TaxTMI 
TaxTMI 
2017 (7) TMI 786
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....der Secretary to the Government of India, Ministry of Commerce and Industry, Department of Commerce to the Deputy Director General of Foreign Trade (in short DGFT). 2.1. This prayer is common to both the Writ Petitions. The only difference being that since, the communication received from the Government of India, was, in turn, forwarded to the Writ Petitioner by the Assistant Development Commissioner vide letter dated 28.04.2013 (sic 28.04.2014), the said communication was also challenged, as based on the input of the Government of India, the Writ Petitioner's claim for reimbursement of Central Sales Tax (in short CST), in respect of purchases made from another Export Oriented Unit (in short EOU), was declined. 3. The appellants, in these appeals, in fact, represent the Government of India, and were, originally respondents in the above-said two (2) Writ Petitions. As would be evident, the respondent company is the original Writ Petitioner. 4. The challenge, which was raised by the Writ Petitioner, was on account of the refusal on the part of the appellants to reimburse CST, in respect of the purchases made from an EOU. 4.1. It is pertinent to note that the respondent compan....
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.... 5.1. Furthermore, in respect of this submission, it is contended that paragraph 6.11 read with clause (a) and (c) of 2009 FTP was clearly indicative of the fact that the reimbursement of CST was available qua "goods manufactured in India". The argument thus, was, that if, supplies were received from another EOU, the goods, so supplied, would not qualify as goods manufactured in India. The contention, therefore, was that, the goods manufactured by an EOU are deemed as goods, which are not manufactured in India and, therefore, are not amenable to excise duty under the Central Excise Act, 1944 (in short 1944 Act). 5.2. It was, therefore, contended that it is, in this background, that the Government of India had issued the impugned letter dated 11.04.2014, wherein, it had indicated that reimbursement of CST was available to an EOU, only, if, purchases were made from a DTA. 5.3. It is, in this background, learned Senior Counsel went on to submit that because the Government of India was desirous of incentivising exports, that it made the necessary amendments in the Foreign Trade Policy of 2015-2020 (in short 2015 FTP), by specifically providing in Clause (2) of Appendix 6H that reimb....
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....olicy did not prohibit or restrict reimbursement of CST, in respect of the purchases made by an EOU from another EOU and, therefore, such a restriction could not be incorporated into the policy, albeit, indirectly, by the DGFT, by restricting the reimbursement of CST to purchases made by an EOU from a DTA. Learned senior counsel submitted that this error, which was obvious, was realized by the appellants and, was, accordingly corrected, while formulating the 2015 FTP. 6.4. In this behalf, our attention was drawn to the relevant provisions of the 2015 FTP to highlight the fact that the Central Government had not amended paragraph 6.11 of the 2009 policy, which enabled reimbursement of CST to EOUs. It was pointed out that the amendment was brought in clause (2) of Appendix 6H, which was part of Handbook of Procedures, so as to include not only DTA's as suppliers, but also EOUs, SEZs, EHTPs, STPs and BTPs. This amendment, according to Mr.Venkataraman, was clarificatory in nature, which only restated the position of the Central Government taken while formulating the 2009 FTP, which is that, it would reimburse CST to EOUs, irrespective of the source of supply. 6.5. Furthermore, le....
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....se duty, as they were excluded from the purview of the 1944 Act. The SEZ units, as per the learned senior counsel, were governed by the Customs Act, 1962. 7. In order to drive home the point, learned senior counsel relied upon the definition of SEZ under Section 2(za) and the provisions of Section 53(1) of the Special Economic Zone Act, 2005. Placing reliance on the latter, it was sought to be demonstrated that SEZ was deemed to be a territory, situate outside the customs territory of India for the purpose of undertaking operations. Therefore, the argument based on the aforesaid provisions was that, while a DTA and the 100% EOU units are units, which are considered to be located in India, a SEZ unit, though geographically located within India was deemed to be a territory located outside the customs territory of India. 7.1. Learned senior counsel, thus, submitted that the argument, which may, perhaps, be available, vis-a-vis a SEZ unit to the appellants was not available qua an EOU unit. In support of his contentions, learned senior counsel relied upon the following judgments: (i).Collector of Central Excise V. TVS Whirlpool Limited, 1994 (74) ELT 496 (Mad.); (ii).C.S.T. Vs. M/s....
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.... Central Excise Department. It appears that the respondent company/Writ Petitioner has also been issued a private bonded warehouse licence and in-bond manufacturer's permission, in terms of Sections 58 and 65 of the Customs Act, 1962, respectively. 8.5. The respondent company/Writ Petitioner has averred, a fact, which has not been disputed, that for complying with the export obligations placed upon it under the FTP, it imports, for the purpose of manufacturing its final product, goods, raw-material or both, from outside the country as well as domestically. In so far as the Customs and Central Excise duty are concerned, under the relevant exemption notification, issued by the Government of India, the respondent company/Writ Petitioner is not called upon to pay the same, both for imported as well as indigenous raw materials/capital goods. 8.6. Furthermore, it appears that the imported raw material and goods are not subjected to Sales Tax or Value Added Tax (in short VAT), or CST, in terms of the CST Act, 1956. However, goods/raw material, sold domestically are taxed by certain State Governments, who seek to impose local sales tax, by virtue of local enactments. 8.7. One such c....
