9911796707
TMI Blog2025 (5) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... , M.C. Mehta v. Union of India, and consequently quash the Rejection Letter dated 05.02.2025 bearing File No.09AX04000927AM25 and Deficiency Letter dated 15.01.2025 bearing File No. 09AX04000927AM25; and (ii) Declare that raw pet coke (RPC) imports by the Petitioners for supply of calcined pet coke (CPC) to SEZ units in India are entitled to the grant of Advance Authorisation under the Foreign Trade Policy, 2023; and (iii) Direct the Respondents to grant Advance Authorisation to the Petitioners against their Application for Grant of Advance Authorisation dated 31.12.2024 bearing File No. 09AX04000927AM25; and (iv) Direct the Respondents to permit the Petitioners to supply CPC to SEZ units in India in terms of the order dated 15.02.2024 issued by the Commission for Air Quality Management in National Capital Region and Adjoining Areas read with the Hon'ble Supreme Court's order dated 10.10.2023 in W.P. (C) No.13029/1985, M.C. Mehta v. Union of India; and (v) In the alternative and without prejudice to the above prayers, declare the actions of the Respondents in issuing the DGFT Notification No.68/2023 dated 07.03.2024, if and insofar as it purports to prohibit the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able in India. The Hon'ble Supreme Court permitted the import of RPC by calciners up to 1.4 MMT per annum vide order dated 09.10.2018. Thereafter, RPC import quota was periodically allocated by the DGFT to calciners including the Petitioners' DTA Unit every financial year. The Hon'ble Supreme Court vide order dated 10.10.2023 in the PIL Proceedings, directed the Commission for Air Quality Management (CAQM) to take a fresh look into all issues pertaining to petroleum coke, after considering the pleas of various persons including the Petitioners. Pursuant to the said directions, the CAQM issued an order inter alia permitting the import of a total of 1.9 MMT RPC by CPC manufacturers for financial year 2024-25 (higher than permitted by the Hon'ble Supreme Court's order dated 09.10.2018). Pertinently, the CAQM Order specifically permitted exports by domestic calcining units to SEZ Units. The relevant paragraph of the CAQM Order is extracted herein below for reference: "I. Import of RPC and CPC by Calciners/Aluminium Industry i. Import of total 1.9 MMT RPC for CPC Manufacturers and 0.5 MMT CPC for Aluminium Industry respectively shall be permitted during 2024-25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isation on 31.12.2024 for import of 54,900 MT of RPC for manufacture and export of 36,600 MT of CPC to the Vedanta SEZ Unit. However, this time around, the Regional Authority issued a Deficiency Letter on 15.01.2025 stating: "1. As per DGFT Notification No.68/2023 dt.07.03.02024, the revised policy condition 06 (b) (iii), import of RPC by calciners shall be on Actual use basis and shall not be transferred to any other unit(s) including SEZ unit(s). Exports of CPC by calciners are not permitted." 10. As aforesaid, the CAQM Order expressly permits exports by domestic calciners to SEZ units. Accordingly, the Petitioners responded to the Deficiency Letter on 20.01.2025. The relevant portion of the Petitioner's response dated 20.01.2025 is extracted herein below: "... 4.1 At the outset, we would like to inform you that RCCVL DTA Unit ("DTA Unit") received the allocation of Raw Petroleum Coke ("RPC") from the Director General of Foreign Trade (DGFT) as per revised policy condition 6(b)(ii) in Notification No.68/2023 dated 07.03.2024 issued under the guidelines prescribed by Commission for Air Quality Management (CAQM) order dated 15.02.2024 under the aegis of the Hon'ble Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .03.02024, the revised policy condition 06(b)(iii) import of RPC by calciners shall be on Actual use basis and shall not be transferred to any other unit(s) including SEZ unit(s). Export of CPC by calciners shall not be permitted." 12. Questioning the impugned rejection order dated 05.02.2025, the petitioners filed the present writ petition. 