9911796707
TMI Blog2019 (2) TMI 1316X X X X Extracts X X X X X X X X Extracts X X X X ..... other appropriate writ, order or direction quashing the Para 3 of the minutes of meeting of the Policy Interpretation Committee being PIC No. 10/AM-11 dated 15-3-2011. 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 Order Nos. 5/40/81/224/AM10/CLA/703095, dated 30-3-2010; 5/40/83/00015/AM11/ CLA/707425, dated 21-4-2010; 5/40/81/89/AM11/CLA/728820, dated 30-7-2010; 5/40/81/99/AM11/CLA/732356 dated.17-8-2010; 5/40/81/102/AM11 /CLA /733209, dated 20-8-2010 and 5/40/81/224/AM10/CLA/735559, dated 1-9-2010; 2. Facts leading to the present Special Civil Application in nut-shell 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 non-mega power projects. 2.2 It is the case on behalf of the petitioner that the petitioner was incorporated with the objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applications dated 22-3-2010, 23-3-2010, 23-3-2010, 25-3-2010 and 25-3-2010 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. 5/40/81/224/AM10/CLA/703095, dated 30-3-2010; 05/40/83/ 00015/AM11/CLA/707425, dated 21-4-2010; 05/40/81/89/AM11/CLA/ 728820 dated 30-7-2010; 05/40/81/99/AM11/CLA/732356, dated 17-8-2010; 5/40/81/102/AM11/CLA/733209, dated 20-8-2010 and 05/40/81/224/AM10 /CLA/735559, dated 1-9-2010 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Advocate appearing on behalf of the respondents. 4. 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 ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder 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. 4.4 Now, so far as the contention on behalf of the respondents that the petitioner has not made specific averments vis-a-vis 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 averme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 5-12-2000 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 project the condition of manufacture in India, a pre-requisite 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-3-2011 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 U-turn 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 entering into power purchase agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 27-4-2007 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 ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 ANF-8. 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 Annexure-III for claiming duty drawback benefit was introduced with effect from 1-3-2011 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 Plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner. 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 21-3-2011 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 22-3-2010, 23-3-2010, 23-3-2010, 25-3-2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icularly 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 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 re-determined the eligibility of the petitioner to deemed export benefit by solely relying on the impugned minutes of meeting of the PIC dated 15-3-2011 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder 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). It 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 5-12-2000 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 pre-requisite 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontractors 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" During the tenure of the above EXIM Policy, the Central Government, in September 2004, re-introduced 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 - 2004-2009 (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, re-packing, polishing, labelling, reconditioning, repair, remaking, refurbishing, testing, calibration, reengineering. Manufacture for the purpose of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries, 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 non-mega 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 5-12-2000 interprets the definition of manufacture as contained in Para 3.31 of then EXIM Policy 1997-2002. It is submitted that the definition of manufacture has continued to remain the same till the FTP 2009-2014 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 provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpret 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 23-8-2010, by the Hon'ble Minister for Commerce and Industry states that Foreign Trade Policy for the Period 2009-14 was announced on 27-8-2009 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 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 non-traditional 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of entry it is evidently clear that goods in respect of Custom duty at concessional rate of 5% was paid in respect whereof duty drawback 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 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of supplies made under Para 8.3-D, F, G of the FTP, supplier shall be entitled to benefits mentioned in Para 8.3-A, 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 8.3-B of the FTP whichever is applicable. It is submitted that in fact, 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 Handbook of Procedures is inapplicable, inasmu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for goods imported by non-mega 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 sub-contractor to get benefit of duty drawback 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 drawback duty supplied by him on any inputs of such goods which are ultimately supplied to non-mega 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 as (i) the essential ingredients which must necessarily be present are non-existent; (ii) the goods are not manufactured in India; (iii) the benefits sought to be availed of does not bind supplier or contractor-Alstom by m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight in other words, it clearly implies that duty will have to be borne by the petitioner. It is submitted that the present claim for drawback 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 on-shore 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 go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that in the aforesaid decision it 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 Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. In support of his above submissions, he has relied upon the decision of the Hon'ble Supreme Court in the case of Babu Verghese v. 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 in fact 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 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 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/sub-contractor. 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. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 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 Handbook 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 Handbook of Procedures is not and cannot be considered an independent source of law. It is contended that the Handbook of Procedure is subservient to the FTP and is encompassed by the same. 6.41 It is submitted that the impugned decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 jurisdiction of this Court and therefore, this Court shall have jurisdiction. 8. 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. Gujar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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 5-12-2010 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, re-packing, polishing, labelling, re-conditioning 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." 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 pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be of any assistance to the petitioner. 9.6 Now, so far as the reliance placed upon the circular dated 5-12-2000 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 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 5-12-2000 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 10. 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 promisso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 15-3-2011, 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 co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision is challenged before the Hon'ble Supreme Court. 13. 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 non-MEGA power project owners in respect of direct import since 2000 on the basis of its own earlier circular dated 5-12-2000 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
