever is applicable against Advance Authorization / DFIA in terms of paragraph 8.3(a) of FTP, supplier shall be entitled to Advance Authorization / DFIA for intermediate supplies."
Page 53 of 64 C/SCA/15706/2011 CAV JUDGMENTWhile considering the entitlement to the petitioner of deemed export drawback, definitions contained in Chapter 9 are also required to be referred to which are as under:
"9.1 For purpose of FTP, unless context otherwise requires, following words and expressions shall have the following meanings attached to them.
9.22 "Drawback" in relation to any goods manufactured in India and exported, means rebate of duty chargeable on any imported material or excisable material used in manufacture of such goods in India. Goods include imported spares, if supplied with capital goods manufactured in India.
9.36 "Manufacture" means to make, produce, fabricate, assemble, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, repacking, polishing, labelling, reconditioning repair, remaking, refurbishing, testing, calibration, reengineering. Manufacture, for the purpose of FTP, shall also include agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining."
Therefore, while considering the benefits of deemed export duty drawback the conditions to be satisfied are that the goods supplied are manufactured in India; supply of goods are to the power projects and that the benefits of deemed export shall be available under paragraphs
(d), (e), (f), (g) of Chapter 8.2, only if the supply is made under procedure of ICB i.e. International Competitive Bidding.
[9.3] In the present case the goods supplied by Alstom and imported by the petitioner was under the procedure of ICB. It is also not in dispute that the said goods imported are used in power projects. However, one essential condition that such imported goods on which the custom duty is paid and which are used in the power project shall be manufactured in India, is not satisfied. "Manufacture" is defined under Chapter 9.36 of the FTP and it means to make, produce, fabricate, assemble, process or Page 54 of 64 C/SCA/15706/2011 CAV JUDGMENT bring it to existence by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, repacking, polishing, labelling, reconditioning...etc. In the present case the goods which are imported by the petitioner and supplied by Alstom on which the custom duty is paid and for which the deemed export drawback is claimed, cannot be said to be manufactured in India even as per the definition of "manufacture" contained in clause / Chapter 9.36. Nothing is on record that any of the activities contained in Chapter / Clause 9.36 had been carried out in India before the same is used in the power project. It appears that the goods which are imported are directly used in the power project. The power project itself cannot be said to be the goods. The deemed export drawback is claimed on the import of the equipments and spare parts which include GT Fields Assembly, HP Feed Water Pumps, Spare parts etc. which is / are used directly used in the power project. The reliance paced upon clause 8.2(g) by the petitioner that supply of goods to power projects shall be regarded as deemed export under the FTP is concerned, it is required to be noted that providing the supply of goods to the power projects must be the goods which are manufactured in India as per the definition contained in Chapter 9.36 of the FTP.
[9.4] The underlying intent and idea to classify certain transactions to be deemed export is to give them a status of export so as to make eligible or a manufacture of such goods including contractor or sub contractor to get benefit of duty draw back and thereby compete with persons who would supply imported goods. The idea seems to be to give the benefit to the local manufacturers and when the locally manufactured goods are supplied, then they are deemed to be export and thereby idea is to provide level playing field to permit such manufacturer/supplier to drawback duty supplied by him on any inputs of such goods which are ultimately supplied to nonmega power project.
Page 55 of 64 C/SCA/15706/2011 CAV JUDGMENTEven considering the statement of object and reasons of the Foreign Trade Development Regulation (hereinafter referred to as "FTDR"), it can been seen that the FTDR has been enacted to provide an adequate legal frame work for the development and promotion of India's foreign trade. It seems that the goal of the new Trade Policy seems to be to increase the productivity and competitiveness and to achieve a strong export performance.
Therefore, considering the object and reasons of the FTDR as well as underlying intent and idea to grant the benefit of deemed export drawback and one of the essential conditions is that the goods imported and supplied to the nonMega power project must be / shall be manufactured in India and in the present case the goods imported for which the benefit of deemed export drawback is claimed, cannot be said to be 'manufactured in India', the claim of the petitioner of deemed export drawback is rightly rejected. The same seems to be absolutely in consonance with the FTP and underlying intent and idea and the object and reasons of the FTP. The case on behalf of the petitioner that the condition that the goods shall be manufactured in India has also been satisfied inasmuch as the imported goods are used to set up a power plant involving fabrication, assembling, erection of power plant at the site of the project and the above process shall constitute the manufacture as per definition given in para 9.36 of the FTP cannot be accepted for the simple reason that what is required to be considered is that the goods imported and supplied must be manufactured in India and not that any imported goods (even if the same are not manufactured in India) used to set up a power plant involving fabrication, assembling etc., on such imported goods the benefit of deemed export drawback shall be available. On fair reading of the provisions of the FTP and the relevant chapter / clauses, only those goods which are manufactured in India by way of process contained in Chapter 9.36 of the FTP on such goods and subject to fulfilling other conditions mentioned in Chapter 8, Page 56 of 64 C/SCA/15706/2011 CAV JUDGMENT benefit of export drawback shall be available.