13. The grounds urged in writ affidavit it is submitted that the Regional Authority has erroneously refused to grant Advance Authorisation to the Petitioners vide Rejection Letter dated 05.02.2025 stating that the domestic calciners cannot supply CPC to SEZ units, and wrongly refuses Advance Authorisation to the petitioners' RPC import on that basis. Further, the Regional Authority does not have the authority or jurisdiction to take a view of the term "deemed exports" that is contrary to the letter and purpose of the CAQM Order. By virtue of Clause 4.05(c)(i) read with Clause 4.03(a) of the FTP, imports incorporated in goods supplied to SEZ units are entitled to Advance Authorisation. Further, by Clause 7.02(A)(a) of the FTP, goods supplied against Advance Authorisation are "deemed exports." Thus, under the FTP, RPC imported to manufacture C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Pet Coke available in the country and the Pet Coke required to be imported and how both of them should be distributed inter se the industries." The Commission vide its Order dated 25.10.2023 accordingly constituted an inter-ministerial Sub-Committee which deliberated the issues in detail relating to the distribution of the Pet Coke available in the country and the Pet Coke required to be imported. With regard to the issue of future import of RPC and CPC in the country for domestic use, availability of RPC in the country and total demand of CPC, the following observations were made: i. The conversion of RPC to CPC, is associated with substantial air pollution load (S02 emissions) therefore the sulphur content in calcined pet coke is required to be reduced to 3.5% as against 7-8% sulphur content in fuel grade raw pet coke. ii. Export of domestically manufactured CPC, by processing of imported RPC by such calciners, which substantially enhances harmful emissions and the air pollution load in the country, thus needs to be strongly discouraged; Therefore purpose of import of RPC is restricted primarily to fulfil only the domestic demand of CPC. 18. It is submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further submitted that 'authorisation is not a right' and the earlier authorisations granted to the petitioners are in the process of being reviewed with the appropriate authority. The CAQM order expressly permits 'deemed exports' to SEZ units, whereas, as per FTP and SEZ act, supplies made to the SEZ units are only exports, i.e. physical exports and not deemed exports. A Special Economic Zone (SEZ) is considered a "foreign territory" for the purpose of trade operations and customs duties, meaning that goods entering SEZ are treated as if they are entering a foreign country. Respondents further refer to Section 2(m)(ii) of SEZ Act, 2005, which reads as under: Section 2 (m) (ii) of SEZ Act, 2005, export means: "(m) "export" means (i) supplying goods, or providing services, from the Domestic Tariff Area to a Unit or Developer;' Definition of "Unit" under 2 (zc) of SEZ Act, 2005, provides as follows: '(zc) "Unit" means a Unit set up by an entrepreneur in a Special Economic Zone and includes an existing Unit, an Offshore Banking Unit and a Unit in an International Financial Services Centre, whether established before or established after commencement of this Act:' Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 16 Review: The Central Government, in the case of any decision or order made by the Director General, or the Director General in the case of any decision or order made by any officer subordinate to him, may on its or his own motion or otherwise, call for and examine the records of any proceedings, for the purpose of satisfying itself or himself, as the case may be, as to the correctness, legality or propriety of such decision or order and make such orders thereon as ay be deemed fit: Provided that no decision or order shall be varied under this section so as to prejudicially affect any person unless such person - (a) has, within a period of two years from the date of such decision or order, received a notice to show cause why such decision or order shall not be vaired; and (b) has been given a reasonable opportunity of making representation and, if he so desires, of being heard in his defence.' Remedy by way of application under Para 2.58 of FTP : Para 2.58 Interpretation of Policy - (a) The decision of DGFT shall be final and binding on all matters relating to interpretation of Policy, or provision in Handbood of Procedures, Appendices and Aayat Niryat Forms or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng physical exports to SEZ units as being eligible for Advance Authorisation. Learned Senior Counsel refers to Chapter 4 of the Foreign Trade Policy, 2023, which is extracted for reference. "[4] Duty Exemption/Remission Schemes 4.00 Objective Schemes under this Chapter enable duty free import of inputs for export production, including replenishment of inputs or duty remission. 4.01 Schemes (a) Duty Exemption Schemes. The Duty Exemption schemes consist of the following: Advance Authorisation (AA) (which will include Advance Authorisation for Annual Requirement). Duty Free Import Authorisation (DFlA). .... 