TaxTMI 
TaxTMI 
2025 (5) TMI 944
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....rder dated 10.10.2023 in W.P. (C) No.13029/1985, M.C. Mehta v. Union of India, and consequently quash the Rejection Letter dated 05.02.2025 bearing File No.09AX04000927AM25 and Deficiency Letter dated 15.01.2025 bearing File No. 09AX04000927AM25; and (ii) Declare that raw pet coke (RPC) imports by the Petitioners for supply of calcined pet coke (CPC) to SEZ units in India are entitled to the grant of Advance Authorisation under the Foreign Trade Policy, 2023; and (iii) Direct the Respondents to grant Advance Authorisation to the Petitioners against their Application for Grant of Advance Authorisation dated 31.12.2024 bearing File No. 09AX04000927AM25; and (iv) Direct the Respondents to permit the Petitioners to supply CPC to SEZ units in India in terms of the order dated 15.02.2024 issued by the Commission for Air Quality Management in National Capital Region and Adjoining Areas read with the Hon'ble Supreme Court's order dated 10.10.2023 in W.P. (C) No.13029/1985, M.C. Mehta v. Union of India; and (v) In the alternative and without prejudice to the above prayers, declare the actions of the Respondents in issuing the DGFT Notification No.....
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....equired for the manufacture of anode-grade CPC. The requisite quantity of RPC is not available in India. The Hon'ble Supreme Court permitted the import of RPC by calciners up to 1.4 MMT per annum vide order dated 09.10.2018. Thereafter, RPC import quota was periodically allocated by the DGFT to calciners including the Petitioners' DTA Unit every financial year. The Hon'ble Supreme Court vide order dated 10.10.2023 in the PIL Proceedings, directed the Commission for Air Quality Management (CAQM) to take a fresh look into all issues pertaining to petroleum coke, after considering the pleas of various persons including the Petitioners. Pursuant to the said directions, the CAQM issued an order inter alia permitting the import of a total of 1.9 MMT RPC by CPC manufacturers for financial year 2024-25 (higher than permitted by the Hon'ble Supreme Court's order dated 09.10.2018). Pertinently, the CAQM Order specifically permitted exports by domestic calcining units to SEZ Units. The relevant paragraph of the CAQM Order is extracted herein below for reference: "I. Import of RPC and CPC by Calciners/Aluminium Industry i. Import of total 1.9 MMT RPC for C....
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....ufacture and export of 54,000 MT, 37,000 MT and 23,333 MT of CPC respectively to the Vedanta SEZ. Thereafter, the petitioners made their Fourth application for Advance Authorisation on 31.12.2024 for import of 54,900 MT of RPC for manufacture and export of 36,600 MT of CPC to the Vedanta SEZ Unit. However, this time around, the Regional Authority issued a Deficiency Letter on 15.01.2025 stating: "1. As per DGFT Notification No.68/2023 dt.07.03.02024, the revised policy condition 06 (b) (iii), import of RPC by calciners shall be on Actual use basis and shall not be transferred to any other unit(s) including SEZ unit(s). Exports of CPC by calciners are not permitted." 10. As aforesaid, the CAQM Order expressly permits exports by domestic calciners to SEZ units. Accordingly, the Petitioners responded to the Deficiency Letter on 20.01.2025. The relevant portion of the Petitioner's response dated 20.01.2025 is extracted herein below: "... 4.1 At the outset, we would like to inform you that RCCVL DTA Unit ("DTA Unit") received the allocation of Raw Petroleum Coke ("RPC") from the Director General of Foreign Trade (DGFT) as per revised policy condition 6(b)(ii) in....
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....d under physical/direct exports wherein a Bill of Exports is generated, whereas deemed exports are defined in Para 7.02 of FTP 2023, which does not cover exports to SEZ units as deemed exports. 2. As per DGFT Notification No.68/2023 dt.07.03.02024, the revised policy condition 06(b)(iii) import of RPC by calciners shall be on Actual use basis and shall not be transferred to any other unit(s) including SEZ unit(s). Export of CPC by calciners shall not be permitted." 12. Questioning the impugned rejection order dated 05.02.2025, the petitioners filed the present writ petition. 13. The grounds urged in writ affidavit it is submitted that the Regional Authority has erroneously refused to grant Advance Authorisation to the Petitioners vide Rejection Letter dated 05.02.2025 stating that the domestic calciners cannot supply CPC to SEZ units, and wrongly refuses Advance Authorisation to the petitioners' RPC import on that basis. Further, the Regional Authority does not have the authority or jurisdiction to take a view of the term "deemed exports" that is contrary to the letter and purpose of the CAQM Order. By virtue of Clause 4.05(c)(i) read with Clause 4.03(a) of the FTP, ....
