Territorial jurisdiction and deemed export drawback were upheld: imported goods used at site did not qualify under policy.

Part of the cause of action arose in Gujarat where the imported goods were used in the project, so the territorial objection failed. On the merits, deemed export drawback under Chapter 8 of the Foreign Trade Policy was available only for goods manufactured in India and supplied within the policy framework; goods directly imported by the project authority could not qualify merely because they were assembled or installed at site. The Court treated the Policy Interpretation Committee's clarification that bills of entry in the project authority's name were ineligible as an interpretation of existing policy, not an amendment. Challenges based on the handbook, prior approvals, Section 16, promissory estoppel and legitimate expectation were rejected.

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Issues: (i) Whether the High Court had territorial jurisdiction to entertain the petition; (ii) Whether the petitioner was entitled to deemed export drawback under Chapter 8 of the Foreign Trade Policy and whether the Policy Interpretation Committee's clarification and the consequential rejection of claims were valid.

Issue (i): Whether the High Court had territorial jurisdiction to entertain the petition.

Analysis: The petition related to communications issued from New Delhi, but the imported goods were used in the project situated in Gujarat. The pleadings disclosed material facts connecting the controversy with Gujarat, so the Court held that part of the cause of action arose within its territorial limits.

Conclusion: The territorial objection was rejected.

Issue (ii): Whether the petitioner was entitled to deemed export drawback under Chapter 8 of the Foreign Trade Policy and whether the Policy Interpretation Committee's clarification and the consequential rejection of claims were valid.

Analysis: The Court held that deemed export benefit under Chapter 8 is available only where the supplied goods are manufactured in India and the claim is made in accordance with the policy framework. Goods directly imported by the project authority and used in the project could not be treated as goods manufactured in India merely because they were assembled or installed at site. The Court further held that the Policy Interpretation Committee's clarification that cases where the bill of entry stood in the name of the project authority were ineligible was an interpretation of the existing policy, not an amendment. The pleas based on the handbook of procedures, prior approvals, Section 16 of the Act, promissory estoppel, legitimate expectation, and prospective operation were rejected.

Conclusion: The rejection of deemed export drawback was upheld and the challenge to the Policy Interpretation Committee's decision failed.

Final Conclusion: The petition was found to be without merit, the jurisdictional objection failed, and the denial of deemed export drawback was sustained.

Ratio Decidendi: Deemed export drawback under Chapter 8 of the Foreign Trade Policy is available only for goods manufactured in India and supplied in accordance with the policy, and a clarification by the competent authority interpreting existing policy conditions is not an impermissible amendment or review.

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