4.03 Advance Authorisation (a) Advance Authorisation is issued to allow duty free import of input, which is physically incorporated in export product (making normal allowance for wastage). In addition, fuel, oil, catalyst which is consumed / utilized in the process of production of export product, may also be allowed. (b) ... 4.05 Eligible Applicant/ Export/ Supply (a) Advance Authorisation can be issued either to a manufacturer exporter or merchant exporter tied to Supporting manufacturer. (b) ... (c) Advance Authorisation shall be issued for: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorized to import its allocated quota of RPC on or before 31.03.2025. Therefore, the Petitioners seek urgent intervention of this Court in order to enable them to import their allocated RPC quota under their Restricted Licence before 31.03.2025, against Advance Authorisation which it is rightfully entitled to under the FTP. Even in the event that the Petitioners import the incoming consignments of RPC against the payment of import duties, the Petitioners will not be able to utilize the imported RPC, as the Petitioners would be unable to supply CPC to the Vedanta SEZ unit on account of the Rejection Letter. The Vedanta SEZ unit is one of the major purchasers of the CPC manufactured by the Petitioners. Thus, if the Petitioners are unable to sell CPC to the Vedanta SEZ unit, it would result in heavy losses to the Petitioners and result in the shutting down of their calcining and power co-generation plants for an extended period, as there are no other CPC consumers in India of the same size as the Vedanta SEZ unit. 35. Learned Senior Counsel would further submit that earlier the Petitioners filed W.P. (C) No.2557 of 2025 before the Delhi High Court that was dismissed by order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he requirement to record the reasons. The said requirement cannot, therefore, be insisted upon in such a case. 40. For the reasons aforesaid, it must be concluded that except in cases where the requirement has been dispensed with expressly or by necessary implication, an administrative authority exercising judicial or quasi-judicial functions is required to record the reasons for its decision. 37. The learned Senior Counsel submitted that the counter affidavit has been filed by the respondent No.1 on authorisation on behalf of the respondents No.2 and 3. Since the counter affidavit has been filed comprehensively on behalf of all the respondents, there is no scope to file review. Further, in terms of the Section 16 of the FT (D&R) Amendment Act, 1992, no notice or show-cause notice was issued from the date of rejection decision. Hence, the petitioner has rightly invoked to challenge the rejection order under Article 226 of the Constitution of India by way of filing the present writ petition. It is further submitted that the power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umed / utilized in the process of production of export product, may also be allowed." 39. Clause 4.05 deals with Eligible Applicant / Export / Supply: Clause 4.05 (c) reads that "Advance Authorisation shall be issued for: (i) Physical export (including export to SEZ)." 40. The learned Senior Counsel has drawn the attention of this Court to Chapter 7, which deals with Deemed Exports. Clause 7.01 (i) and (ii) reads that "(i) 'Deemed Exports' for the purpose of this FTP refer to those transactions in which goods supplied do not leave country, and payment for such supply is received either in Indian rupees or in free foreign exchange. Supply of goods as specified in Paragraph 7.02 below shall be regarded as "Deemed Exports" provided goods are manufactured in India. (ii) 'Deemed Exports' for the purpose of GST would include only the supplies notified under Section 147 of the CGST/SGST Act, on the recommendations of the GST Council. The benefits of GST and conditions applicable for such benefits would be as specified by the GST Council and as per relevant rules and notification. 41. Clause 7.02 deals with Categories of Supply, which reads that "Supply of goods under following categori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d payment for such supplies is received either in Indian rupees or in free foreign exchange." 40. Para 8.1, after amendment, in 2012-2013 reads thus: "8.1. Deemed exports.-"Deemed Exports" refer to those transactions in which goods supplied do not leave country, and payment for such supplies is received either in Indian rupees or in free foreign exchange. Supply of goods as mentioned in Para 8.2 below shall be regarded as "Deemed Exports" provided goods are manufactured in India." (amendment emphasised) 41. Para 8.2 of Chapter 8 specifies the categories of supplies which can be regarded as deemed exports. Clause (b) thereof is applicable to the present appeals. Relevant extract of original Para 8.2 is as under: "8.2. Categories of supply.