[9.5] Now, so far as the reliance placed upon the decision of the Hon'ble Supreme Court in the case of Triveni Engineering & Indus. Ltd. (Supra) by the learned Counsel appearing on behalf of the petitioner on the interpretation of "manufacture"is concerned, the said decision shall not be applicable to the facts of the case on hand. What is required to be considered is whether the goods imported and supplied on which the deemed export drawback is claimed, can be said to be "manufactured in India" is required to be considered considering the definition of "manufacture" contained in Chapter 9.36 to be read with Chapter 8. In the case before the Hon'ble Supreme Court, the question was whether assembly - fixing of steam turbine and alternator and in coupling and aligning them in a specific manner to form a turbo alternator amounts to a manufacturing process since it results in a new commodity was under
the consideration and considering section 2(f) of Central Excise Act, it was held that the same can be said to be "manufactured". However, as observed hereinabove, what is required to be considered is whether the goods imported, on which the deemed export drawback is claimed, can be said to have been manufactured in India. As observed hereinabove the goods which are imported are straightway supplied to the power project and used in the power project. No activities such as assembling etc. have been carried out and therefore, such goods cannot be said to be manufactured in India. Under the circumstances, the said decision shall not be applicable to the facts of the case on hand and/or the same shall not be of any assistance to the petitioner.
[9.6] Now, so far as the reliance placed upon the circular dated 05.12.2000 issued by the Joint DGFT relied upon by the learned Counsel appearing on behalf of the petitioner is concerned, at the outset it is required to be noted that what is required to be considered is whether Page 57 of 64 C/SCA/15706/2011 CAV JUDGMENT the FTP was applicable at the relevant time and the relevant provisions of the FTP under which the benefit of deemed export drawback is provided which also contains the definition of "manufacture". Even subsequently the PIC has clarified and/or interpreted that if the bill of entry is in the name of the project Authority, deemed export benefits shall not be available and such cases shall be ineligible for grant of deemed export benefits. Therefore, considering the relevant FTP applicable at the relevant time, a reliance placed upon the circular dated 05.12.2000 is absolutely misplaced.
[9.7] Now, so far as the reliance placed upon the Handbook of Procedure with respect to the "manufacture" by the learned Counsel appearing on behalf of the petitioner is concerned, at the outset it is required to be noted that Chapter 8 of the FTP is a complete Code and the same shall prevail over anything contained in HOP. Chapters 8 and 9 are very clear. The sum and substance of the aforesaid discussion and considering the relevant provisions of the FTP applicable at the relevant time when the goods were imported and the custom duty was paid, benefit of deemed export drawback shall not be available on such goods as the same are not manufactured in India (as discussed hereinabove).
[9.8] Now, so far as the reliance placed upon para 8.3.1 of the Handbook of Procedure by the learned Counsel appearing on behalf of the petitioner in support of their case that even the recipients may also claim drawback benefits is concerned, it is required to be noted that even if assuming that para 8.3.1 of the Handbook of Procedure shall be applicable in that case also, it provides that the recipient may claim drawback benefits on production of a suitable declaration from the supplier. No such declaration from the supplier is forthcoming. Under the circumstances, the petitioner not being the supplier may not get the benefit of deemed export drawback as claimed.
Page 58 of 64 C/SCA/15706/2011 CAV JUDGMENT[9.9] It is also required to be noted at this stage that in the present case the supplier is Alstom and the petitioner has imported the goods. Therefore, considering clause / chapter 8.4.4(i) in respect of the supplies made under paragraphs 8.2(g) of FTP i.e. supply of goods to power projects, the supplier shall be entitled to the benefits listed in para 8.3(b) namely deemed export drawback. Therefore also, the petitioner not being the supplier shall not be entitled to the benefit of the deemed export drawback under para 8.3(b) as claimed by the petitioner.
