CST reimbursement under Foreign Trade Policy was available for EOU purchases from SEZ units; rejection notices could not stand.

Paragraph 6.11(c)(i) of the Foreign Trade Policy, 2009-2014 entitled EOU/EHTP/STP/BTP units to reimbursement of Central Sales Tax on goods manufactured in India, and that entitlement was not denied merely because the purchases were made from a Special Economic Zone unit. Reliance on the Domestic Tariff Area and SEZ distinction did not displace the policy benefit, and later policy material, including the Office Memorandum dated 11.04.2014, could not sustain rejection of reimbursement where the memorandum had already been quashed. On that basis, the demand notices rejecting CST reimbursement were invalid and quashed.

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Issues: Whether an Export Oriented Unit was entitled to reimbursement of Central Sales Tax on purchases made from a Special Economic Zone unit under the Foreign Trade Policy, 2009-2014, and whether the impugned demand notices rejecting such reimbursement were valid.

Analysis: Paragraph 6.11(c)(i) of the Foreign Trade Policy, 2009-2014 entitled EOU/EHTP/STP/BTP units to reimbursement of Central Sales Tax on goods manufactured in India. Although the respondents relied on the distinction between Domestic Tariff Area and Special Economic Zone, the policy framework did not justify denying reimbursement merely because the purchases were from an SEZ unit. The later policy materials and the Office Memorandum dated 11.04.2014 were relied upon by the respondents, but the Office Memorandum had already been quashed by the Madras High Court. The demand notices proceeded on grounds that could not be sustained under the applicable policy regime.

Conclusion: The petitioner was entitled to CST reimbursement on purchases from an SEZ unit under the applicable Foreign Trade Policy, and the impugned notices were invalid and quashed.

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