-Following categories of supply of goods by main/sub-contractors shall be regarded as "Deemed Exports" under FTP, provided goods are manufactured in India: (a) *** (b) Supply of goods to EOU/STP/EHTP/BTP;" Para 8.2, after amendment, in 2012-2013 reads thus: "8.2. Categories of supply.-Following categories of supply of goods by main/sub-contractors shall be regarded as "Deemed Exports": (a)-(c) *** (d) Supply of goods to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. 46. It is further submitted that if the petitioner No.1 succeeds in the present writ petition, then would be entitled to refund of duties of Rs.40,82,84,128/- (Rupees Forty Crore Eighty Two Lakh Eighty Four Thousand One Hundred and Twenty Eight only) as well as supply CPC to the Vedanta SEZ. Pending the writ petition, the petitioner prayed for an interim order enabling the petitioner to supply the CPC to the Vedanta SEZ. In support of the case of the petitioner, learned Senior Counsel for the petitioners made the following submissions: (i) The first three Advance Authorisations dated 14th May 2024, 13th Augutst, 2024 and 28th October, 2024 allowed the petitioner No.1 to supply the CPC to Vedanta SEZ and there is no reason why the same right is being denied to the last application for Advance Authorisation dated 31st December, 2024 for 54,900 MT of RPC. (ii) The Minutes of Meeting dated 27the March, 2024 which allotted the RPC for the Financial year 2024-25 clearly mentions that the petitioner No.1 was permitted to supply to the domestic aluminium industry including the Vedanta SEZ. (iii) The Foreign Trade Policy, 2023, Chapter IV, Paragraph 4.05(c) specifically mentions t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are contractual obligations with the Indian Company and that the 3/4th of the contractual obligations have been completed and by virtue of that, the Government has already collected the import duty and now the CPC remains in godown and that they are duty paid goods. Therefore, the impugned rejection letter dated 05.02.2025 is against the principle of promissory estoppel. 50. In the affidavit, copy of the public notice No.49/2023, dated 11.03.2024 was filed issued by the Ministry of Commerce and Industry Department of Commerce Directorate General of Foreign Trade for import of calcined petroleum coke for aluminium industry and raw petroleum coke for CPC manufacturing industry. The said public notice was issued regarding the procedure for allocation of quantities for import of calcined petroleum coke for aluminium industry and raw petroleum coke for CPC manufacturing industry for the Financial Year 2024-25. 51. A copy of the debit sheet, of the petitioner's company with respect to the import restrict licence No.0111014688 dated 05.04.2024; statements/table of petitioner's RPC imports with duty for the Financial year 2024-25; a copy of the bill entries receipts; copy of the minute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. Union of India and others (Writ Petition (Civil) No.13029 of 1985) while hearing interlocutory applications, wherein the Union of India through the Ministry of Environment, Forests and Climate Change filed and affidavit on 08th October, 2018 regarding use of calcined pet coke (CPC) in Aluminium Industry, held that the calcined pet coke (CPC) (domestic as well as imported) can be used as raw-material for anode making in the Aluminium Industry with the revised BIS specifications. 57. In the said order, the Hon'ble Supreme Court, based on the report given by the Central Pollution Control Board (CPCB) dated 04.10.2018 observed that as per the BIS guidelines, calciners are permitted to use high sulphur containing raw petroleum coke for making CPC having sulphur content less than 3.5%. While recording the statement of the learned Amicus Curiae the view expressed by the CPCB are also acceptable to EPCA and accordingly disposed of the applications observing that the raw pet coke (domestic and imported) can be used as a feedstock for producing calcined pet coke. In the said order, the applications filed by the petitioner herein seeking certain directions, while considering the affidav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d inter se the industries...". 