TMI Blog2024 (5) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... 09 July 2022 - impugned Instruction invalid or ultra vires Section 151A of the Act - Warehousing of imported capital goods used in the generation of solar power - Cancellation of license of warehousing as granted in terms of the MOOWR Regulations - Whether solar power generation could be said to be an operation or activity permissible u/s 65 of the Act - Principle of purposive interpretation - HELD THAT:- The impugned Instruction, as would be manifest from a plain reading thereof, appears to place the licensing authorities under a clear mandate to proceed on the basis that generation of electricity as a subject per se falls outside the ambit of the MOOWR Regulations. The Instruction proceeds further to hold that all licenses granted as well as applications which may be made thereafter would be guided by the view expressed by the Board. This clearly appears thus to travel far beyond the advisory and clarificatory function which stands placed in the Board by virtue of Section 151A of the Act. We find ourselves unable to uphold the validity of the impugned Instruction bearing in mind the well settled precepts of administrative law and which abhor abdication of an independent decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of permissions granted under Section 65 of the Act. The statute enables capital goods being housed in the warehouse till such time as they may be cleared for home consumption. While Section 61, prior to the 2016 amendments envisaged the maximum retention period to be five years, post amendment, that stipulation came to be substituted with the Legislature permitting the retention of those goods without any maximum time frame operating. The clear and unambiguous scheme which thus emerges from a reading of Sections 61 and 65 is of the importer being enabled to bring into the country capital goods which may be utilized in connection with manufacture or other operations in a licensed warehouse and the resultant goods alone being subjected to tax. MOOWR REGULATIONS AND THE CONTEMPORANEOUS MATERIAL - T he principal argument of the respondents was that the MOOWR Regulations were never intended to extend to a situation where imported capital goods do not get subsumed in the final product which may emerge out of a licensed warehouse and that Section 65 was meant to apply only to manufacturing operations being undertaken on the imported capital goods itself. We have in the preceding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usion that neither Section 61 nor Section 65 can be justifiably construed as incorporating an inherent or implied exclusion of solar power generation. The material that was placed for our consideration cannot possibly be interpreted as indicative of an intent of a particular type of self-consuming capital goods alone being intended for import. Neither the statutory provisions nor the contemporaneous material embodies an underlying policy intent for capital goods themselves being worked upon in the warehouse and constituting a part of the resultant goods. In fact, and to the contrary as we have found, the primary objective of the scheme was to give a fillip to domestic manufacturing albeit with the aid of imported capital goods. On an overall conspectus of the above, we find ourselves unable to accede to the submissions addressed by the learned ASG. DISTORTION OF THE LEVEL PLAYING FIELD - The learned ASG had vehemently contended that the activity of solar power generation has led to the creation of inequalities between domestic manufacturers and those like the petitioner who have claimed undue benefit of the MOOWR Regulations. It was in the aforesaid context that the respondents had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of purposive interpretation, one cannot possibly lose sight of the fact that the arguments addressed by the respondents with respect to the illegality of the activities undertaken by the petitioners were not based on an asserted statutory anomaly, absurdity or irreconcilability, principles which are often spoken of in the context of statutory interpretation. The learned ASG also did not argue that the statutory provisions suffered from ambiguity. The entire plank of the argument against solar power generation being permissible u/s 65 was based on the inequitable impact that such activity was likely to have on domestic industry and local generators. That, however, and as was observed by us in the preceding parts of this decision, is an aspect pertaining to policy and which cannot constitute a legitimate basis for the Court to reconstruct a statutory provision. The respondents essentially bid us to introduce a condition of ineligibility in the garb of statutory interpretation. It would be wholly incorrect for us to recreate or reassemble Section 65 so as to exclude a particular category of activity based upon the experience of its working or its perceived negative impact on domest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the asserted inapplicability of the Manufacture and other Operations in Warehouse (No.2) Regulations, 2019 [MOOWR Regulations] framed in the backdrop of Section 65 of the Act. 2. The petitioners also impugn various Show Cause Notices [SCN] which came to be issued in purported implementation of the impugned Instruction and which calls upon them to explain why the license of warehousing as granted in terms of the MOOWR Regulations be not cancelled. In W.P.(C) 10838/2022, besides assailing the impugned Instruction, the petitioner therein has also impugned the validity of the letter dated 19 July 2022 cancelling the warehouse license of the petitioner. In W.P.(C) 12386/2022, the petitioner has impugned the letter dated 23 August 2022 which sought a provisional duty bond as a condition precedent to the provisional release of the imported goods. 3. The impugned Instruction is questioned, with it being contended that the same is contrary to Section 151A of the Act, and more particularly the Proviso appended thereto. The petitioners would contend that the impugned Instruction compels and commands the Customs authorities to cancel all licenses pertaining to solar generation units and thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 65 of the Act as well as the MOOWR Regulations and authoritatively rule on the question whether solar power generation could be said to be an activity envisaged or permissible. Mr. Venkataraman stressed upon the imperative of such a course being adopted in light of multiple challenges which were pending before various Courts and the need for the controversy itself being rendered a quietus. 6. It is in the aforesaid light that counsels for respective sides proceeded to address submissions which were not merely confined to the validity of the impugned Instruction or the consequential SCNs but also extended to the larger question of whether solar power generation could be said to be an operation or activity permissible under Section 65 of the Act. B. THE FACTUAL BACKDROP 7. For the purposes of evaluating the challenge which stands raised, we deem it apposite to notice the following salient facts as they obtain in the lead petition, being W.P.(C) 10537/2022. The MOOWR Regulations which came to be promulgated on 01 October 2019 principally provided for a duty deferment on the import of capital goods and inputs intended to be used in manufacturing and other operations within a customs b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion to operate under Section 65 of the Act, 4. Eligibility for application for operating under these regulations. (1) The following persons shall be eligible to apply for operating under these regulations, - (i) a person who has been granted a license for a warehouse under section 58 of the Act, in accordance with Private Warehouse Licensing Regulations, 2016. (ii) a person who applies for a license for a warehouse under section 58 of the Act, along with permission for undertaking manufacturing or other operations in the warehouse under section 65 of the Act. (2) An application for operating under these regulations shall be made to the Principal Commissioner of Customs or the Commissioner of Customs, as the case may be, along with an undertaking to, - (i) maintain accounts of receipt and removal of goods in digital form in such format as may be specified and furnish the same to the bond officer on monthly basis digitally; (ii) execute a bond in such format as may be specified; and (iii) inform the input-output norms, wherever considered necessary for raw materials and the final products and to inform the revised input-output norms in case of change therein. 5. Grant of permission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) affixing a one-time-lock to the load compartment of the means of transport in which such goods are removed from the warehouse. (2) The licensee shall take into record the goods removed. 12. In terms of Regulation 20, the Board stands empowered to exempt a class of goods from any of the provisions of the Regulations having regard to the nature thereof or the manner of their transportation or storage. The MOOWR Regulations essentially facilitate the housing of imported capital goods or imported raw materials in a duly designated warehouse and for a manufacturing process being undertaken in relation to and with the involvement of those goods till such time as they remain housed therein. This arrangement leads to the deferral of customs duty to the stage where either the resultant final product or the imported capital goods are cleared from the warehouse for home consumption. 13. This procedure of deferral of customs duty on imported capital goods and the policy of those goods being housed in a designated warehouse is founded upon the provisions of Sections 61 and 65 of the Act, which are reproduced hereinbelow:- 61. Period for which goods may remain warehoused. (1) Any warehoused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification in the Official Gazette, specify the class of goods in respect of which the interest shall be chargeable from the date on which the proper officer has made an order under sub-section (1) of Section 60. Explanation. For the purposes of this section, (i) electronic hardware technology park unit means a unit established under the Electronic Hardware Technology Park Scheme notified by the Government of India; (ii) hundred per cent export oriented undertaking has the same meaning as in clause (ii) of Explanation 2 to sub-section (1) of Section 3 of the Central Excise Act, 1944 (1 of 1944); and (iii) software technology park unit means a unit established under the Software Technology Park Scheme notified by the Government of India. xxxx xxxx xxxx 65. Manufacture and other operations in relation to goods in a warehouse. (1) With the permission of the Principal Commissioner of Customs or Commissioner of Customs and subject to the provisions of Section 65-A and such conditions as may be prescribed, the owner of any warehoused goods may carry on any manufacturing process or other operations in the warehouse in relation to such goods. (2) Where in the course of any operations pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (1) of Section 15; (ii) the integrated tax under sub-section (7) and the goods and services tax compensation cess under sub-section (9), of Section 3 of the Customs Tariff Act, 1975 (51 of 1975) have been paid in accordance with Section 47; (iii) on removal of the goods from another warehouse in terms of Section 67, a bill of entry for home consumption under clause (a) of Section 68 has been presented and the integrated tax under sub-section (7), and the goods and services tax compensation cess under sub-section (9), of Section 3 of the Customs Tariff Act, 1975 (51 of 1975) have been paid before the goods are so removed from that other warehouse; (iv) the provisions of Section 59, subject to the following modifications therein, have been complied with, namely (a) for the words bill of entry for warehousing , the words bill of entry for home consumption shall be substituted; and (b) for the words amount of the duty assessed , the words amount of duty assessed, but not paid shall be substituted; (c) the duty payable in respect of warehoused goods referred to in clause (A), to the extent not paid, is paid before the goods are removed from the warehouse in such manner as may be pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital goods can also be exported after use, without payment of duty as per Section 69 of the Customs Act. The duty deferment is without any time limitation. 