[9.10] Now, so far as the submission on behalf of the petitioner that the impugned decision of the respondent No.3 rejecting the application / claim of the petitioner of deemed export drawback can be said to be reviewing its earlier decision and therefore, the same is hit by Section 16 of the FTDR is concerned, considering section 16 of the FTDR, we are of the opinion that the reliance placed upon section 16 of the FTDR is absolutely misplaced. The impugned decision cannot be said to be review in exercise of powers under Section 16 of the FTDR. The impugned decision has been taken by the respondent No.3 on the basis of the interpretation by the PIC which was headed by the respondent No.2 - Director General of Foreign Trade, New Delhi. The decision of the respondent No.3 as such can be said to be an administrative decision. The same cannot be said to be in any manner exercising the quasi judicial powers. Therefore, the decision of the Hon'ble Supreme Court relied upon by the learned Counsel appearing on behalf of the petitioner on review shall not be applicable to the facts of the case on hand more particularly with respect to the administrative decision of the respondent No.3. The impugned decision of the respondent No.3 based on the interpretation made by the respondent No.2 - DGFT in the meeting of the PIC is on pure interpretation of the FTP and the relevant provisions of the FTP.
Page 59 of 64 C/SCA/15706/2011 CAV JUDGMENT[10.0] Now, so far as the challenge to the impugned decision by the respondent No.3 on the ground of principle of promissory estoppel and legitimate expectation of the petitioner is concerned, at the outset it is required to be noted that it is the case on behalf of the petitioner that DGFT have been regularly allowing the deemed export drawback to various power projects in the past. However, no such examples are forthcoming. It is required to be noted that the only averment in the petition with respect to the promissory estoppel are contained in para E2. Considering averments in para E2, it is the case on behalf of the petitioner that as the petitioner who have acted on the basis of the promise made by the Government notified in the FTP for grant of duty drawback to supplies made to the power projects and as the petitioner have fulfilled all the conditions laid down in the FTP for claiming deemed export duty drawback, the decision as per para 3 of the impugned minutes of meeting of the PIC and the subsequent rejection letters issued by Additional DGFT to deny the legitimate drawback claims of the petitioner on extraneous grounds are bad in law in view of the principles of promissory estoppel. However, it is required to be noted that the impugned decision is absolutely in consonance with the relevant provisions of the FTP which are discussed in detail hereinabove. As per catena of decisions of the Hon'ble Supreme Court as well as this Court, as such there cannot be any estoppel against any statute and/or statutory provision. As observed hereinabove Chapter 8 of the FTP is a complete Code in itself. There are no further averments in the petition that either because of some promise and/or representation that the petitioner shall be eligible to the deemed export duty drawback and thereafter the goods were imported by the petitioner. There is no promise by the Government. The FTP applicable at the relevant time is very clear. The petitioner has not pleaded that it has acted on such promise. Therefore, on facts the decisions relied upon by the learned Counsel appearing on behalf of the petitioner in the case of Motilal Page 60 of 64 C/SCA/15706/2011 CAV JUDGMENT Padampat Sugar Mills Co. Ltd. (Supra); Nestle India Ltd. & Anr. (Supra) and MRF Ltd., Kottayam (Supra) shall not be applicable to the facts of the case on hand and/or shall not be of any assistance to the petitioner. Therefore, as such the impugned decisions cannot be said to be hit by principles of promissory estoppels and/or legitimate expectation as contended on behalf of the petitioner.
