Kerala High Court
3 vs Solar Pesticide Pvt. Ltd [2000 (116) Elt ... on 4 November, 2013
Author: K.Vinod Chandran
Bench: K.Vinod Chandran
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN
&
THE HONOURABLE MR. JUSTICE ASHOK MENON
FRIDAY, THE 13TH DAY OF JULY 2018 / 22ND ASHADHA, 1940
WA.No. 1020 of 2014 IN OP. 2812/2003
AGAINST THE ORDER/JUDGMENT IN OP 2812/2003 of HIGH COURT OF KERALA DATED
04-11-2013
APPELLANT(S)/RESPONDENTS
1 THE DIRECTOR GENERAL OF FOREIGN TRADE
MINISTRY OF COMMERCE AND INDUSTRY, UDYOG BHAWAN,
NEW DELHI-110 107.
2 THE EPCG COMMITTEE
OFFICE OF THE DIRECTOR GENERAL OF FOREIGN TRADE,
MINISTRY OF COMMERCE AND INDUSTRY, UDYOG BHAVAN,
NEW DELHI-110 107.
3 ASST.COMMISSIONER OF CUSTOMS(R)
AIR CARGO COMPLEX, SAHAR, ANDHERI (EAST), MUMBAI
4 FOREIGN TRADE DEVELOPMENT OFFICER
OFFICE OF THE DIRECTOR GENERAL OF FOREIGN TRADE,
MINISTRY OF COMMERCE AND INDUSTRY, UDYOG BHAVAN,
NEW DELHI-110107.
BY ADVS.SRI.P.PARAMESWARAN NAIR, ASGI
SRI.N.NAGARESH,ASG OF INDIA
RESPONDENT(S)/PETITIONER:
TATA TEA LTD.,
INSTANT TEA DIVISION, P.B.NO.3, MUNNAR-685612.
R1 BY ADV. SRI.JOSEPH KODIANTHARA (SR.)
R1 BY ADV. SRI.V.ABRAHAM MARKOS
R1 BY ADV. SRI.BINU MATHEW
R1 BY ADV. SRI.TOM THOMAS (KAKKUZHIYIL)
R1 BY ADV. SRI.ABRAHAM JOSEPH MARKOS
R1 BY ADV. SRI.ISAAC THOMAS
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 13-07-2018,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
jg
K.VINOD CHANDRAN & ASHOK MENON, JJ.
-------------------------------------------
W.A.No. 1020 of 2014
-------------------------------------------
Dated this the 13th day of July, 2018
JUDGMENT
Vinod Chandran, J.
The officials of the Ministry of Commerce & Industry along with an Assistant Commissioner of Customs are before this Court in appeal against the judgment of the learned Single Judge, which directed refund of the duty concession to the respondent in accordance with Para 197 of the Export Import Policy 1990-1993 (for short 'the Policy') formulated by the Central Government. The respondent is the petitioner in the Original Petition. The respondent, a 100% Export Oriented Unit (EOU), for reason of the obsolete machinery in its plant, required purchase of new ones. The respondent was engaged in the manufacture and export of instant tea and the machinery required were centrifuges, which were not available within the Country.
WA.1020/20142
2. On the basis of the Policy formulated by the Central Government; under Para 197, the respondent made an application, as seen from Ext.P1, before the Chief Controller of Imports & Exports. The Export Promotion Capital Goods Committee (EPCG Committee) rejected the application filed by the respondent as per Ext.P3 pointing out that the requirement of the respondent could be satisfied by indigenous suppliers, the two of whom were specifically named in Ext.P3. The respondent approached both of them, who expressed their helplessness, which is evident from Exts.P4 and P5. The respondent, then approached the Chief Controller seeking a review of the rejection by the EPCG Committee as per Ext.P3. In the meanwhile, due to expediency; for reason of the respondent having to comply with its export obligations to foreign purchasers, they purchased the machinery from abroad using Replenishment Licence (REP Licence) under Para 95 of the Policy. The import was made on 02-07-1991.