9. Would any customs duty be payable on the goods manufactured in the bonded premises using the imported capital goods (on which duty has been deferred) and sold into the domestic tariff area? Response : The payment of duty on the finished goods is clarified in Para 8 and 9 of the Circular No. 34/2019. Duty on the capital goods would be payable if the capital goods itself are cleared into the domestic market (home consumption). Thus the duty on the capital goods does not get incorporated on the finished goods. Thus no extra duty in finished goods cleared into DTAs payable on account of imported capital goods on which duty has been deferred). 10. Can a unit undertaking manufacture and other operations in a bonded warehouse import inputs without payment of duty? If yes, whether only BCD or both BCD and IGST on imports is covered? For how long is duty deferment available? Is interest payable after some time? Response : Manufacture and other operations in a bonded warehouse is a duty deferment scheme. Thus both BCD and IGST on impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1962 governed by the MOOWR Regulation notified by Customs Notification No. 69/2019-Customs dated 01.10.2019. 2. This license is not transferable and will remain in force unless specifically revoked under section 58 of the Customs Act, 1962 or is surrendered in terms of Regulation 8 of Private Warehouse Licensing Regulations, 2016 of the Customs Act, 1962. This license will not affect any right and remedies under the previous license or licenses. 3. The dimensions and measurements of the Private Bonded Warehouse are as follows: Warehouse Measurement Total area available for storage 4.39 acres 4. This license is issued under the following conditions: (i) The license holder shall be held strictly liable for the safe custody of bonded goods and for the strict observance of the provisions of Customs Act, 1962 and/or any other law for the time being in force and the amendments/ Instructions/ orders issued there under from time to time. (ii) The license holder shall comply with regulations laid down in the Private Warehouse Licensing Regulation, 2016 issued vide notification No. 71/2016- Customs (NT) dated 14.05.2016. (iii) The license holder shall comply with the regulation laid down in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty Commissioner of Customs may direct. (xiv) The license holder shall keep record of each activity, operation or actions taken in relation to warehoused goods and produce the same to bond officer as and when required. (xv) The license holder shall make arrangement for computerized system for accounting of receipt, storage, operation and removal of goods and preserve computerized data of all the records maintained by them for a minimum period of five years. (xvi) The license holder shall file a monthly return of receipt, storage, operation and removal of goods in the warehouse, within ten days after the close of the month to which such return relates in the prescribed format. (xvii) The license holder shall preserve updated digital copies of the records at a place other that the warehouse to prevent loss of records due to natural calamities, fire, theft, skill pilferage of computer malfunction as per Warehousing Regulation. (xviii) The license holder shall regularly pay fees for supervision/services by the official signatory. (xix) The bonded warehouse shall be visited from time to time by inspector/ and/or Superintendent and/or Assistant/Deputy Commissioner and other officer from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... convey that a reading of section 65 shows that in relation to any particular goods, resulting from the operations, they can either be removed from warehouse for export or for home consumption. In respect of applications of the type referred in para 1 above, the resultant electricity is identical whether it be removed for home consumption or for export. In Manufacture and Other Operations in Warehouse (no.2) Regulations, 2019 (hereinafter referred as 'MOOWR 2019'), the Regulation 15 (removal of resultant goods from the warehouse for export) requires affixing a one-time-lock to the load compartment of the means of transport in which such goods are removed from the warehouse. As the identical goods, i.e. electricity, may also be cleared for home consumption, the provision for removal for export shows that those goods, i.e. electricity, which are of the nature to which it is incapable to affix one-time-lock to the load compartment of the means of transport in which such goods are removed, fall squarely outside the scope of MOOWR 2019 because of inability to satisfy the essence of the prescribed condition. 3. Moreover, the Regulation 20 is that the Board, having regard to the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foresaid SCN was assailed by way of an amendment application which was moved by the petitioner. While considering its application for interim relief, this Court on 13 July 2022 provided that the respondents would stand restrained from taking any coercive measures against the petitioner till the next date of listing. The aforesaid interim order was followed by another order dated 20 July 2022, pursuant to which further proceedings in terms of the impugned SCN were also stayed. The aforesaid interim order dated 20 July 2023 staying the operation of the impugned SCN was confirmed and made absolute during the pendency of the writ petition on 26 August 2022. C. SUBMISSIONS OF ACME AND AVAADA 23. Appearing for the ACME and AVAADA entities in the instant batch of petitions, Mr. Sujit Ghosh, learned senior counsel, advanced the following submissions. Mr. Ghosh, at the outset contended that the grant of a licence is essentially a judicial act. It was his submission that the grant of a licence is preceded by the officer of Customs conducting an investigation and inquiry in order to verify the particulars set out in an application. Subsequently, after due application of mind, the officer of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the matter on findings based upon those questions of law and fact. 25. Tested on the aforesaid principles, Mr. Ghosh would contend that the act of grant of the MOOWR license is a judicial function performed by an officer of Customs. A fortiori, the cancellation of a license would also be liable to be viewed as a judicial act since prior to the taking of that decision, the officer of Customs would be bound to carry out an inquiry and investigation in consonance with the principles of natural justice. Mr. Ghosh, in this respect invited our attention to the enunciation of the legal position as appearing in a decision rendered by the Madhya Pradesh High Court in Sukhlal vs Collector, Satna [1968 SCC OnLine MP 44] and where the following observations were made: With this background we now come back to the question raised in this case regarding the nature of the duty imposed on the licensing authority by section 31(1) of the Central Provinces Excise Act in the matter of cancellation or suspension of a licence. We are here essentially concerned with clause (b) of section 31(1) as the petitioner's licence was cancelled under that clause That provision enables the licensing authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner could have gone up in appeal. The petition is allowed. The order of the Collector cancelling the petitioner's licence is quashed. There will be no order as to costs of this petition. The amount of security deposit shall be refunded to the petitioner. 26. Without prejudice to the above, Mr. Ghosh submitted that assuming without admitting that the licence granted to the petitioner to operate a solar power plant is a mere permission to operate as a warehouse under Section 65 of the Act, even then such permission is liable to be construed as a judicial action. Mr. Ghosh submitted that the grant of permission contemplated under Section 65 of the Act would be preceded by investigation, ascertainment and verification of facts disclosed by the applicant against objective standards. The submission was that the grant of permission is thus not liable to be understood as being based upon a mere subjective satisfaction of an officer of Customs. Accordingly, Mr. Ghosh contended, the grant of a license under the MOOWR Regulations must be held to be a judicial act. Learned senior counsel submitted that if the aforesaid precepts are borne in mind, it would be manifest that para 5 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the persons who are called upon to pay duty and the department. It is true that the assessing authorities as well as the Appellate Authorities are judges in their own cause; yet when they are called upon to decide disputes arising under the Act they must act independently and impartially. They cannot be said to act independently if their judgment is controlled by the directions given by others. Then it is a misnomer to call their orders as their judgments; they would essentially be the judgments of the authority that gave the directions and which authority had given those judgments without hearing the aggrieved party. The only provision under which the Board can issue directions is Rule 233 of the Rules framed under the Act. That rule says that the Board and the Collectors may issue written Instructions providing for any supplemental matters arising out of these Rules. Under this rule the only Instruction that the Board can issue is that relating to administrative matters; otherwise, that rule will have to be considered as ultra vires Section 35 of the Act In view of the above, it was submitted that the direction as embodied in the impugned Instruction not to grant further licen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial authorities should not allow their judgment to be influenced by administrative considerations or by the Instructions or directions given by their superior. Therefore, Instructions issued by the Board are not binding upon the adjudicating authority. 95. The impugned Circular was issued by the executive and sent to all Chief Commissioners of Central Excise, all Director General of Central Excise, all Commissioners of Central Excise (Appeals) and all Commissioners of Central Excise. Some of these bodies discharge quasi judicial functions. It is the settled position of law that quasi judicial functions cannot be controlled by executive actions by issuing circulars. It is totally impermissible. According to the spirit of Section 37B circulars or directions can be issued in order to achieve the object of uniformity and to avoid discrimination. Such circulars bind the officers only when they act in their administrative capacity. It must be clearly understood that the Board's circulars Instructions or directions cannot in any manner interfere with quasi judicial powers of the Assessing Officers. Officials exercising quasi judicial powers must ignore any circular or direction in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or command for being obeyed in each individual case of assessment before them. 33. The High Court further held that the Standing Order is to be taken only as an assistance in exercise of the quasi-judicial power of determining value for the purpose of levying of customs duty. We agree with the view of the High Court. As a matter of fact, it is the case of the Department as well that the impugned Standing Order is not binding; it is just in the nature of guidelines to streamline the functioning of Customs Officers at various field formations. 31. The validity of the impugned Instruction was also assailed on the basis of the same impinging upon the right of the statutory authority to bear its own independent and unfettered judgment in exercise of its quasi-judicial powers, and any fetter, if placed on the exercise of those powers being liable to be declared as wholly illegal. In support of the aforesaid proposition, Mr. Ghosh drew our attention to the judgment in Anirudhsinhji Karansinhji Jadeja vs. State of Gujarat [(1995) 5 SCC 302] and to para 11 of the report which is extracted hereinbelow: 11. The case against the appellants originally was registered on 19-3-1995 under the Arm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Proviso to Section 151A. Section 151A of the Act reads thus: 151-A. Instructions to officers of customs . The Board may, if it considers it necessary or expedient so to do for the purpose of uniformity in the classification of goods or with respect to the levy of duty thereon or for the implementation of any other provisions of this Act or of any other law for the time being in force, insofar as they relate to any prohibition, restriction or procedure for import or export of goods, issue such orders, Instructions and directions to officers of customs as it may deem fit and such officers of customs and all other persons employed in the execution of this Act shall observe and follow such orders, Instructions and directions of the Board: Provided that no such order, Instructions or directions shall be issued (a) so as to require any such officer of customs to make a particular assessment or to dispose of a particular case in a particular manner; or (b) so as to interfere with the discretion of the Principal Commissioner of Customs or Commissioner of Customs (Appeals) in the exercise of his appellate functions. 