TMI Blog2015 (2) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... e communication dated 5th December 2000, since it was preceded by Policy Circular No. 32, dated 20th August 1998 issued to all Licensing Authorities. Therefore, the Recovery Notices were issued to the Petitioner for surrender of export deemed benefit availed. Since they failed to respond, the Respondents issued the show cause notices as per the Foreign Trade (Development and Regulation) Act, 1992. The affidavit thus contains a justification as to why show cause notices have been issued. We find in the entire affidavit that the Respondents have not explained as to why they decided to recover the benefits earlier granted and from parties like the Petitioners, why the Petitioners were not entitled to the benefits in terms of the earlier policy and specifically is not explained. All that we find is that the deemed exports were for certain categories. In that regard, what we find is that the interpretation which was placed on the provisions of the Foreign Trade policy and particularly Chapter 8 by the Committee in its meeting dated 15th March 2011 is extensively referred to. The denial of duty drawback for excise duty paid on High Speed Diesel, Steel, Cement has been correctly done as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Heard both sides. Rule. The Respondents waive service. By consent, rule is made returnable forthwith. 2. The Writ Petitioner is dissatisfied with the decision taken by the Policy Interpretation Committee in its meeting No. 10/AM-11 held on 15th March 2011. The Petitioner seeks that in pursuance of this Policy alone, the show cause notices are issued to the Petitioner. In such circumstances, Mr. Sridharan, learned Senior Counsel appearing on behalf of the Petitioner submits that since the show cause notices specifically refer to the minutes of the Policy Interpretation Committee and the decision taken therein that no useful purpose will be served by appearing before the Adjudicating Authority mid showing cause to the show cause notices, copies of which are annexed to the Petition at Annexures P-1 onwards. 3. It is the case of the Petitioner that these show cause notices are based on the clarification and the clarification could not be made applicable to the case covered by the Government of India, Ministry of Commerce, Directorate General of Foreign Trade decision dated 5th December 2000 or in any event 2011 decision as contained in the minutes of the meeting, cannot be ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause notice referred to certain Power Projects in relation to that there is no factual foundation has been laid in the subject Writ Petitions. Apart therefrom, it is only a matter of construing the minutes of the Policy Interpretation Committee and whether they would apply in the given facts and circumstances. That is a jurisdictional aspect of the matter which can very well be adjudicated during the course of the proceedings and in Appeal against the decision of the Adjudicating Authority. In that regard, a reference was made to the Foreign Trade (Development and Regulation) Act, 1992 and Section 15(2) thereof. According to Mr. Avasia, this provision would allow the Central Government to look into and the Central Government would be in a position to consider all the aspects including whether the latter clarification would govern the case covered by the earlier 2000 decision. Therefore, Writ Petitions should not be entertained and particularly in the above background. 10. After having heard the learned counsel for the Respondent and finding that the Writ Petitions raises a issue of applicability of the Circular, which was issued earlier in 2000 and to the goods supplied thereund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce is made to the projects of Andhra Pradesh Electricity Board. A reference is then made to certain projects under the North-Eastern Electric Power Corporation Ltd. They are referred to from paragraphs 7 to 11 of the Petition. 12. A reference is then made to National Hydroelectric Power Corporation Ltd. contracts and which are found in paragraphs 12 to 15. Thus, it is the case of the Petitioner that the above referred projects would be coming within the purview of the Foreign Trade Policy. The salient features of the Foreign Trade Policy are set out in the Petition from paragraphs 17 to 18. Then, our attention is invited by Mr. Sridharan, learned Senior Counsel to the Government of India, Ministry of Commerce, Director General of Foreign Trade communication, Annexure H dated 5th December 2000. The same reads as under :- 2. It is noted that it is not possible for a single contractor to manufacture himself all the items required for completion of such projects and hence certain items, either imported or indigenous have necessarily to be procured from other sources. These items are often directly supplied to the project for assembly, commissioning, erection, testing etc. at s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to return or pay back the benefit of deemed export. This benefit was granted by refund of excise duty paid for the goods supplied to the projects. 15. Mr. Sridharan submits that the show cause notice being solely based on the decision of the Policy Interpretation Committee that this Court should in the given facts and circumstances hold that the interpretation placed by the Department on 15th March 2011 would not govern the cases where unless refund is sanctioned and granted. There is no question of Petitioners being called upon to pay back the amount which has been refunded to them. In such circumstances, it is submitted that the 2011 decision cannot apply to the concluded exports of the Petitioners. 