3. Despite the import having been effected, the respondent did not give up its earlier demand for concessional WA.1020/2014 3 rate of customs duty. The respondent pursued it by filing an application for refund before the Assistant Commissioner of Customs, which was rejected as per Ext.P7. An appeal was filed as is evident from Ext.P8. The same was also rejected and the respondent was before the Tribunal, by an appeal of the year 1992, in which, by Ext.P14 there was a direction to the adjudicating authority to reconsider the matter. The direction was to reconsider the issue in the light of the observations in Union Of India Vs. Solar Pesticide Pvt. Ltd [2000 (116) ELT 401 S.C. subject to the decision of the High Court; which was approached in the meanwhile. The above referred decision was in the context of the assessee claiming refund of duty paid for reason of the goods imported having been subject to captive consumption and the incidence of duty having not been passed over to any one. The Original Authority rejected the claim on the ground of there being a possibility of unjust enrichment, but the High Court held that the principle of unjust enrichment applies only in the case of a sale having been made and the duty having been then passed over. The finding that there is no unjust enrichment when there is WA.1020/2014 4 captive consumption was set aside by the Supreme Court finding that the prohibition in refund applies in all cases where the incidence of duty and not the duty as such, has been passed over. In manufacture of a finished product, the duty component could always be taken into account for pricing of the finished product; the absence of which was for the assessee to establish. We do not see how the decision becomes applicable here.
4. Be that as it may, while the matter was pending before the Tribunal, the respondent approached this Court with O.P.No.30268/1999 challenging the order rejecting the application under Para 197 of the Policy. The learned Single Judge rejected the same as per Ext.P15. An appeal was filed in which the Division Bench directed reconsideration of the said application, which is evident by Ext.P16. On reconsideration, the application was rejected as per Ext.P19, which was challenged in the Writ Petition. The learned Single Judge found that since it is not disputed that the machinery was not available in India and that the respondent (petitioner in O.P.) is a fully export oriented unit which could fulfill the export commitment as required under WA.1020/2014 5 the Policy, a refund was directed. The Central Government is in appeal from the judgment of the learned Single Judge.
5. The learned Central Government Standing Counsel [CGSC] points out on the basis of Ext.P19 that import on the basis of REP Licence and on the basis of the EPCG Licence are mutually exclusive and are not interchangeable. It is submitted that the respondent having applied under Para 197 and suffered a rejection, did not challenge the same. The respondent then applied for import under Para 195 and the import itself was effected on 02-07-1991. A challenge made before the adjudicating authority for duty refund was futile in so far as without an EPCG Licence, there could be no refund or a concessional duty claimed. The import, which the respondent made, was not on an EPCG Licence and hence the concessional duty cannot be claimed by the respondent. The learned CGSC has yet another contention that there are procedures to be followed as per the Hand Book of Procedures brought out by the Government of India and Para 163 of the Hand Book requires a clearance from indigenous angle given by the Director General of Technical WA.1020/2014 6 Development. Further, the advertisement procedures as seen from Paras 164 to 169 requires an advertisement to be made for enabling the indigenous suppliers to make an offer of supply before the application could be considered by the EPCG Committee.