34. As is manifest from a reading of the aforenoted provision, Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 151A could have been invoked in order to make a particular provision workable within the scheme of the Act, it cannot be exercised or invoked so as to exclude a class of persons from the application of any provision. It was thus contended that the directive of the first respondent requiring the Customs authorities to review all permissions already granted and not to grant any licenses in the future is ultra vires Section 151A and is liable to be set aside. 37. Without prejudice to the above, and on merits, Mr. Ghosh submitted that the first respondent has clearly erred in coming to the conclusion that solar power projects are outside the purview of the MOOWR Regulations. Mr. Ghosh submitted that a bare perusal of Section 65 of the Act evidences the intention of the Legislature to permit manufacturing operations within a warehouse. Learned senior counsel sought to underline the fact that Section 65 of the Act does not exclude any particular industry from its operation. It was submitted that the MOOWR Regulations were first introduced in 1966 vide a notification dated 30 July 1966. The scheme was thereafter updated and reintroduced in terms of a notification issued on 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that it was by virtue of the Finance Act, 2020 that for the first time a duty came to be imposed on solar modules. In terms of the provisions so introduced, a BCD of 20% came to be imposed on the import of solar modules and solar cells. However, according to Mr. Ghosh, solar cells and modules continued to be exempted from BCD by virtue of Notification No. 24/2005 dated 01 March 200520. It was pointed out by learned senior counsel that although and in terms of the Finance Act, 2022, the duty on the aforesaid articles came to be increased from 20% to 40% [solar modules] and 20% to 25% [solar cells modules], it was by virtue of Notification No. 15/2022- Cus. dated 01 February 2022 that the exemption granted to solar cells and solar modules by virtue of Entry 23 of the 2005 Notification came to be withdrawn and it was only thereafter that they became subject to the levy of BCD with effect from 01 April 2022. It was submitted that insofar as ACME is concerned, the grant of licence as well as certain imports which it made preceded the levy of BCD which came to be enforced with effect from 01 April 2022. Consequently, and according to Mr. Ghosh, it would be wholly incorrect to allege ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory exclusion, the impugned Instruction cannot sustain and it ought to be quashed and set aside. 42. In our opinion, this would be an appropriate juncture to record the submissions of Mr. Venkataraman, the learned ASG before we proceed to notice the arguments addressed by Mr. Datar, learned senior counsel appearing for Jakson Power in order to lend lucidity and context to the discussion which ensues. D. SUBMISSIONS OF THE RESPONDENTS 43. The learned ASG firstly sketched out a brief history of the policy measures adopted by the Union Government in respect of solar energy. Mr. Venkataraman submitted that solar cells are classified under Tariff Entry 8541 42 00 whereas solar modules are placed in Tariff Entry 8541 43 00 of the First Schedule to the Customs Tariff Act, 1975 [1975 Act] . It was pointed out that prior to 01 April 2022, solar cells and solar modules attracted Nil BCD. The learned ASG however drew our attention to Notification No. 01/2018-Customs (SG) dated 30 July 2018 and Notification No. 02/2020-Customs(SG) dated 29 July 2020 and in terms of which a safeguard duty was imposed in terms of Section 8B of the 1975 Act on both solar cells and solar modules. The traject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms duty and Goods and Services Tax [GST] on import of solar cells and modules. Our attention in this respect was drawn to the aforesaid communication which is extracted hereinbelow for ready reference:- F. No. 283/31/2022-GRID SOLAR Government of India Ministry of New Renewable Energy Grid Solar Power Division Block No. 14, C.G.O. Complex, Lodhi Road, New Delhi -110003 Dated: 27th July, 2022 OFFICE MEMORANDUM Sub: 'Manufacture and Other Operations in Warehouse (no. 2) Regulations, 2019 (MOOWR Scheme): Applicability to Solar PV Power Projects 1. It has been reported to Ministry of New Renewable Energy (MNRE) that solar power developers are utilizing the provisions of 'Manufacture and Other Operations in Warehouse (no. 2) Regulations, 2019' (MOOWR) to avoid import duty and GST on imported solar equipment, while setting up solar power projects. The electricity thus generated from such projects into Domestic Tariff Area is without duty incidence of any kind, as electricity is not a physical good and is exempt from GST. A detailed note is attached at Annexure-I for consideration of Department of Revenue, Ministry of Finance. 2. A representation dated 25.05.2022 received from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by Mr. Venkataraman that Project Imports are classified under Customs Tariff Heading [CTH] 9801 of the First Schedule to the 1975 Act and assessment of imported goods is undertaken on the basis of the project as a whole under a single heading and irrespective of the classification of different components for ease of assessment and facilitation of trade. 50. Our attention was also drawn to a representation made by the North India Module Manufacturer Association dated 02 August 2022 and which had apprised the respondents that in the case of a power developer, more than 90% of the import content is in the form of a solar module. They had accordingly submitted that for solar power developers, the applicable Project Import rate of duty should be 40% in order to level the playing field between solar power developers who directly import and those which may use solar cells and modules manufactured in India. 51. Mr. Venkataraman submitted that it was bearing the aforesaid factors in mind that the Project Import Regulations, 1986 came to be amended vide notification dated 19 October 2022 to specifically exclude solar power projects and solar power plants from its purview. Similarly, and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly removed in January 2018, consequent to a challenge which was raised by the United States of America in the World Trade Organization. 54. The learned ASG also drew our attention to the following data pertaining to import of solar cells and modules:- Imports 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 (till Dec) Solar Cells 3,211 6,499 9,896 8,010 Solar Modules 9,871 40,333 3,935 22,516 Solar Cells Modules 15,106 11,900 13,090 46,832 13,831 55. It was also pointed out that after imposition of BCD in 2022-23, the country had seen a reduction in imports. However, import of solar modules are stated to have increased in 2023-24. The data on import stands encapsulated in the following chart:- Year Capacity Addition (in GW) Imports of Solar Modules (in Rs Cr) Imports of Solar Modules (in GW) 2020-21 5.63 9,871 3.95 2021-22 12.77 40,333 16.13 2022-23 12.78 3,935 1.57 2023-24 (till Dec) 6.54 22,516 9.00 Total 37.72 76,655 30.65 Source: MNRE, Advait (DG Systems), Doc 56. From the aforesaid table, it was pointed out by Mr. Venkataraman that it would be apparent that while solar power production has increased by about 38 GW in the last four years, roughly 31 GW is based on imports and wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Solar One Private Limited 139.72 1000 500 3 TP Solar Limited 3 83 4000 2000 Total 105 1.26 7400 3700 Total PU allocated under PLI Tranche-II Rs. 13937.575 Cr, Total Manufacturing Capacity allocated under PU Tranche-II 39600MW 58. Based on the aforesaid details, the learned ASG submitted that the total domestic solar power PV module manufacturing capacity is pegged at 48,337 MW with a cumulative support of more than INR 18,500 crores. All of the above steps, the learned ASG submitted, are essentially aimed at not only eliminating the existing price gap between imported and domestic cells and modules but also to make domestic modules more competitive as compared to imports. 59. It was in the aforesaid backdrop that the learned ASG submitted that irrespective of the outcome of the challenge to the impugned Instruction, bearing in mind the significance of the issues which arise, it would be expedient for the Court to render an authoritative determination on the scope of Section 65 read along with the MOOWR Regulations in the instant batch of petitions. This prayer stands reiterated in paragraph 16 of the Written Submissions which have been tendered. 60. Proceeding then to explain the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and with the use of the solar panels and cells generate solar energy. Consequently, it was submitted, the question of import of raw materials or inputs into India does not arise. 62. Proceeding then to explain the scope and ambit of the warehousing provisions under the Act, the learned ASG firstly drew our attention to the definition of warehouse and warehoused goods as appearing in Sections 2(43) and 2(44) respectively and which are reproduced hereinbelow:- 2. Definitions. In this Act, unless the context otherwise requires, xxxx xxxx xxxx (43) warehouse means a public warehouse licensed under Section 57 or a private warehouse licensed under Section 58 or a special warehouse licensed under Section 58-A ; (44) warehoused goods means goods deposited in a warehouse; 63. The learned ASG proceeded then to Section 57 and which enables the Principal Commissioner/Commissioner of Customs to license a public warehouse wherein dutiable goods may be stored. In addition to the above, reference was also made to Section 58 which enables the Customs authorities to grant a similar license for storage of imported goods in a private warehouse. Our attention was also drawn to Section 58A which deals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rance therefrom. According to the learned ASG, Section 61(1)(b) would be applicable to raw materials or inputs. It would therefore, according to the learned ASG, be manifest that solar cells and panels which have been imported would be deemed to be capital goods falling squarely within the ambit of Section 61(1)(a) of the Act. 67. Proceeding then to Section 65 itself, the learned ASG submitted that a deconstruction of that provision would reveal that the principal expressions which merit consideration are (a) warehoused goods ; (b) the carrying on of any manufacturing process or other operations and (c) of vital significance and import being the expression in relation to such goods . It was submitted by Mr. Venkataraman that the phrase such goods can only mean the warehoused goods . Consequently, according to the learned ASG, an importer would become entitled to claim the benefit of Section 65 provided it had warehoused goods and had undertaken a manufacturing process or other operations in relation to the said warehoused goods . The submission in essence was that it is the warehoused goods themselves which must undergo manufacturing or other operations and the benefit of Section 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng other reasons, which may include avoidance of repetition of the same phrase in the same clause or sentence, a method followed in good drafting. The word pertain is synonymous with the word relate , see Corpus Juris Secundum, Volume 17, page 693. 