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2019 (2) TMI 1316 - HC - CustomsDenial of export duty drawback to the petitioner - petitioner is a power generation company which has implemented various non-mega power projects - 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 - Territorial jurisdiction of this Court. Territorial Jurisdiction - 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 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 - Held that:- 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. Rejection of the claim of the petitioner of deemed export drawback on the goods imported by the petitioner, for supply of off-shore 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 - Held that:- 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 - 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 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, re-packing, 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 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. 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 non-mega power project - 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 non-Mega 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. 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. 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/AM-11, dated 15-3-2011 are absolutely in consonance with the Foreign Trade Policy (2009-2014) and the petitioner has been rightly denied the benefit of deemed export duty drawback - petition dismissed - decided against petitioner.
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