6. The learned Senior Counsel appearing for the respondent would contend that there is no question of interchangeability of Paras 195 and 197. Even an importer entitled to import goods under Para 195 on the basis of REP licences, could always seek for concessional rate of duty under Para 197. The respondent had filed an application under Para 197 and was pursuing the remedies on the rejection effected. But at the same time, to carryout the import to comply with its export obligations, they imported the machinery under Para 195. This does not preclude pursuing the remedy under Para 197. The Division Bench of this Court in Ext.P16 having directed a consideration, such consideration has to be made on the facts as available at the time of rejection and not later. The claim hence has to be allowed and refund granted, is the contention. WA.1020/2014 7
7. Left to ourselves we would not have held the application for refund to be a proper remedy against the rejection by the EPCG Committee. The rejection that occurred in the year 1991 was challenged only in a Writ Petition of the year 1999. A refund could not have been granted unless the import was with the permission of the EPCG Committee. But, we are constrained to notice that the appellants are bound by the directions issued in Ext.P16 judgment of this Court. Ext.P16 directed a fresh consideration of the claim for importation at concessional duty as made by the respondent by its letter dated 20-12-1990, and reiterated by various other representations. The subsequent fact of an import having been made using the REP Licences under Para 195 of the Policy, hence, cannot at all be put against the respondent for the purpose of denying the concessional duty. The consideration has to be made on the facts existing as on that date ie: the date on which an application was made at the first instance.
8. The further contention of procedural requirement of an advertisement is also not sustainable, looking at the specific WA.1020/2014 8 Para 164 of the Hand Book. The Hand Book specifically speaks of a waiver from advertisement procedure by the Secretary (Technical Development) and Director General of Technical Development. Only on such waiver not being obtained, the procedure for advertisement for supply by interested indigenous manufactures has to be made. We have to notice that Ext.P3 did not speak of any such procedure and specifically directed the respondent to satisfy their requirement from two indigenous suppliers, namely, M/s Alfa Laval, Pune and M/s Anup Engineering Co.Ltd. Ahmedabad. It has to be understood that there was a waiver of the advertisement procedure for reason of the EPCG Committee itself having suggested the indigenous suppliers, who could satisfy the requirement of the respondent. Evidently, both the indigenous suppliers pointed out by the EPCG Committee could not make the supply as is evident from Exts.P4 and P5. Hence, there is no question of an advertisement procedure being resorted to in the case of the respondent. It is also to be noticed that a reading of the judgment of the learned Single Judge and the Division Bench, in the earlier Original Petition would indicate that WA.1020/2014 9 there was a recommendation issued by the Director General of Technical Development under Para 164 of the Hand Book. Hence, the preliminary requirement of recommendation of the Director General of Technical Development and waiver of advertisement procedure has to be found in favour of the respondent.
9. We now come to the consideration made at Ext.P19. Ext.P19 treats Paras 195 and 197 of the Policy to be exclusive and not interchangeable. We do not see any such exclusiveness or prohibition from interchangeability as evident from the Policy itself. Para 195 allows a manufacturer-exporter to utilise REP licences issued to him, against his own products manufactured by him, for the import of permissible Non-OGL goods (Open General Licence), even without the recommendation of the sponsoring authority and without indigenous clearance, as also without advertisement procedure being followed. Para 197 speaks of payment only of 25% customs duty as against the Cost Insurance Freight (CIF) value; to reduce the incidence of high capital cost on export prices and thereby ensuring that exports are competitive in the international market. The applications have to be considered WA.1020/2014 10 by an inter-ministerial committee, headed by the CCI&E, which obviously is the EPCG Committee. The only pre-requirement for such an application to be filed is that the importer should be a registered manufacturer exporter, who have been regularly exporting for a period not less than three years. The other conditions are to be satisfied after the import of the capital goods; being an export obligation equivalent to three times the value of the capital goods permitted for import, to be fulfilled within four years and the same being over and above the average level of exports made by the manufacturer in the preceding three years. A person, who obtains an EPCG Licence under Para 197, could as well satisfy the value of the capital goods by REP Licences. Para 195 specifically speaks of the replenishment being permissible only with respect to the value of the capital goods and not the duty payable. It cannot be said that the imports as per Paras 195 and 197 are mutually exclusive. Reading the concessions offered, we are inclined to think that when an EPCG licence is obtained for the import of capital goods, then the duty concession of 75% could be availed of subject only to the export WA.1020/2014 11 obligations being satisfied. As per Para 195(3) b