50. The expression in relation to (so also pertaining to ), is a very broad expression which presupposes another subject matter. These are words of comprehensiveness which might have both a direct significance as well as an indirect significance depending on the context, see State Wakf Board v. Abdul Azeez [AIR 1968 Mad 79, 81, paras 8 and 10] , following and approving Nita Charan Bagchi v. Suresh Chandra Paul [66 Cal WN 767] , Shyam Lal v. M. Shyamlal [AIR 1933 All 649] and 76 Corpus Juris Secundum 621. Assuming that the investments in shares and in lands do not form part of the undertakings but are different subject matters, even then these would be brought within the purview of the vesting by reason of the above expressions. In this connection reference may be made to 76 Corpus Juris Secundum at pages 620 and 621 where it is stated that the term relate is also defined as meaning to bring into association or connection with. It has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to whether the dominant purpose test, which is pressed into service by the assessees would apply while interpreting Section 14-A of the Act or we have to go by the theory of apportionment. We are of the opinion that the dominant purpose for which the investment into shares is made by an assessee may not be relevant. No doubt, the assessee like Maxopp Investment Ltd. may have made the investment in order to gain control of the investee company. However, that does not appear to be a relevant factor in determining the issue at hand. Fact remains that such dividend income is non-taxable. In this scenario, if expenditure is incurred on earning the dividend income, that much of the expenditure which is attributable to the dividend income has to be disallowed and cannot be treated as business expenditure. Keeping this objective behind Section 14-A of the Act in mind, the said provision has to be interpreted, particularly, the word in relation to the income that does not form part of total income. Considered in this hue, the principle of apportionment of expenses comes into play as that is the principle which is engrained in Section 14-A of the Act. This is so held in Walfort Share and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carrying out the object of section 4-B of the Act, but would be going beyond its purview or may even be contravening the plain object thereof. 72. The learned ASG then referred to the following passages from yet another decision of the Allahabad High Court in Suresh Kumar v. State of Uttar Pradesh Ors [ Judgment dated 19 April 2019 in Writ (A) No. 27260/2018] : 11. The same view was earlier taken in the case of Dharambeer Singh Vs. State of U.P. and Ors. reported in 2004 (4) ESC 2838 (Alld.) wherein this Court has repelled the similar argument that Teaching Training Course mentioned in Rule 4 (2) (b) of 1978 Rules, is illustratative and not exhaustive, therefore, B.Ed. which is also a Training Course has to be treated equivalent to the courses mentioned in the Rules. Relevant paras 7, 8, 9, 10, 11, 12 and 13 of the said judgment is being quoted below : 7. Education qualification of the respondent No. 4 is M.Sc., B.Ed. He is graduate and has three years teaching experience. He passed B.Ed. teacher's training course. The question is whether B.Ed. teachers training certificate could be treated to be minimum qualification for appointment on the post of head master of a recognized J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the course must be similar to certificate mentioned in the Rule. The State Government or the Board has not recognized or declared training qualifications of B.Ed. or L.T. to be the equivalent qualification as enumerated in Rule 4 (2) (b), therefore, it cannot be accepted that the petitioner possessed the teachers training qualification envisaged by Rule 4 (2) (b) of Rules, 1978. 11. It may now be considered whether B.Ed. or L.T. is equivalent to teachers training courses such as Hindustani Teaching Certificate, Junior Teaching Certificate, Certificate of Training or Basic Teaching Certificate. The expression 'such' as, explained earlier means courses of similar type. Since B.Ed. is not a course of similar type the respondent was not qualified to be appointed as head master. The submission of Shri Khare appears to be based on Government treating B.Ed. as sufficient for appointment in Basic Schools in 1998. But the submission proceeds on misapprehension. In Junior Basic Schools managed by U.P. Basic Education Board. Education is imparted from Classes 1 to V. In Senior Basic Schools education is imparted from classes VI to VIII. Service Conditions of teachers and head master ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligible for appointment as assistant teachers in the Schools managed by the Board. This Court upheld the validity of Government Order dated 9.1.1998 in Civil Misc. Writ Petition No. 29107 of 1999, Alok Kumar Pandey Vs. State of U.P. and Ors., decided on 19.7.1999. The candidates who had passed L.T./ B.Ed./C.P.Ed./D.P.Ed./B.P.Ed., training courses filed writ petitions before this Court claiming that they possessed L.T./B.Ed. training certificates which was higher than B.T.C. and in any case it has to be treated to be equivalent to B.T.C. training certificate. This Court did not accept that L.T./B.Ed. training certificates were higher or equivalent to B.T.C. training certificate. In Nirmal Chandra Mishra and Ors. v. State of U.P. and Ors., 1997 (1) ESC 412, it was held that B.Ed. training course is not equivalent to B.T.C. as the State Government has not declared L.T. or B.Ed., training course to be equivalent to B.T.C. training course. I another decision in B.Ed. Berozgar Sangh, Sonnhadra and Ors Vs. State of U.P. and other, 1997 (30) ALR 737, it had been held that B.Ed. or L.T. cannot be treated to be equivalent to B.T.C. The Court further held that B.Ed. and B.T.C. are different t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he post of head master of Junior High Schools and his appointment is liable to be quashed, therefore, it is not necessary for me to consider the other questions raised by learned Counsel for the parties. 73. According to the learned ASG, the submission that the imported goods themselves must undergo a process of manufacture stands further fortified from Section 65 using the expression carry on . It was in the aforesaid backdrop that the learned ASG submitted that the clear and unequivocal intent of Section 65 is of the warehoused goods themselves going through a process of manufacture or other operations. It was submitted that since the solar panels and solar cells undergo no such process and are merely used for converting sunlight into solar energy, the petitioners cannot possibly claim the benefit of Section 65. It was consequently submitted that since the activities undertaken by the petitioners do not fall within the ambit of Section 65, the question of applicability of the MOOWR Regulations does not arise. 74. In summation, the learned ASG submitted that the petitioners have clearly contravened both Section 65 and MOOWR Regulations and consequently the challenge as raised shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss for producing electricity. It was submitted that since the production of electricity is by a manufacturing process carried out in relation to such goods , the requirements of Section 65 are fully complied with. Mr. Datar contended that since the generation of electricity indisputably qualifies as manufacturing and that the petitioner is undertaking manufacturing of electricity within the warehouse using the imported capital goods, the requirements of Section 65 are satisfied. 77. Mr. Datar also questioned the correctness of the contention of the learned ASG when it was submitted that since capital goods in the present case do not undergo any manufacturing, the same would fall outside the ambit of Section 65. According to Mr. Datar, the said contention is clearly misplaced when one bears in mind that under the MOOWR Regulations, duty would be paid only upon clearance of the capital goods for home consumption and till such time that event occurs, duty stands deferred. It was submitted that neither Sections 61 and 65 nor the MOOWR Regulations prescribe an outer time limit with respect to duty deferral. Emphasis was also laid on the statutory scheme not seeking to restrict the duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revolving around the phrase in relation to such goods and submitted that the phrase in relation to is intended to convey a sense of comprehensiveness which may have a direct or indirect significance depending upon the context in which it is used. It was Mr. Ghosh s submission that the aforesaid phrase is synonymous with the expression pertain to . Our attention in this respect was drawn to paras 14 -16 from the decision of the Supreme Court in Mansukhlal Dhanraj Jain v. Eknath Vithal Ogale34. 14. So far as the first condition is concerned, a comprehensive reading of the relevant averments in the plaints in both these cases leaves no room for doubt that the plaintiffs claim relief on the basis that they are licensees on monetary consideration and the defendants are the licensors. The first condition is clearly satisfied. Then remains the question whether the third condition, namely, that the suits must relate to the recovery of possession of immovable property situated in Greater Bombay is satisfied or not. It is not in dispute that the suit properties are immovable properties situated in Greater Bombay but the controversy is around the question whether these suits relate to recove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the report (SCC pp. 703-04, para 25) has culled out propositions emerging from the consideration of the relevant authorities. At page 471 proposition 2 has been mentioned as under: (SCC p. 704, para 25) Expressions such as arising out of or in respect of or in connection with or in relation to or in consequence of or concerning or relating to the contract are of the widest amplitude and content and include even questions as to the existence, validity and effect (scope) of the arbitration agreement. 15. In Doypack Systems (P) Ltd. v. Union of India [(1988) 2 SCC 299], another Division Bench of this Court consisting of Sabyasachi Mukherji (as he then was) and G.L. Oza, JJ. had an occasion to consider this very question in connection with the provisions of Sections 3 and 4 of the Swadeshi Cotton Mills Co. Ltd. (Acquisition and Transfer of Undertakings) Act, 1986. Sabyasachi Mukherji, J. speaking for the Court, has made the following pertinent observations in paras 49 and 50 of the report: (SCC p. 329) The words arising out of have been used in the sense that it comprises purchase of shares and lands from income arising out of the Kanpur undertaking. We are of the opinion that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suits. 82. Viewed in light of the above, Mr. Ghosh submitted that the phrase in relation to such goods would cover all aspects of manufacturing and would bear the same meaning as having a connection with , association with or relation with the warehoused goods . According to Mr. Ghosh, the aforesaid phrase would also extend to manufacturing process or other operations , which may have some concern with the warehoused goods . According to learned senior counsel, the aforesaid phrase cannot be conferred a restrictive meaning and must be understood as extending to a variety of situations based upon the purpose for which the input is being used. Reliance in this respect was placed on the observations appearing in para 38 of Maruti Suzuki Limited v. Commissioner of Central Excise, Delhi [(2018) 15 SCC 523] . 38. In each case it has to be established that inputs mentioned in the inclusive part are used in or in relation to the manufacture of final product . It is the functional utility of the said item which would constitute the relevant consideration. Unless and until the said input is used in or in relation to the manufacture of final product within the factory of production, the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rate of duty and tariff valuation of the imported goods are to be ascertained is regulated by Section 15, and which reads thus: 15. Date for determination of rate of duty and tariff valuation of imported goods . (1) The rate of duty and tariff valuation, if any, applicable to any imported goods, shall be the rate and valuation in force, (a) in the case of goods entered for home consumption under Section 46, on the date on which a bill of entry in respect of such goods is presented under that section; (b) in the case of goods cleared from a warehouse under Section 68, on the date on which a bill of entry for home consumption in respect of such goods is presented under that section; (c) in the case of any other goods, on the date of payment of duty: Provided that if a bill of entry has been presented before the date of entry inwards of the vessel or the arrival of the aircraft or the vehicle by which the goods are imported, the bill of entry shall be deemed to have been presented on the date of such entry inwards or the arrival, as the case may be. (2) The provisions of this section shall not apply to baggage and goods imported by post. 87. Chapter VII of the Act pertains to clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whole or part of any interest payable under this section. 