16. In that regard, what we find from the affidavit in reply of the Respondents viz. Deputy Director General of Foreign Trade, is that such a Policy was indeed framed. In paragraph 14 of the affidavit the deponent states that the Central Government for the period from 2004-2009 and 2009-2014 formulated and announced Foreign Trade Policy. In paragraph 1.2, the Foreign Trade Policy specifically provides that the said Policy incorporating provisions relating to export and import of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions were held in a meeting convened by the DGFT of representatives of the Department of the Revenue, Department of Economic Affairs and Ministry of Power. The Regional Authorities were advised that in case any payment has been made which is contrary to the clarification issued in the meeting dated 15th March 2011 that all such cases should be reviewed and recovery be made. 17. The Petitioner cannot rely upon the communication dated 5th December 2000, since it was preceded by Policy Circular No. 32, dated 20th August 1998 issued to all Licensing Authorities. Therefore, the Recovery Notices were issued to the Petitioner for surrender of export deemed benefit availed. Since they failed to respond, the Respondents issued the show cause notices as per the Foreign Trade (Development and Regulation) Act, 1992. The affidavit thus contains a justification as to why show cause notices have been issued. We find in the entire affidavit that the Respondents have not explained as to why they decided to recover the benefits earlier granted and from parties like the Petitioners, why the Petitioners were not entitled to the benefits in terms of the earlier policy and specifically is not explain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mega power projects complies with the threshold generation capacity specified therein, in Custom Notification. In view of the provisions for mega power projects under FTP provides deemed export benefits in respect of only those goods which are as per Sl. No. 400 of Notification No. 21/2002-Customs dated 1-3-2002, as emended from time to time (Custom Notification No. 12/2012-Customs dated 17-3-2012 has replaced Notification dated 1-3-2002). Sl. No. 400 of Notification No. 21/2002 covers supplies which are covered under heading No. 98.01 of ITS (HS) Classification cover all item of machinery such as prime movers, instruments, apparatus and appliances etc. Thus, the conclusion is that supplies of cement and steel to mega power projects are not eligible for deemed export benefits. Hereto annexed and marked as Exhibit No. 5 and 6 are the copies of Custom Notification No. 21/2002 dated 1-3-2002 and Chapter 98.01 of Customs. Further para 8.4.7 sets out conditions for benefit for supply to NPCIL under para 8.2(j) of FTP as reproduced under : In respect of supplies made to nuclear power project under para 8.2(j) of FTP, the supplier would be eligible for benefits given in para 8.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority, then, advance authorization for import without payment of duty for inputs can be taken. The Petitioner is being proceeded against as in the opinion of the Respondents, they are not fulfilling conditions of the Policy Interpretation Committee dated 15th March, 2011. The entire reply thus contains justification for the interpretation placed in 2011 and the action taken in pursuance thereof. 19. A bare perusal of this clarification shows that the meeting of the Policy Interpretation Committee was held. A Zonal Joint Director and some of the Regional Authorities were invited to obtain response from them and particularly their experience in processing export goods. In paragraph 2 of the minutes which has been stated that these authorities pointed out their inability to settle the deemed export claims due to inadequate budgetary provisions. These difficulties are noted in paragraph 2 further and there is a reference to Public Notice issued on 1st March 2011. In paragraph 3 of the minutes, the issue of claiming deemed export benefits issued by the project authority was discussed. After detailed deliberations, it was decided that if the bill of entry is in the name of Projec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having not been reopened at any time, reliance on such clarification or interpretation cannot take the case of the Department any further. The Department may have been called upon to interpret the Policy in the light of the several difficulties and particularly the objectionable provision but that should not have been the basis for reopening the case of the present Petitioner or review it merely on the strength of the policy or the interpretation placed thereon. The Petitioner could not have been called upon to refund the amount duly paid and disbursed to them. 22. As a result of the above discussion, writ petitions succeed, show cause notices referred to in prayer clause (a) of the Petitions are quashed and set aside. It is declared that the decision taken by the Policy Interpretation Committee in its meeting on 15th March 2011 cannot be applied to the Petitioner s case and which has been concluded prior thereto. Rule is made absolute in the above terms with no order as to costs. 23. At this stage, Mr. Sridharan, learned Sr. Counsel points out that though the show cause notices and the petitions proceed on the footing that there are refunds already granted but equally what ..... X X X X Extracts X X X X X X X X Extracts X X X X
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