4. The Commission vide its Order dated 25.10.2023 accordingly constituted a Sub-Committee comprising members from CAQM, Ministry of Environment, Forest and Climate Change (MoEF&CC), Ministry of Petroleum and Natural Gas (MoPNG), Ministry of Commerce and Industry (MoC&I), Director General of Foreign Trade (DGFT) and Central Pollution Control Board (CPCB) and National Environmental Engineering Research Institute (NEERI as co-opted Member). The Sub-Committee deliberated the issues in detail related to the distribution of the Pet Coke available in the country and the Pet Coke required to be imported and made its recommendations to the Commission. .... 10. The observations, deliberations and recommendations made by the Sub-Committee were shared with the Commission members and the Commission approved the various recommendations of the Sub-Committee. The Commission, accordingly, in compliance of the directions of the Hon'ble Supreme Court hereby directs as under: I. Import of RPC and CPC by Calciners / Aluminium Industry: i. Import of total 1.9 MMT RPC for CPC Manufacturers and 0.5 MMT CPC for Aluminium Industry respectively shall be permitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 15.02.2024 should also be complied with." 62. Subsequently, authorisation for import of restricted item of Raw Petroleum Coke was granted to the petitioner on 05.04.2024 for quantity of 4,84,169.0 MTs. Thereafter, the petitioner was granted advance authorisation on 28.10.2024 to import duty free items for quantity of 34,999.995 MTs. 63. Similarly on 14.05.2024 another advance authorisation was granted to the petitioner to import duty free item of Raw Petroleum Coke for quantity of 81,000.000 MTs., and another advance authorisation dated 13.08.2024 was granted to the petitioner to import duty free Raw Petroleum Coke for quantity of 55,500.000 MTs., and the petitioner has accordingly given an undertaking for advance authorisation on 18.04.2024, 09.08.2024, 17.10.2024 and 31.12.2024. 64. Thereafter, the respondents have issued a deficiency letter dated 15.01.2025 stating that "As per DGFT Notification No.68/2023 dt.07.03.2024, the revised policy condition 06.(b)(iii) import of RPC by calciners shall be on Actual use basis and shall not be transferred to any other unit (s) including SEZ unit(s). Export of CPC by calciners shall not be permitted." 65. In response to the said defic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .. (c) Advance Authorisation shall be issued for: (i) Physical export (including export to SEZ) (ii) Intermediate supply; and/or (iii) Supply of goods to the categories mentioned in paragraph 7.02 (b) (c), (d), (e), (f) and (g) of this FTP. (iv) ...." 68. It is pertinent to note that in the Notification No.68/2023, dated 07.03.2024 the authorisation for restricted imports, condition No.3 that "Import of RPC by Calciners shall be on Actual User basis and shall not be transferred to any other unit(s) including SEZ unit(s). Export of CPC by Calciners shall not be permitted" is contrary to the orders passed by the CAQM, dated 15.02.2024 and also to Clause VI of the Notification dated 07.03.2024 and the Minutes of the Meeting held on 27.03.2024 for allocation for import of raw petroleum coke for CPC manufacturing and Calcined Petroleum Coke for Aluminium Industry for the Financial Year 2024-25 wherein at para 5 (ii) & (v) of the said meeting, which is relevant to the petitioner's case is extracted for reference. "5. Committee noted that pursuant to the recommendations of CAQM issued vide Order dated 14.02.2024, DGFT vide Notification 68/23 dated 07.03.2024 has notified th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) DGFT : Chairman (ii) All Additional DGFTs in Headquarters ; Members (iii) All Joint DGFTs in Headquarters looking after Policy matters : Members (iv) Joint DGFT (PRC/PIC) : Member Secretary (v) Any other person / representative of the concerned Ministry / Department, to be co-opted by the Chairman." 71. Further, it is also to be noted that the impugned rejection letter dated 05.02.2025 has been issued without considering the explanation dated 20.01.2025 given by the petitioner to the deficiency letter dated 15.01.2024. As such, it is not a reasoned order. In the case on hand, the change in the policy would cause genuine hardship and would have adverse impact on trade of the petitioner's company. 72. Further, since earlier the petitioner was granted three advance authorisations and the same are under review before the respondents' authority, this Court is of the considered opinion to pass the following directions. 73. In the light of the orders passed by the CAQM dated 15.02.2024, pursuant to the order dated 10.10.2023 passed by the Hon'ble Supreme Court in the case of M.C. Mehta in W.P. (Civil) No.13029 of 1985 and the Minutes of the Meeting held on 27.03.2024 the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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