48. Procedure in case of goods not cleared, warehoused, or transhipped within thirty days after unloading . If any goods brought into India from a place outside India are not cleared for home consumption or warehoused or transhipped within thirty days from the date of the unloading thereof at a customs station or within such further time as the proper officer may allow or if the title to any imported goods is relinquished, such goods may, after notice to the importer and with the permission of the proper officer, be sold by the person having the custody thereof: Provided that (a) animals, perishable goods and hazardous goods, may, with the permission of the proper officer, be sold at any time; (b) arms and ammunition may be sold at such time and place and in such manner as the Central Government may direct. Explanation. In this section, arms and ammunition have the meanings respectively assigned to them in the Arms Act, 1959 (54 of 1959). 88. The subject of warehousing is regulated by Chapter IX of the Act and the principal provisions with which we are concerned are Sections 61 and 65. Section 61 stipulates the period for wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed therein shall, within seven days from the date on which notice of such cancellation is given or within such extended period as the proper officer may allow, remove the goods from such warehouse to another warehouse wherein manufacture or other operations have been permitted under Section 65, till their clearance from the warehouse; in the case of goods other than capital goods intended for use in any hundred per cent export oriented undertaking or electronic hardware technology park unit or software technology park unit or any warehouse wherein manufacture or other operations have been permitted under Section 65, till their consumption or clearance from the warehouse; and in the case of any other goods, till the expiry of one year from the date on which the proper officer has made an order under sub-section (1) of Section 60: Provided that in the case of any goods referred to in this clause, the Principal Commissioner of Customs or Commissioner of Customs may, on sufficient cause being shown, extend the period for which the goods may remain in the warehouse, by not more than one year at a time: Provided further that where such goods are likely to deteriorate, the period referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction in respect of any warehoused goods; by notification in the Official Gazette, specify the class of goods in respect of which no interest shall be charged under this section; by notification in the Official Gazette, specify the class of goods in respect of which the interest shall be chargeable from the date on which the proper officer has made an order under sub- section (1) of Section 60. notification in the Official Gazette, specify the class of goods in respect of which no interest shall be charged under this section. Explanation. For the purposes of this section, ―hundred per cent export- oriented undertaking‖ has the same meaning as in Explanation 2 to sub- section (1) of Section 3 of the Central Excises and Salt Act, 1944.‖ Explanation. For the purposes of this section, ―electronic hardware technology park unit‖ means a unit established under the Electronic Hardware Technology Park Scheme notified by the Government of India; ―hundred per cent export oriented undertaking‖ has the same meaning as in clause (ii) of Explanation 2 to sub-section (1) of Section 3 of the Central Excise Act, 1944 (1 of 1944); and (iii) ―software te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owner of any warehoused goods may, at any time before an order for clearance of goods for home consumption has been made in respect of such goods, relinquish his title to the goods upon payment of penalties that may be payable in respect of the goods and upon such relinquishment, he shall not be liable to pay duty thereon : Provided also that the owner of any such warehoused goods shall not be allowed to relinquish his title to such goods regarding which an offence appears to have been committed under this Act or any other law for the time being in force. 91. The MOOWR Regulations framed in terms of the powers conferred by Sections 157, 143AA read along with Section 65 came to be promulgated on 01 October 2019. The scope of those Regulations and its application is defined by Regulation 3 which reads thus: 3. Application . These regulations shall apply to (i) the units that operate under Section 65 of the Act, or (ii) the units applying for permission to operate under Section 65 of the Act, 92. The eligibility criteria is prescribed by Regulation 4 and which reads as follows: 4. Eligibility for application for operating under these regulations. - (1) The following persons shall be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods from customs station . - (1) Upon receipt of goods at a warehouse from a customs station, the licensee shall, - (i) verify the one-time-lock affixed by the proper officer at the customs station on the load compartment of the means of transport carrying the goods to the warehouse; (ii) inform the bond officer immediately if the one-time-lock is not found intact, and refuse the unloading of the goods; (iii) allow unloading, provided the one-time-lock is found intact and verify the quantity of goods received by reconciling with the bill of entry for warehousing; (iv) report any discrepancy in the quantity of the goods within twenty-four hours to the bond officer; (v) endorse the bill of entry for warehousing with the quantity of goods received and retain a copy thereof; (vi) acknowledge the receipt of the goods by endorsing the transportation document presented by the carrier of the goods and retain a copy thereof; and (vii) take into record the goods received. (2) Upon taking into record the goods received in the warehouse, the licensee shall cause to be delivered an acknowledgement to the proper officer referred to in sub-section (1) of section 60 and to the bond officer regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd officer. 98. Regulations 14 and 15 of the MOOWR Regulations are concerned with the subject of removal of resultant goods either for home consumption or for export and are framed as follows: 14. Removal of resultant goods for home consumption . - (1) A licensee may remove the resultant goods from warehouse for home consumption: Provided that a bill of entry for home consumption has been filed in respect of the warehoused goods contained in so much of the resultant goods and the import duty, interest, fine and penalties payable, if any, in respect of such goods have been paid. (2) The licensee shall retain a copy of the bill of entry filed and take into record the goods removed. 15. Removal of resultant goods for export . - (1) A licensee shall remove the resultant goods from the warehouse for export, upon, - (i) filing a shipping bill or a bill of export, as the case may be; and (ii) affixing a one-time-lock to the load compartment of the means of transport in which such goods are removed from the warehouse. (2) The licensee shall take into record the goods removed. 99. Since the power of the Board to exempt a certain class of goods had also been alluded to by respective counsels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing out of manufacturing or other operations in the warehouse) is cleared for domestic consumption, such a transaction squarely falls within the ambit of supply under Section 7 of the Central Goods and Service Tax Act,2017 (hereinafter referred to as the, CGST Act ). It would therefore be taxable in terms of section 9 of the CGST Act, 2017 or section 5 of the Integrated Goods and Services Tax Act, 2017 depending upon the supply being intra-state or inter-state. The resultant product will thus be supplied from the warehouse to the domestic tariff area under the cover of GST invoice on the payment of appropriate GST and compensation cess, if any. As regards import duties payable on the imported goods contained in so much of the resultant products are concerned, same shall be paid at the time of supply of the resultant product from the warehouse for which the licensee shall have to file an ex-bond Bill of entry and such transactions shall be duly reflected in the accounts prescribed under Annexure B. As per MOOWR, 2019, the applicant shall also inform the input-output norms, wherever considered necessary, for raw materials and final products and shall also inform the revised input-out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be able to procure required raw materials, consumables, capital goods etc., imported or procured from domestic market. The goods may include dutiable goods, exempt goods or those chargeable to nil rate of duty. Denial of the facility to exempt goods or those chargeable to nil rate of duty, which may be required for manufacturing, would defeat the objective of Section 65. It is therefore clarified that imported goods, that are exempt from duty or are chargeable to nil rate of duty, may be brought into the warehouse, upon filing a bill of entry for home consumption and clearance, at the customs station of import. Such goods shall not be considered as warehoused goods in terms of section 60 of the Act. xxxx xxxx xxxx 15.1 Given the continuous nature of operations in warehouses under section 65, and the potential need to clear resultant goods expeditiously, the requirement to obtain prior permission of the proper officer for each clearance could pose a challenge to making clearances on time to meet delivery schedules. Therefore to facilitate such timely clearances and for convenience of the trade, recourse has been taken to the powers vested under Section 143 AA, and it is provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Capital goods required for setting up the facility Likely to be imported under Chapter 85 GOODS PROPOSED TO BE DOMESTICALLY PROCURED Description of goods HSN Classification Capital goods required for setting up the facility Likely to be procured under Chapter 32, 38, 72, 85, 90, 94 etc. BRIEF DESCRIPTION OF THE PROPOSED FACILITY The company is going to set up solar power plant with the generation capacity of around 300 MV. For this purpose, the Company shall import and procure capital goods such as solar panels, PV modules, inverters etc. required for setting up the facility. 103. As is evident from the communication dated 27 July 2022 addressed by MNRE to the Department of Revenue, the issue with respect to eligibility of solar generation appears to have fallen for the consideration of that Ministry consequent to various representations received from domestic industry and upon a review of the scheme undertaken by it. Annexure -I to that communication and which would have some bearing on the manner in which the respondents construed the scope and ambit of Section 65 and the MOOWR Regulations is extracted hereunder: Annexure-I Sub: 'Manufacture and Other Operations in Warehous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opers, solar equipment required for generation of electricity, when imported to a solar PV power project having the license of 'Customs Bonded Warehouse' under MOOWR, will qualify as capital goods, for which BCD and IGST will be deferred till the time such goods remain within the Customs Bonded Warehouse. Solar Modules will remain within the Solar Power Project (Customs Bonded Warehouse) for their useful life of 25 years and generate electricity which will be supplied to DTA. Under the MOOWR scheme, no customs duty is payable on the domestic clearance of 'resultant product' per se. Duty is payable only w.r.t. 'raw materials physically contained in resultant product', which is NIL in the case of electricity. Further, there shall not be any liability of GST on domestic supply of 'electricity', because it is exempted from GST. III. Implementation of Basic Customs Duty (BCD) Solar Projects obtaining Warehouse License and availing benefits under MOOWR, 2019 7. It is pertinent that Basic Customs Duty of 40% on import of solar PV modules (HSN code 85414300) and BCD of 25% on import of solar PV cells (HSN Code 85414200), has been implemented with effect from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reads as Any other Plant and Project, other than solar power plant or solar power project 105. All of this, according to the learned ASG, was indicative of the policy decision taken by the Union Government to incentivize domestic manufacturing of solar cells and modules and to thus give impetus to domestic industry engaged in the manufacture of solar cells and modules. The incentives extended under the PLI scheme was explained to be an extension of the aforesaid decision. However, and before we proceed to consider the merits of the submissions addressed from a policy perspective, it would be necessary to firstly examine the validity of the impugned Instruction based purely on a consideration of the statutory position as it prevails. I. THE VALIDITY OF THE IMPUGNED INSTRUCTION 106. The impugned Instruction is stated to have been issued in exercise of the powers conferred upon the Board in terms of Section 151A of the Act. Although extracted in an earlier part of the judgment, we deem it apposite for purposes of continuity and coherence to notice that provision again: 151-A. Instructions to officers of customs . The Board may, if it considers it necessary or expedient so to do for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars to have understood the scope of the MOOWR Regulations as invariably requiring the affixation of a one-time-lock at the stage when the resultant goods are being removed from the warehouse. The stand appears to be that since electricity cannot possibly be housed in a load compartment or be contained with the affixation of a one-time-lock, it would fall outside the scope of the MOOWR Regulations. The Board also refers to the provisions contained in Regulation 20 of the MOOWR Regulations to state that since electricity as a category of goods had not been exempted from the operation of those Regulations, the same should be viewed as being indicative of solar power generating units not being envisaged under Section 65 of the Act or the MOOWR Regulations. 