TaxTMI 
TaxTMI 
2015 (10) TMI 2615
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....ng the same to the Hydel Project and claimed to have fulfilled the export obligation and filed an appeal before third respondent for redemption of advance licence and issuance of Export Obligation Discharge Certificate (for short 'EODC') which came to be rejected by endorsement dated 28-8-2012 (Annexure-AC) and confirmed in appeal by order dated 18-1-2013 (Annexure-A1). 2. I have heard the arguments of Sri Shivadass, learned Advocate appearing for petitioner and Sri Krishna S. Dixit, learned Assistant Solicitor General of India appearing for respondents. 3. It is the contention of Sri Shivadass, learned Advocate appearing for petitioner that goods supplied to a power project under procedure of International Competitive Bidding (ICB) is covered under clause (g) of Paragraph 8.2 of Foreign Trade Policy (for short 'FTP'). He would contend that under Paragraph 8.2 of the FTP and in order to be covered under the ambit of 'Deemed Export', three conditions are to be fulfilled namely; (i) supply must be by main contractor or by sub-contractors; (ii) supply must be made by following the procedures of ICB; (iii) t....
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....ention. 4.1 He would contend that capital goods procured by the petitioner are directly shifted to the project site and hence it does not fit into the claim of deemed exports. As per the definition of word "Manufacture" found in Paragraph 9.36 of FTP, an applicant has to first manufacture in his factory using the imported inputs claimed under the Advance Authorisation and supply goods so manufactured to project authority and then only third condition envisaged under the Policy Circular 50/2009-2014 is deemed to be satisfied as otherwise not. Hence, he has sought for rejection of the writ petition. Factual Matrix 5. Petitioner is a contractor engaged in the commissioning of Hydel Power Plants. It entered into a contract with M/s. SLS Power Corporation Limited to carry out commissioning of a 24 MW Hydro Electric Power Generation Plant including Electro Mechanical and Hydro Mechanical Equipments for Dummugudem Mini Hydel Scheme with six units of 4000 KW rated capacity each on the anicut of Godavari river, Andhra Pradesh after competing in the international bidding. Petitioner obtained Advanced Authorisation No. 0710064907, dated 21-5-2009 from 'Jt. DGFT'. Under the ....
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....) rejected the same by upholding the order dated 28-8-2012. Thereafter, third respondent has issued a communication to the petitioner on 11-2-2013 (Annexure-A2) directing the petitioner to pay Customs duty with interest on the imported goods. It is this order and communication which is questioned in the present writ petition. 7. Respondents on being notified have appeared and filed detailed statement of objections supporting the impugned order and contending that petitioner cannot claim duty exemption benefit under Advance Authorisation as the goods under supply to Non-Mega Power Project have been supplied 'as such' to the project site without goods being manufactured in India and as such, no benefit of duty exemption under Deemed Exports Scheme for the said Advance Authorisation can be extended. Respondents have also relied upon the Policy Circular No. 50/2009-2014, dated 28-12-2011 to contend that capital goods which have been imported by contractors or sub-contractors and supplied as such to the project authority, Customs duty paid on such imports cannot be refunded as per Paragraph 8.2 of Chapter 8 which relates to Deemed Exports under FTP. Hence, they have sought for d....
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....he petitioner in the instant case is claiming the benefit of deemed export by contending that Paragraph 8.2 of Chapter 8 is to be understood in terms of definition of manufacture occurring in Paragraph 9.36 of Chapter 9 of FTP. As such, this Court is of the considered view that Paragraphs 8.1, 8.2, 8.3 of Chapter 8 and Paragraphs 9.1, 9.4, 9.5, 9.12, 9.14 and 9.36 are required to be examined and as such, they are extracted hereinbelow : CHAPTER 8 DEEMED EXPORTS "Deemed Exports 8.1 "Deemed Exports" refer to those transactions in which goods supplied to not leave country, and payment for such supplies is received either in Indian rupees or in free foreign exchange. Categories of supply 8.2 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) Supply of goods against Advance Authorisation/Advance Authorisation for annual requirement/DFIA; (b) Supply of goods to EOU/STP/EHTP/BTP; (c) Supply of capital goods to EPCG Authorisation holders; (d) Supply of goods to projects financed by multilateral or bilateral Agen....
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..... (c) Exemption from terminal excise duty where supplies are made against ICB. In other cases, refund of terminal excise duty will be given. Exemption from TED shall also be available for supplies made by an Advance Authorisation holder to a manufacturer holding another Advance Authorisation if such manufacturer, in turn, supplies the product(s) to an ultimate exporter." CHAPTER 9 DEFINITIONS 9.1 "For purpose of FTP, unless context otherwise requires, following words and expressions shall have the following meanings attached to them. 9.4 "Actual User" means an actual user who may be either industrial or non-industrial. 9.5 "Actual User (Industrial)" means a person who utilizes imported goods for manufacturing in his own industrial unit or manufacturing for his own use in another unit including a jobbing unit. 9.12 "Capital Goods" means any plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods or for rendering services, including those required for replacement, modernization, technological upgradation or expansion. It also includes packaging machinery and equipment, re....
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.... claim for obtaining EODC on the ground that after direct import of procurements, it has undertaken the activity of assembly of various parts, fabrication, re-conditioning, erection, installation, etc., and as such its claim would fall within the word 'manufacture' as specifically defined in Paragraph 9.36 of Chapter 9 of FTP. 15. At this juncture itself, it would be appropriate to notice that a Circular bearing No. 50/2009-2014 (RE 2010), dated 28-12-2011 came to be issued by the Department of Commerce, Directorate General of Foreign Trade, New Delhi to All Regional Authorities (RAs), C.B.E. & C., All Commissioners of Customs and Exporting Community clarifying as to the claims relating to Deemed Export benefits and it was clarified thereunder as follows : "(1) Policy Interpretation Committee in its meeting held on 15-3-2011 had inter alia clarified as under : "Issue of claiming Deemed Export benefits in cases of import made by the project authority was discussed. After detailed deliberation, it was decided that if the Bill of Entry is in the name of project authority deemed export benefits would not be available (such cases will be ineligible for grant of Deemed....
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....e, namely, the contention of the petitioner that activity undertaken by it is in terms of the contract entered into with the project authority when examined in the background of the definition of the word "manufacture" as defined under Paragraph 9.36, this Court is of the considered view that same will have to be read along with Clause 8.2 of FTP. 19. There cannot be any dispute to the fact that the Hydel power plant which is being installed and commissioned by the petitioner is an immovable item which is fastened to the earth and as such, project by itself cannot be construed as deemed export. An item which comes into existence after manufacture by use of the inputs procured under the duty exemption and such goods which come into being for being supplied to the project authority would be covered under the category of Deemed Exports. Thus, claim of the petitioner that it has procured the capital goods and same was within the knowledge of the authorities and as such, it had shifted the goods so procured (imported) and shifted to the project site would not satisfy the ingredient of Deemed Exports. In the instant case, petitioner has imported capital goods like Turbines, Gener....