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....larification from appellant No.2, i.e., DGFT. It appears, DGFT, thereafter, sought clarification of the Central Government, i.e., appellant No.3. 9.2. It is, in this background, that the two impugned communications were generated. The first communication dated 11.04.2014, is, as indicated above, an internal communication between the Central Government and the DG, while the second communication, i.e., letter dated 28.04.2014 is a communication, whereby, the decision reached by the Central Government was sought to be brought to the knowledge of the respondent company/Writ Petitioner. The net effect of the two (2) impugned communications was that, the petitioner's claim for refund of CST was declined. It is this stance of the appellants, which has brought the respondent company/Writ Petitioner to Court. 10. Therefore, in order to appreciate the controversy at hand, one would have to first set down the relevant provisions of 2009 FTP, on which reliance is placed by the parties herein. In this behalf, the provisions of paragraph 6.11, along the relevant extract of the Appendix 14-I-I is set forth hereinbelow: "Entitlement for supplies from the DTA 6.11 (a) Supplies from DTA to ....
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....opment Commissioner or the designated officer of the EHTP/STP shall see, inter alia, that the purchases are essential for the production of goods / services by the units. (c) For payment of interest, in accordance with para 6.11(c) (i) of FTP, separate application for claiming interest is not required and a single cheque for main claim and interest can be issued to the claimant. However, separate account will be maintained by the Development Commissioner of Special economic Zones for the amount of interest disbursed by them." 11. Before we proceed further, it would be important to contextualise that chapter of 2009 FTP, in which, paragraph 6.11 stands incorporated. 11.1. As is, obvious, paragraph 6.11, is part of Chapter 6 of 2009 FTP, which deals with EOUs, EHTPs, STPs and BTPs. The first paragraph of Chapter 6, which contains the eligibility criteria, inter alia, is indicative of the fact that the benefits available in the said chapter are available only to those units, who undertake to export their entire production of goods and services, save and except, permissible sales in DTA, which are set out under the EOU Scheme or the EHTP Scheme or STP Scheme or BTP Scheme. Inherent....
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....ment of CST; sub-clause (ii) speaks about exemption from Central Excise Duty on goods procured from DTA on goods manufactured in India. Sub-clause (iii) provides for reimbursement of duty paid on fuel procured from domestic oil companies/depots of domestic oil Public Sector Undertakings, as per drawback rate, notified by DGFT from time to time. It also provides for reimbursement of additional duty of excise levied on fuel under the Finance Act, and lastly, clause (iv) provides for cenvat credit on service tax paid. In chapter 6, there are provisions for other entitlements, such as, those given in paragraph 6.12. 11.8. A holistic reading of the Scheme of Chapter 6 is, indicative of the fact that, there are several entitlements available to an EOU unit, none of which seems to suggest that it is either prohibited from purchasing goods from a DTA unit or from making a domestic sale, subject to it fulfilling the threshold NFE, fixed qua the concerned unit. 12. We must, however, confess that the heading/marginal note to paragraph 6.11 is indicative of the fact that the entitlements, provided therein may, perhaps, be restricted only qua supplies received by an EOU from a DTA unit. That ....
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....rmore, in so far as the 100% EOUs are concerned, excise duty is levied and collected on any excisable goods which are produced or manufactured by it and brought to any other place in India. The excise duty so levied and collected is required to be equivalent to an aggregate of duties of customs, which would be leviable under the Customs Act, 1962 or any other law, for the time being in force, on like goods produced or manufactured outside India, if, they were to be imported into India and where the said duties of customs are chargeable, by reference to their value, the value of such excisable goods is required to be determined under the provisions of Customs Act, 1962 and the Customs Tariff Act, 1975. This aspect of the matter clearly emerges, upon a bare perusal of Section 3 of the 1944 Act. 15. Therefore, quite clearly, both in law and on facts, it cannot be contended by the appellants that goods manufactured by EOU units are not goods manufactured in India and, thus, do not fulfill the conditionality for reimbursement of CST, as contained in sub-clause (i) of clause (c) of paragraph 6.11 of the 2009 FTP. 16. The other argument of Mr.Rajagopalan that, if, the argument advanced ....
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....nt the purpose and the object for which the provision had been incorporated into the Act. While doing so, the Supreme Court made the following apposite observations: "The limited question is whether the asessee which has been found by tribunal to be a new company could be denied the benefit as visualised in section 15C(1) because of operation of the clause (i) of Sub-section (2) It is a restrictive clause. It denies benefit which is otherwise available in sub-section (1) A provision in a taxing statute granting incentives for promoting growth and development should be construed liberally ! In Broach Distt. Co- Operative Cotton Sales Ginning and Pressing Society Ltd. v. Commissioner of Income Tax Ahmedabad, 177 ITR [1989] 418 SC the assessee a cooperative society claimed that the receipts from the ginning and pressing activities was exempt under- Section 81 of the Income tax Act. The question for interpretation was whether the cooperative society which carried on the business of ginning and pressing was society engaged in`marketing' of the agricultural produce of the its members. The Court held that object of section 81(1) was to encourage and promote the growth of cooperative ....
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....e is that the FTP is formulated by the Central Government by issuing a notification under Section 5 of the FTDR Act. The DGFT is the implementing authority, as is clearly discernible on a plain reading of sub-section (2) of Section 6 of the very same Act. The amendments, if any, in the FTP can only be made by the Central Government; a position, which clearly emerges upon a reading of sub-section (3) of Section 6. The Central Government is entitled to delegate all powers to the Director General (DG) or an officer subordinate to him, except those contained in Sections 3,5,15,16 and 19. Clearly, the power of formulation of FTP, which is vested in the Central Government, by virtue of Section 5 cannot be delegated to the DG or an officer subordinate to him. Thus, the amendments to the FTP can only be brought about by the Central Government and not by the DGFT. 19.2. Therefore, to our minds, as correctly argued by Mr.Venkataraman, the provisions of clause (2) of Appendix 14-I-I cannot take away what has been conferred upon the respondent company/Writ Petitioner under the 2009 FTP. 19.3. The delegatee cannot be vested with powers, beyond that which is provided under the parent legislati....