109. While we would have been inclined to countenance a broad policy directive with respect to the subject of solar generation under Section 65 being framed by the Board, we find ourselves unable to sustain the peremptory directions which stand embodied in paragraph 5 of the impugned Instruction. As was noticed hereinabove, in para 5, the Board takes an unabashed stand that all permissions granted with respect to solar power generati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod. 111. Significantly, the power to cancel a license duly granted would be liable to be exercised where it is found that the licensee has either contravened any of the provisions of the Act, the rules or the regulations made thereunder, or where it is found to have breached any of the conditions of the license. The respondents cannot possibly argue that the petitioners had either contravened any provision of the Act or had acted contrary to any of the conditions as imposed or contained in the license. In fact, it was not even argued that they had in fact contravened the conditions of the license which stood granted. We therefore seriously doubt whether the licenses were liable to be cancelled in purported exercise of the Section 58B power. 112. It is pertinent to note that this was not a case where the petitioners had either failed to disclose or concealed the purpose for which the capital goods were being imported or their intended purpose and utility. As is evident from the extracts of the application which was moved, the petitioners had in no uncertain terms declared that the resulting goods of the manufacturing or other operations which were proposed to be undertaken would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner. This prohibition is not different from Section 119 of the Income Tax Act, 1961 and section 37B of the Central Excise Act, 1944. The legal position governing the above provisions of the Income-tax Act, 1961 as well as the Central Excise Act, 1944 as explained in Faridabad Iron and Steel Traders Association v. Union of India (2004) 178 ELT 1099 (Delhi) would apply to section 151A of the Act as well. The decision in Union of India v. Madras Steel Re-rollers Association (2012) 278 ELT 584 (SC) explains that the Central Board of Excise and Customs is empowered to issue circulars for the guidance of quasi- judicial authorities . Also in Collector of Central Excise v. Dhiren Chemical Industries [2002] 254 ITR 554 (SC) ; [2002] 126 STC 122 (SC) it was explained that the Central Board of Excise and Customs could disseminate interpretative findings or procedures or such other Instructions to its officers for ensuring equity and uniformity in assessment practices . However, on that pretext the power under section 151A cannot be used to whittle down the scope of an exemption. This has been explained in a large number of decisions which will be discussed hereafter. 50. In Union of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of the fiscal provision, in the present case, in consonance with the concept of income and in particular, notional income as also the treatment of such notional income under accounting practice. 53. Recently in a decision dated February 1, 2016 in Writ Petition (Civil) No. 4665 of 2014 (Allen Diesel India P. Ltd. v. Union of India [2016] 37 GSTR166 (Delhi)) this court noted that section 151A of the Act is for a very limited purpose of issuing of Instructions to officers of customs for the purpose of uniformity in the classification of goods or with respect to the levy of duty thereon . The above provision does not envisage any amendment being made to an exemption notification that may have been issued in exercise of powers under section 25(1) of the Act. This court, in the above decision, also referred to the decision in Modi Rubber Ltd. v. Union of India (1978) 2 ELT 127 (Delhi) wherein it was held that Central Board of Excise and Customs cannot impose any condition for availing of exemption without amending the original exemption notification. The impugned circulars are ultra vires Section 151A 54. Examined in light of the legal position explained in the above decisions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seas only on the basis of the said circular. 115. As was succinctly explained in Bullion and Jewellers Association, the power under Section 151A is essentially concerned with ensuring uniformity in assessment practices and providing guidance to quasi-judicial authorities. However, and as the Court observed in Bullion and Jewellers Association, the scope and ambit of an exemption being claimed could not have been whittled down on the basis of an instruction issued by the Board. While coming to the aforesaid conclusion, the Court in Bullion and Jewellers Association had also noticed the decision rendered by the Supreme Court in Union of India Ors vs. Karvy Stock Broking Ltd. [2015 SCC Online SC 1788 ] and which had significantly held that a circular which amounts to foreclosing or impinging upon the discretional judgment that may otherwise be exercised by a quasi-judicial authority would not sustain. 116. Yet another decision which proceeds on similar lines is that of Faridabad Iron Steel Traders Association. The Court on that occasion had to deal with the validity of a direction issued by the Board pertaining to the cutting of iron and steel coils into sheets and slitting of iron co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax is essentially a legislative function and according to our constitutional scheme it cannot be delegated. The Excise Duty which the legislature intends to impose must be imposed directly in accordance with law. By issuing the impugned circular the respondent cannot introduce revenue legislation indirectly. The impugned circular also deserves to be quashed on this ground also. 97. Consequently, the impugned circular dated 7-9-2001 issued by the Ministry of Finance, Department of Revenue, Central Board of Excise Customs is quashed and proceedings emanating from the said Circular also stand quashed. These writ petitions are accordingly allowed. In the facts and circumstances of the case, we direct the parties to bear their own costs. 117. Faridabad Iron Steel Traders Association thus again lays emphasis on the Board clearly not having or being conceived to have the power to frame directions or issue a circular which may bind subordinate authorities in the discharge of their quasi-judicial functions or otherwise influence and dictate the exercise of their powers. The impugned Instruction clearly has the effect of deterring the licensing authorities from either independently examini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public policy, and in some contexts the policy of a minister or of the Government as a whole may be a relevant factor in weighing those considerations; but this will not absolve them from their duty to exercise their personal judgment in individual cases, unless explicitly statutory provision has been made for them to be given binding instructions by a superior, or (possibly) unless the cumulative effect of the subject-matter and their hierarchical subordination (in the case of civil servants and local government officers) make it clear that it is constitutionally proper for them to receive and obey instructions conveyed in the proper manner and form. 119. The aspect of abdication of discretion was succinctly explained by the Supreme Court in Anirudhsinghji Karansinhji Jadeja in the following terms: - 11. The case against the appellants originally was registered on 19-3-1995 under the Arms Act. The DSP did not give any prior approval on his own to record any information about the commission of an offence under TADA. On the contrary, he made a report to the Additional Chief Secretary and asked for permission to proceed under TADA. Why? Was it because he was reluctant to exercise ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as solar panels PV modules, inverters etc., for setting up a solar power generation facility. It was the respondents who on due consideration of that application had proceeded to grant permissions and licenses. This was therefore clearly not a case where the petitioners had either concealed or misrepresented facts. It was therefore clearly impermissible for the Board by way of the impugned Instruction to have trampled over the power of cancellation as independently placed in the hands of the proper officer of Customs by virtue of Section 58B of the Act. The fact that the proper officer of Customs clearly perceived and understood the intent of the impugned Instruction to be the initiation of proceedings for cancellation of the license is evident from the following extracts of one of the impugned SCNs : Sub: -Cancellation of License issued under the MOOWR Scheme, 2019 C/r Sirs, Please refer to the Instruction No. 13/2022-Custom dated 09.07.2022 issued by the Central Board of Indirect Taxes Customs under F.No. 473/03/2022-LC, GOI, MOF, Department of Revenue, New Delhi on the above subject. The following MOOWR licenses were issued to you under Manufacture and Other Operations in Wareh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nwada, Tehsil- Pokaran, Dist- Jaishalmer (Raj.) 12 CUS/LIC/MISC/194/2 021- Tech-O/o Commr-Cus-Prev- Jodhpur 19/PBW/ACME Raisar Plot-2/Customs Jaipur/2021 dated 05.11.2021 Total Area 341.02 Acres at Village Sanwada, Tehsil- Pokaran, Dist- Jaishalmer (Raj.) 13 CUS/LIC/MISC/195/2 021- Tech-O/o Commr- Cus-Prev- Jodhpur 20/PBW/ACME Raisar Plot-13/ Customs Jaipur/2021 dated 05.11.2021 Total Area 138.72 Acres at Village Sanwada, Tehsil- Pokaran, Dist- Jaishalmer (Raj.) 14 CUS/LIC/MISC/196/2 021- Tech-O/o Commr- Cus-Prev- Jodhpur 21/PBW/ACME Raisar Plot-4/ Customs Jaipur/2021 dated 05.11.2021 Total Area 179.22 Acres at Village Sanwada, Tehsil- Pokaran, Dist- Jaishalmer (Raj.) In light of the said Instruction, you are hereby called upon to explain to the Commissioner of Customs, having his office N.C.R. Building, Statue Circle, C-Scheme, Jaipur within two weeks of receipt of this letter, as to why the above MOOWR licenses granted to you, should not be Cancelled under section 58 read with section 65 of Customs Act 1962 on the following Grounds: i. The imported solar panels/solar modules and related accessories which have been declared as Capital goods would be utilized to generate electricit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein. Prior to the amendments which were introduced in Section 61 by Act 28 of 2016, capital goods, goods other than capital goods and any other goods could have been placed in a warehouse for periods stipulated in that provision. In the case of capital goods, Section 61(1)(a) placed an outer time limit of five years subject to extensions that the Principal Commissioner of Customs or Commissioner of Customs could grant upon sufficient cause being shown. Therefore, prior to 2016, there was a specified time limit of five years for which capital goods could have been housed or placed in a warehouse. Post the 2016 amendments, an importer of capital goods now stands enabled to retain them in a warehouse till they are ultimately cleared for home consumption. In terms of Section 61(1)(a), the aforesaid facility is extended to capital goods intended for use in either a 100% export-oriented undertaking, an electronic hardware technology part unit, a software technology part unit or any warehouse wherein manufacture or other operations may have been permitted in terms of Section 65. The 2016 Amendments thus constitute a radical departure from the position which obtained under Section 61 prior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the MOOWR Regulations clearly appears to cater to a situation where the resultant goods may contain or be comprised of goods which had otherwise been imported and placed in the warehouse. It does not appear to extend to a situation where the imported goods either do not form part of the resultant goods or remain unused in the course of manufacture. One cannot be unmindful of the fact that a statute is generally framed in order to deal with myriad contingencies. Since the Act undoubtedly contemplates the import of non-capital goods, raw materials, ingredients and other consumables, it had to necessarily provision for the fixation of an input-output ratio. However, the said prescriptions cannot be read as the embodiment of an intent to place a restriction on the type of goods that may be imported and used in the course of manufacture. It would thus be wholly incorrect to understand the scope of Section 61 and 65 as being limited only to those categories of goods which ultimately get subsumed in the resultant goods or which may be compliant with the requirement of an input-output classification. 