CST reimbursement under the Foreign Trade Policy cannot be denied for purchases from EOU/SEZ units; subordinate circular cannot override policy.

An EOU manufacturing goods in India was held entitled to CST reimbursement under paragraph 6.11(c)(i) of the Foreign Trade Policy, 2009-2014 even where raw materials were purchased from another EOU/SEZ unit, because the clause does not limit reimbursement to DTA purchases. A subordinate circular could not add a restriction absent from the policy, as the policy has statutory force under the Foreign Trade (Development and Regulation) Act, 1992, so the circular was ineffective to the extent it denied the benefit for purchases from EOU/SEZ/STP/EHTP/BTP units. The Handbook of Procedures also required the designated STPI officer to receive, process and disburse the claim.

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Issues: (i) Whether an EOU manufacturing goods in India is entitled to reimbursement of CST under paragraph 6.11(c)(i) of the Foreign Trade Policy, 2009-2014 when the raw material is purchased from another EOU/SEZ unit and not from DTA; (ii) Whether Circular No. STPN/CST/2015 dated 14.01.2015 could restrict or negate the entitlement conferred by the Foreign Trade Policy; (iii) Whether the designated officer of STPI is the competent authority to receive, process and disburse the CST reimbursement claim under the Handbook of Procedures.

Issue (i): Whether an EOU manufacturing goods in India is entitled to reimbursement of CST under paragraph 6.11(c)(i) of the Foreign Trade Policy, 2009-2014 when the raw material is purchased from another EOU/SEZ unit and not from DTA.

Analysis: Paragraph 6.11(c)(i) grants reimbursement of CST in addition to the incentives under clauses (a) and (b). The entitlement is expressed in broad terms and does not make reimbursement dependent upon procurement from DTA. The source of purchase is relevant for deemed export and drawback under clause (a), but not for CST reimbursement under clause (c). The policy therefore confers the benefit on an EOU manufacturing goods in India, irrespective of whether the goods were purchased from DTA or from another EOU/SEZ unit.

Conclusion: The petitioner was entitled to CST reimbursement for purchases made from non-DTA units.

Issue (ii): Whether Circular No. STPN/CST/2015 dated 14.01.2015 could restrict or negate the entitlement conferred by the Foreign Trade Policy.

Analysis: The Foreign Trade Policy derives statutory force under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992. A circular issued by a subordinate authority cannot override or whittle down the entitlement created by the policy. Since the circular imposed a condition not found in paragraph 6.11(c)(i), it was inconsistent with the policy and could not control the claim for reimbursement.

Conclusion: The circular was invalid to the extent it denied reimbursement for purchases from EOU/SEZ/STP/EHTP/BTP units.

Issue (iii): Whether the designated officer of STPI is the competent authority to receive, process and disburse the CST reimbursement claim under the Handbook of Procedures.

Analysis: Appendix 14-I-I of the Handbook of Procedures provides that the claim is to be presented to the designated officer of the EHTP/STP and that the same authority is the disbursing authority. The procedural scheme therefore casts responsibility on the STPI designated officer to process the claim and make payment, and the plea that the matter must first be sanctioned by some higher authority was rejected.

Conclusion: The designated officer of STPI was the competent authority to process and disburse the reimbursement claim.

Final Conclusion: The Court held that the petitioner's claim for CST reimbursement could not be denied on the ground that the raw material was purchased from other EOU/SEZ units, struck down the restrictive circular, and directed payment of the admissible amount in accordance with the policy and procedure.

Ratio Decidendi: Where a statutory foreign trade policy grants a reimbursement benefit in unconditional terms, a subordinate circular cannot add a restrictive condition that is absent from the policy, and the designated authority named in the procedural handbook must process and disburse the claim accordingly.

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