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Jain Grani Marmo Versus The Union of India Private Limited & ors.

2015 (10) TMI 833 - RAJASTHAN HIGH COURT

DTA sale by 100% EOU - wastage in production from Imported Blocks - Challenge the limit of disposal of reject/scraps - Revenue allowed only 2% - Development Commissioner had initially fixed ad hoc norms for wastage in production from Imported Blocks to the extent of 8.92% and wastage to the extent of 27.56% from indigenous blocks.

Held That:- By allowing only 2% of reject /waste disposal the Respondent is going against its own policy as enumerated in Clause 6.8( e) and 6.8 (d) of Fore .....

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aishree Thakur, J.) ORDER 1. The present writ petition has been filed seeking the following reliefs:- (1) The impugned decision dated 18.9.2014 taken by the Board of Approval in its Third Meeting (Annexure 11) may be modified as permitted under para 6.8(d) & (e) of the Foreign Trade Policy. (2) The decision dated 23.11.2012(Annexure 3) taken by the Board of Approval in its meeting, being applied to the Petitioner may be modified as permitted under para 6.8(d) & (e) of the Foreign Trade P .....

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and the same was granted to it. 3. In a bid to regulate foreign trade and promotion of exports, the Parliament enacted the Foreign Trade (Development and Regulation) Act, 1992 (for short 'the Act of 1992'). In exercise of powers conferred under Sections 3 and 5 of the Act of 1992, the Government of India has been framing the export and import policies from time to time to encourage entrepreneurs to boost their exports to enable the Government of India to earn foreign exchange. The Forei .....

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sold in DTA, on payment of duties as applicable to sale under sub-para 6.8(a) on prior intimation to Customs authorities. Such sale of rejects upto 5% of FOB value of exports shall not be subject to achievement of NFE. 6.8(e) Scrap/waste/remnants arising out of production process or in connection therewith may be sold in DTA, as per SION notified under Duty Exemption Scheme, on payment of concessional duties as applicable, within overall ceiling of 50% of FOB value of exports. Such sales of scr .....

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contended by the petitioner that the Development Commissioner had initially fixed ad hoc norms for wastage in production from Imported Blocks to the extent of 8.92% and wastage to the extent of 27.56% from indigenous blocks. A contention is also raised that the petitioner further requested to grant approval to dispose of rejects/remnants/export surplus to the extent of 7.5%. Another representation was sent seeking permission to dispose of rejects/remnants since the petitioner was facing acute sh .....

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e respondents and came to file the present writ petition. 5. Mr. Mehta, learned counsel for the petitioner has argued that the action of the respondents in granting permission for disposal of rejects/waste only to the extent of 2% violates of Article 19(1)(g) of the Constitution of India as it places a restriction upon the trade of the petitioner as well as against the Foreign Trade Policy para 6.8 (d) & (e) under which the authorities had initially permitted disposal of wastage of 8.92% of .....

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% of value of exports, with a further stipulation that sale of waste/scraps/remnants by EOU shall be on payment of full duty. It is contended that the respondents have illegally and without jurisdiction issued the impugned order by fixing a norm of 2% as maximum permissible limit of sale of rejects/scraps/waste/ remnants in a domestic market. 6. Per contra, the counsel for the respondents Mr. Vishal Thakur has argued that the Board of Approval had rightly permitted disposal of such rejects / was .....

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f the Board by which the petitioners had been granted permission for disposal of rejects/waste upto 2% of input quantity (in absence of SION fixed for the items). 7. We have heard the counsel for the parties and perused the record of the case. 8. Admittedly the petitioner is an EOU and trading in marble. As per clause 6.8.(e) of the Trade Policy , an EOU is allowed sale in the Domestic Traffic Area of Scrap/waste/ remnants arising out of production process as per Standard Input Output Norms noti .....

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s are to continue till such time norms are fixed by Norms Committee. The Development Commissioner had given permission to the petitioner to off load it scrap in the domestic market in the year 2004 @ 8.92% of inputs of imported block and 27.56% of inputs in case of indigenous block. This has been modified to 2% by the Board in its meeting held on 23.11.2012. This decision was later affirmed in a subsequent meeting held on 18 .9 2014. 9. Reading of the minutes of the Board held on the 23.11.2012 .....

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the file or the reply filed . As per the clause 6. 8 (e) of the trade policy an EOU is permitted to sell rejects within an overall limit of 50% in the domestic market on payment of duties as applicable to a sale under sub-para 6 (1). An understanding of the clause would mean that an EOU is permitted to sell up to the limit of 50% as stipulated and not beyond, subject to payment of duties. The decision to place an embargo of 2% is certainly a restriction being imposed upon the petitioner and wil .....

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a domestic market wherein clause 6.8(d) specifically provides that rejects can be sold in the market subject to payment of duties. Clause does not mention taking permission for such sale of rejects. 11. We are of the opinion that the two Paragraphs namely 6.8 (d) and 6.8 (e) are distinct and separate from each other. The word reject and waste have been defined in the Oxford dictionary to mean to decide not to use, sell, publish, etc. something because its quality is not good enough whereas wast .....

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s have not been notified by the Directorate General of Foreign Trade (DGFT). 12. The Foreign Trade Policy was brought about in the year 2004-2005 with a view for India to become a major player in world trade. As per the Trade Policy it was felt that Trade is not an end in itself, but a means to economic growth and national development. The primary purpose is not the mere earning of foreign exchange, but the stimulation of greater economic activity. To achieve its objective the strategy to be ado .....

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