126. A manufacturing activity which is undertaken with the aid of capital goods may not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be imported and placed in a warehouse pursuant to permissions granted in terms of Section 65. While some may get consumed in the course of manufacture, others may not. This situation would invariably arise since the statute contemplates both capital as well as other goods being imported and placed in a warehouse. Capital goods, in light of their inherent characteristic need not be self-consuming. In fact, they are normally understood to be goods which are durable and capable of repetitive and continuous use. 130. It becomes pertinent to note that the expression capital goods is not unique to the Act with which we are concerned in this batch of writ petitions. It is an expression which is found in various statutes. For instance, under the Central Goods and Services Tax Act 2017, the words capital goods and inputs are defined as follows:- 2. Definitions . In this Act, unless the context otherwise requires, xxxx xxxx xxxx (19) capital goods means goods, the value of which is capitalised in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business; xxxx xxxx xxxx (59) input means any goods other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods, the value of which is capitalized in the books of account of the importer; 135. We also deem it apposite to extract the meaning assigned to the expression capital goods in P. Ramanatha Aiyar s, The Major Law Lexicon [P. Ramanatha Aiyar, The Major Law Lexicon, 4th edition, 2010] : Goods that are not themselves consumed in the actual manufacturing as raw materials, etc., but are used over a long period of time to aid in the production of other goods, e.g. items of plant and machinery, vehicles, etc. 136. It becomes pertinent to observe that the statutory scheme underlying Sections 61 and 65 is concerned with the import of capital goods and captive utilization of those goods in a process of manufacturing. The capital goods so imported enjoy the benefit of duty deferment till they be ultimately released for domestic consumption. Capital goods are those assets which are used to produce goods or services. They are understood to mean goods which are durable and capable of repetitive use in the course of manufacture. They could take the form of machinery, equipment or even technology infrastructure. Viewed in that backdrop, it could also represent a component which acts as an aid to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehoused can stretch up to the stage of their consumption and clearance from the warehouse. The aspect of consumption is one which is spoken of only in respect of goods which are non-capital in nature. The period of warehousing insofar as capital goods is concerned is not connected or correlated to consumption as is manifest from a reading of Section 61(1)(a). Capital goods can remain in a warehouse till they are ultimately cleared therefrom. The same leads one to the irresistible conclusion that capital goods once imported could be validly and legitimately placed in a warehouse and thus be exempt from the payment of duties and taxes till they are cleared from those facilities. 139. In our considered opinion, Section 65 clearly stops short of making an exception or excluding a certain category of manufacturing activities from its ambit. It also fails to exclude from its application the manufacture of intangible goods in explicit terms. Section 61 clearly envisages both capital and non-capital goods being imported and housed in a warehouse for the purposes of manufacturing activity being undertaken in terms of permissions granted under Section 65 of the Act. The statute enables capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital goods would be payable only once they are cleared from the warehouse or are moved into the domestic market. This was further explained with the respondents taking the unequivocal position that the duty on the capital goods does not get incorporated in the finished goods. The MOOWR Regulations themselves were explained to be one relating to deferment of duty with it being held out that both BCD and IGST on imports would stand deferred and that such deferment would be without any time limitation. 142. Till this point, the respondents do not appear to have harboured any doubt with respect to either the applicability of the scheme or its width and area of operation. The representations made by the respondents neither restricted the scheme with reference to a particular category of goods nor did they limit or confine the applicability of the scheme to a particular genre of manufacturing activity that could be legitimately undertaken. However, and whether their experience of the working of the scheme and the larger policy objectives are relevant considerations to hold against the petitioners is an aspect which we propose to consider in the latter parts of this decision. K. THE IN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aiyar in The Major Law Lexicon explains the meaning of that phrase in the following terms: The phrase in relation to is, ordinarily, of wide import, but in the context of its use in the expression determination of any question having a relation to the rate of duty of customs or to the value of goods for purpose of assessment in Section 129-C, it must be read as meaning a direct and proximate relationship to the rate of duty and to the value of goods for the purposes of assessment. Navin Chemicals Mfg. and Trading Co. Ltd. v. Collector of Customs, (1993) 4 SCC 320, 324. [Customs Act (52 of 1962), S. 129-C (3)]. 147. The said expression in relation to has also been construed to mean words of comprehensiveness as explained in Wharton s Law Lexicon [Wharton s Law Lexicon, Revised, Updated and Enlarged by Dr. Justice AR Lakshmanan, 16th edition (Reprint), 2015] . The relevant extract from the said lexicon is reproduced hereinbelow: The expression in relation to are words of comprehensiveness, which might both have a direct significance as well as an indirect significance, depending on the context in which it is used and they are not words of restrictive content and ought not be so const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by us hereinbefore, the principal argument of the respondents was that the MOOWR Regulations were never intended to extend to a situation where imported capital goods do not get subsumed in the final product which may emerge out of a licensed warehouse and that Section 65 was meant to apply only to manufacturing operations being undertaken on the imported capital goods itself. We have in the preceding parts of this decision already found that neither Section 61 nor Section 65 would warrant such a meaning being ascribed to those statutory provisions. This, in light of the plain text of the provisions neither impliedly nor in explicit terms excluding any particular category of manufacture or basing the extent of the applicability of those provisions dependent upon the nature of the resultant goods which may be obtained at the end of a manufacturing process. 151. While we had an occasion to review some of the contemporaneous policy announcements and circulars pertaining to the MOOWR Regulations in the preceding parts of this decision, we deem it apposite to revisit and review that material in brief so as to sketch a broad summary. We firstly go back to the FAQs which had been issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted that in the course of imports effected by a unit licensed under Sections 58 and 65 of the Act, capital goods would be freed from the imposition of duty, since the MOOWR Scheme was principally envisaged to be a duty deferment scheme. It was further explained that the levy of both BCD as well as IGST on such imports would be deferred. It was thereafter and more specifically explained that duty deferment is without any time limitation . 156. The question of when the imported capital goods would become subject to the payment of duties imposed under the Act was dealt with in Query 9, and which stated that the same would be payable when the capital goods itself are cleared into the domestic market. It was significantly clarified that the duty on the capital goods would not get incorporated or attached to the finished goods. 157. This too is indicative of the capital goods not being subject to the payment of duty as long as they remained in the warehouse and were used in the course of a manufacturing process or other operations. The fact that capital goods could be housed in a licensed warehouse without any limitation of time being applicable was further underscored by the response t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor the contemporaneous material embodies an underlying policy intent for capital goods themselves being worked upon in the warehouse and constituting a part of the resultant goods. In fact, and to the contrary as we have found, the primary objective of the scheme was to give a fillip to domestic manufacturing albeit with the aid of imported capital goods. On an overall conspectus of the above, we find ourselves unable to accede to the submissions addressed by the learned ASG. M. DISTORTION OF THE LEVEL PLAYING FIELD 162. The learned ASG had vehemently contended that the activity of solar power generation has led to the creation of inequalities between domestic manufacturers and those like the petitioner who have claimed undue benefit of the MOOWR Regulations. It was in the aforesaid context that the respondents had sought to urge that we must interpret Section 65 in a manner which would subserve the larger policy objectives and the impetus sought to be accorded to domestic generation of solar power. 163. The avowed benefits underlying the aim of the Union and the emergent need to switch to solar power as a source of renewable energy cannot possibly be doubted. Undoubtedly, solar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lities such as through time spent on domestic chores and unpaid care work. Women in many developing countries spend on average 1.4 hours a day collecting fuelwood and four hours cooking, in addition to other household tasks that could be supported by energy access. The importance of prioritizing clean energy initiatives to ensure environmental sustainability and uphold human rights obligations cannot be understated. 35. India faces a number of pressing near-term challenges that directly impact the right to a healthy environment, particularly for vulnerable and indigenous communities including forest dwellers. The lack of reliable electricity supply for many citizens not only hinders economic development but also disproportionately affects communities, including women and low-income households, further perpetuating inequalities. Therefore, the right to a healthy environment encapsulates the principle that every individual has the entitlement to live in an environment that is clean, safe, and conducive to their well-being. By recognizing the right to a healthy environment and the right to be free from the adverse effects of climate change, states are compelled to prioritize environme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... men and girls, minimizing health risks associated with indoor air pollution, generating employment at the village level, and ultimately improving living standards and fostering economic activities. Additionally, the solar energy sector in India has emerged as a significant contributor to grid-connected power generation capacity. It aligns with India s agenda of sustainable growth and plays a crucial role in meeting the nation's energy needs while enhancing energy security. 