[11.0] Now, so far as the challenge to the impugned minutes of meeting dated 15.03.2011 of the Policy Interpretation Committee (PIC) on the ground that what is stated in para 3 of the minutes can be said to be change in the policy and/or reviewing the FTP and/or adding additional ground / condition is concerned, it is required to be noted that as such the impugned decision can be said to be on interpretation of the FTP / provisions of the FTP. Under the Act, PIC has a jurisdiction to interpret any policy already in existence. The respondent No.2 - DGFT is the head of the PIC, who has been conferred with the power under the FTDR to interpret the FTP. As per section 6 of the FTDR, the Director General is conferred with the power to advice the Central Government in the formation of the FTP and shall be responsible for carrying out that policy. It appears that number of project authorities were facing difficulties in getting deemed drawback benefits and therefore, the representations were made and therefore, in the meeting of the PIC held on 15.03.2011, issue of claiming deemed export benefits in place of import made by the project Authority was discussed and as observed in para 3 of the Minutes of Meeting, after detail deliberation it was decided that if the Bill of Entry is in the name of project Authority, deemed export benefits would not be available and such cases will be ineligible for grant of deemed export benefits. The aforesaid cannot be said to be adding a further condition and/or change in the policy and/or review in the policy as sought to be contended on behalf of the petitioner. The PIC headed by the respondent No.2 - DGFT has as such clarified the above Page 61 of 64 C/SCA/15706/2011 CAV JUDGMENT and on interpretation it is observed that if the bill of entry is in the name of project Authority, deemed export benefits would not be available and such cases will be ineligible for grant of deemed export benefits. The sum and substance of the aforesaid would be that the goods which are imported by the Project Authority cannot be said to be on the goods imported by the Project Authority, in whose name the bill of entry is issued, shall not be entitled to deemed export benefits as, considering Chapter 8 of the FTP, 3 conditions as referred to hereinabove shall be fulfilled / complied with out of which one of the conditions is that such goods must be manufactured in India. Under the circumstances, the impugned minutes of meeting of the PIC held on 15.03.2011 more particularly para 3 cannot be said to be illegal and/or without authority under the law. The impugned PIC minutes as observed hereinabove can be said to be absolutely in consonance with the FTP more particularly Chapter 8 of the FTP that on directly imported items the deemed export benefits shall not be available. The idea was to grant the benefit of deemed export benefit to the directly imported items. In that case there was no question of such a provision and straightway the exemption could have been provided under the Customs Act. The same does not seem to be the idea and/or the intent of grant of deemed export benefit under Chapter 8 of the FTP.
[11.1] Respondent No.3 being interpreting authority is bound to follow and consider the decision of the PIC which was headed by the respondent No.2 - DGFT. Therefore, the impugned decision of the respondent No.3 denying / rejecting the claim of the petitioner of deemed export benefit on the goods imported by the petitioner being Project Authority in whose name the bill of entry was issued is also just and proper, legal and as observed hereinabove in consonance with the provisions of Chapter 8 of the FTP.
Page 62 of 64 C/SCA/15706/2011 CAV JUDGMENT[12.0] Now, so far as the submission on behalf of the petitioner relying upon the decision of the Division Bench of this Court in the case of Alstom India Ltd. vs. Union of India rendered in Special Civil Application No.11031/2013 is concerned, it is required to be noted that it is reported that the said decision is challenged before the Hon'ble Supreme Court.
[13.0] Now, so far as the alternative submission on behalf of the petitioner that the impugned PIC minutes can be only prospective is concerned, it appears that it is the case on behalf of the petitioner that by the impugned PIC minutes a new criteria has been added and therefore, the said new criteria cannot be applied retrospectively. It is also the case on behalf of the petitioner that the respondents have been continuously allowing the deemed export duty drawback benefits to various MEGA and nonMEGA power project owners in respect of direct import since 2000 on the basis of its own earlier circular dated 05.12.2000 and therefore, the impugned PIC minutes, which proposes to answer the new ineligibility criterion is restrictive in nature and is, therefore, liable to be applied prospectively. The aforesaid has no substance and cannot be accepted. Firstly, as observed hereinabove, the impugned PIC minutes is interpreting the existing FTP and cannot be said to be adding new criteria as sought to be contended on behalf of the petitioner. The submission on behalf of the petitioner that the respondents have been continuously allowing deemed export drawback benefit to various MEGA and nonMEGA power project owners in respect of direct imports by the project owners is concerned, as such there are no specific instances stated in the petition. Even from the impugned minutes of the PIC and so stated in para 3 that "issue of claiming deemed export benefits in cases of import made by the Project Authority was discussed". Therefore, the said issue was referred to and/or considered by the PIC. As the said decision is on interpretation of the Page 63 of 64 C/SCA/15706/2011 CAV JUDGMENT existing FTP applicable at the time of import, the same has to be made applicable from the inception and there is no question of making it applicable retrospectively.
[14.0] In view of the above and for the reasons stated above, present Special Civil Application fails and the same deserves to be dismissed and is, accordingly, dismissed. The impugned decision of the respondent No.3 rejecting the claim of the petitioner of deemed export drawback and the impugned minutes of meeting of the Policy Interpretation Committee being PIC No.10/AM11 dated 15.03.2011 are absolutely in consonance with the Foreign Trade Policy (20092014) and the petitioner has been rightly denied the benefit of deemed export duty drawback. Under the circumstances, present petition deserves to be dismissed and is, accordingly, dismissed. Rule is discharged. No costs Sd/ (M.R. SHAH, J.) Sd/ (SONIA GOKANI, J.) Ajay** Page 64 of 64