38. Solar energy holds a central place in India's National Action Plan on Climate Change, with the National Solar Mission being one of its key initiatives. Launched on 11 January 2010, NSM aims to establish India as a global leader in solar energy by creating favourable policy conditions for the diffusion of solar technology across the country. This mission is in line with India's Nationally Determined Contributions target, which aims to achieve about 50 per cent cumulative electric power installed capacity from non-fossil fuel-based energy resources and reduce the emission intensity of its GDP by 45 per cent from 2005 levels by 2030. India's goal to achieve 500 GW of non-fossil-based electricity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r energy source. This is clearly an aspect which cannot possibly be doubted even by the respondents. What was however sought to be canvassed was the resultant distortion of the level playing field with the respondents alleging that the petitioners are deriving an undue advantage of the MOOWR Regulations having established a solar generation unit with the aid of duty free imports at a cost far lesser than that which a domestic producer may incur in the course of establishing a comparable generating facility. It was in the aforesaid backdrop that the learned ASG had urged us to interpret Section 65 as well as the MOOWR Regulations in a manner which would coalesce with the larger policy measures adopted by the Union. 165. While we have no reason to doubt the salutary purpose and objective underlying the framing of those measures, as a Court, we cannot be unmindful of our primary function being confined to interpret the statutory provisions in accordance with well-defined precepts of interpretation. The construction of a statute cannot be guided or influenced by the subsequent experience of the executive or of discerned inequitable results. As we have found hereinabove, the statutory s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpretation which least offends our sense of justice . If the grammatical construction leads to some absurdity or some repugnance or inconsistency with the rest of the instrument, it may be de-parted from so as to avoid that absurdity, and inconsistency. Similarly, a construction giving rise to anomalies should be avoided. As approved by VENKATARAMA AIYAR, J., Where the language of a statute, in its ordinary meaning and grammatical construction, leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence. 167. Craies on Legislation [Craies on Legislation, A Practitioners Guide to the Nature, Process, Effect and Interpretation of Legislation, Daniel Greenburg, South Asian Edition, 2010] , expounds the cardinal rule of construction to be words of the legislation, when precise and unambiguous, being acknowledged as embodying the true means of declaring legislative intent. The learned author elaborated upon the aforesaid precepts by stating that Courts are bound to giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng but the literal meaning of the text as a whole a difficulty emerges. A mere anomaly, however, is not in itself sufficient to prevent the application of the literal meaning of an Act. See, for example, the following passage of the judgment of Peter Gibson L.J. in Slamon v Planchon- I share the judge's unease at a construction which gives rise to the two 'anomalies' which he has identified as arising, being circumstances in which a landlord is not a resident landlord for the purposes of the Leasehold Reform, Housing and Urban Development Act 1993, viz. (1) freehold held by a bare trustee for a beneficiary for part of the period between the date of conversion and the relevant date and by the beneficiary for the remainder of the period, and (2) freehold held by the trustee for A for life, remainder to A's son, for part of that period and on A's death by the son. Those examples seem to me not so much anomalies as surprising consequences of the construction which, as the judge acknowledged, was what the clear words of s.10(1) and (4) suggested. One is entitled to wonder what was the intention of Parliament in so providing. However, the duty of the court is to give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, the legislative promoters and the draftsman could not have envisaged such anomaly and could not have been prepared to accept it in the interest of a supervening legislative objective; (3) the anomaly can be obviated without detriment to such legislative objective; (4) the language of the statute is susceptible of the modification required to obviate the anomaly. For early examples of the latitude available for the avoidance of manifest absurdity see Simms v Registrar of Probates, R. v Tonbridge Overseers,Gover's Case, River Wear Commissioners v Adamson and Ex p. St. Sepulchre's. For recent cases on the point see Omar Parks Ltd v Elkington, Baker v The Queen, In re Pantmaenog Timber Co Ltd, Cranfield v Bridgegrove Ltd and Lewis v Eliades. The latitude to have regard to justice and common sense in choosing in which of the various ways, each of which is possible as a matter of grammar and syntax, to read a particular legislative expression, does not, however, amount to permission for the courts to modify express legislative language for the same purpose. As Willes J. said in Abel v Lee No doubt the general rule is that the language of an Act is to be read according to it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he mischief at which the law is aimed. But it has long been recognised that our courts cannot so apply taxing Acts. The fact that a statutory regime has a clear social purpose does not mean that the courts will always feel able to act so as to prevent a course of conduct which is clearly designed to circumvent the statute and undermine its intention. In In re C. (A Minor) (Adoption: Illegality), for example, the High Court found that although the statutory regime of adoption law, with its rigorous screening processes, was being consistently and deliberately circumvented by people obtaining foreign adoption orders and seeking to have them confirmed here, the courts were nevertheless powerless to refuse confirmation where it was in the best interests of the child post facto. For a case where the court agreed that the court should take care not to circumvent the policy of the Act . See Pegram Shopfitters Ltd v Tally Weijl. 170. Cross, in his celebrated work on Statutory Interpretation [Cross, Statutory Interpretation, John Bell and George Engle, 3rd edition, 1995] , while acknowledging the primary precept being that of words of a statute being understood in their plain grammatical and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g as a literal meaning as distinguished from some other meaning.' He goes on to point out that the real distinction is between the 'first blush' or the obvious meaning of words and the less obvious. This has much in common with the views of Glanville Williams noted in the previous chapter. The appropriate reading of words depends on context, and in particular on the purpose of the statutory provision examined. It must be emphasised at the outset that it is only when a secondary meaning is available that there can be any question of the courts' abandoning a primary meaning simply because it produces a result which they believe is contrary to the purpose of the Act. No judge can decline to apply a statutory provision because it seems to him to lead to absurd results nor can he, for this or any other reason, give words a meaning they will not bear. We have already seen this point, in connection with Duport Steels Ltd v Sirs. It will be recalled that the Court of Appeal considered that the words any act done by a person in contemplation or furtherance of a trade dispute' had to be interpreted as qualified by the requirement that the acts should not be too remote fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suggested in argument are purely hypothetical, and may never or only rarely occur in practice, the court will remain unmoved. 172. Dealing specifically with taxing statutes, Maxwell propounds the following:- Taxing Acts and the substance Although statutes imposing pecuniary burdens are construed strictly in favour of those on whom the burden is sought to be imposed, and in revenue statutes in particular the subject is aided by presumptions such as that against double taxation, the question is primarily that of the full and fair application of particular statutory language to particular facts as found. The desirability or the undesirability of one conclusion as compared with another cannot furnish a guide in reaching a decision. So often, particularly in Tax Statutes, the spirit and intention of the Act... is subject to such uncertainty ... that it may provide a misleading rather than a reliable guide, and in any case affords a less certain guide than the construction of the words without a resort to conceptions of spirit and intention. The language used is not to be either stretched, in favour of the Crown or narrowed in favour of the taxpayer. So, where the court has to consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-barred in view of Article 136 of the Limitation Act read with Section 24 of the RDB Act. We cannot but comment that it is the Bank itself which is to blame because after its first execution petition was dismissed on 23-8-1990 it should have immediately thereafter filed a second execution petition, but instead it filed the second execution petition only in 1994 which was dismissed on 18-8-1994. Thereafter, again the Bank waited for 5 years and it was only on 1-4-1999 (sic 11-1-1999) that it filed its third execution petition. We fail to understand why the Bank waited from 1990 to 1994 and again from 1994 to 1999 in filing its execution petitions. Hence, it is the Bank which is responsible for not getting the decree executed well in time. xxxx xxxx xxxx 39. In Hiralal Ratanlal v. STO [(1973) 1 SCC 216 : 1973 SCC (Tax) 307 : AIR 1973 SC 1034] this Court observed: (AIR p. 1035) In construing a statutory provision, the first and the foremost rule of construction is the literary construction. All that the court has to see at the very outset is what does that provision say. If the provision is unambiguous and if from that provision the legislative intent is clear, the court need not ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raint in this connection. xxxx xxxx xxxx 48. No doubt in some exceptional cases departure can be made from the literal rule of the interpretation e.g. by adopting a purposive construction, Heydon s mischief rule, etc. but that should only be done in very exceptional cases. Ordinarily, it is not proper for the court to depart from the literal rule as that would really be amending the law in the garb of interpretation, which is not permissible vide J.P. Bansal v. State of Rajasthan [(2003) 5 SCC 134 : 2003 SCC (L S) 605 : AIR 2003 SC 1405] , State of Jharkhand v. Govind Singh [(2005) 10 SCC 437 : 2005 SCC (Cri) 1570 : JT (2004) 10 SC 349] . It is for the legislature to amend the law and not the court vide State of Jharkhand v. Govind Singh [(2005) 10 SCC 437 : 2005 SCC (Cri) 1570 : JT (2004) 10 SC 349] . In Jinia Keotin v. Kumar Sitaram Manjhi [(2003) 1 SCC 730] this Court observed (SCC p. 733, para 5) that the court cannot legislate under the garb of interpretation. Hence there should be judicial restraint in this connection, and the temptation to do judicial legislation should be eschewed by the courts. In fact, judicial legislation is an oxymoron. 175. As was noticed by us hereina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealing with the aforesaid issue and while considering C.M. 36603/2023 (Application for Directions) passed detailed orders on 04 August 2023. We do not deem it necessary to observe any further in this respect. The respective parties would proceed further in accordance with the directions which had been issued on this batch. Consequently, W.P.(C) 12386/2022 shall stand disposed of finally in terms of that order. 179. In W.P. (C) 10838/2022, the respondents have in terms of an order dated 19 July 2022 proceeded to cancel the license held by the petitioner. Quite apart from the said order being devoid of reasons, it would not sustain in light of the conclusions recorded hereinabove. P. FINAL DETERMINATION 180. Accordingly, and for all the aforesaid reasons, we allow the present writ petitions. The impugned Instruction of the Board dated 09 July 2022 insofar as it mandates review of existing licences and taking of follow-up action is hereby quashed. For reasons aforenoted, we also quash the SCNs dated 13 July 2022 [W.P.(C) 10537/2022, W.P.(C) 10835/2022, W.P.(C) 10836/2022, W.P.(C) 10840/2022, W.P.(C) 10844/2022, W.P.(C) 10853/2022, W.P.(C) 10837/2022] and 12 December 2022 [W.P.(C) 150 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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