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....23 in WP(C) No.13029 of 1985 titled as M. C. Mehta vs. Union of India & Ors., delegated certain issues related to pet coke, to the CAQM (Commission For Air Quality Management), inter alia observing that "a holistic view would have to be taken as to the distribution of the Pet Coke available in the country and the Pet Coke required to be imported and how both of them should be distributed inter se the industries." The Commission vide its Order dated 25.10.2023 accordingly constituted an inter-ministerial Sub-Committee which deliberated the issues in detail relating to the distribution of the Pet Coke available in the country and the Pet Coke required to be imported. With regard to the issue of future import of RPC and CPC in the country for domestic use, availability of RPC in the country and total demand of CPC, the following observations were made: i. The conversion of RPC to CPC, is associated with substantial air pollution load (S02 emissions) therefore the sulphur content in calcined pet coke is required to be reduced to 3.5% as against 7-8% sulphur content in fuel grade raw pet coke. ii. Export of domestically manufactured CPC, by processing of imported RPC b....
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....e, physical export of CPC is not permitted, therefore, the application of the petitioner stood rejected and no person can claim an authorization as a right and the grant or renewal of the same can be rejected by DGFT or by the Regional Authority, by specifying valid reasons for such rejection. 22. It is further submitted that 'authorisation is not a right' and the earlier authorisations granted to the petitioners are in the process of being reviewed with the appropriate authority. The CAQM order expressly permits 'deemed exports' to SEZ units, whereas, as per FTP and SEZ act, supplies made to the SEZ units are only exports, i.e. physical exports and not deemed exports. A Special Economic Zone (SEZ) is considered a "foreign territory" for the purpose of trade operations and customs duties, meaning that goods entering SEZ are treated as if they are entering a foreign country. Respondents further refer to Section 2(m)(ii) of SEZ Act, 2005, which reads as under: Section 2 (m) (ii) of SEZ Act, 2005, export means: "(m) "export" means (i) supplying goods, or providing services, from the Domestic Tariff Area to a Unit or Developer;' Definition of "Unit" under ....
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....A)(a) treats supplies to Advance Authorization holders as deemed exports. Thus, the petitioner is not eligible to claim AA as a right as on cumulative reading of CAQM order and FTP provisions, the firm is not doing any deemed export to SEZ unit. 26. It is further submitted that the Act itself provides the following efficacious remedies. For reference Section 16 of the Act is extracted: "Section 16 Review: The Central Government, in the case of any decision or order made by the Director General, or the Director General in the case of any decision or order made by any officer subordinate to him, may on its or his own motion or otherwise, call for and examine the records of any proceedings, for the purpose of satisfying itself or himself, as the case may be, as to the correctness, legality or propriety of such decision or order and make such orders thereon as ay be deemed fit: Provided that no decision or order shall be varied under this section so as to prejudicially affect any person unless such person - (a) has, within a period of two years from the date of such decision or order, received a notice to show cause why such decision or order shall not be ....
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....o give effect to the CAQM Order. The reasons given by the Regional Authority are that supply by domestic units to SEZ units are not deemed exports under the FTP. Under Chapter 4 of the FTP, which deals with Advance Authorisation, Clause 4.03 states that imports of goods that are physically incorporated into goods exported are entitled to Advance Authorisation. Clause 4.05(c)(i) specifically includes in relation to imports intended for manufacturing physical exports to SEZ units as being eligible for Advance Authorisation. Learned Senior Counsel refers to Chapter 4 of the Foreign Trade Policy, 2023, which is extracted for reference. "[4] Duty Exemption/Remission Schemes 4.00 Objective Schemes under this Chapter enable duty free import of inputs for export production, including replenishment of inputs or duty remission. 4.01 Schemes (a) Duty Exemption Schemes. The Duty Exemption schemes consist of the following: Advance Authorisation (AA) (which will include Advance Authorisation for Annual Requirement). Duty Free Import Authorisation (DFlA). .... 4.03 Advance Authorisation (a) Advance Authorisation is issued to ....
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.... and granted Advance Authorisations to the Petitioners on 14.05.2024, 13.08.2024 and 28.10.2024. As such, there is no justification for a sudden change in the opinion or policy from its earlier decision to grant Advance Authorisations to the Petitioners by its rejection letter dated 05.02.2025. Pertinently, the Petitioners' incoming shipments under its RPC import allocation quota for Financial Year 2024-25, are expected to arrive in the month of March. In accordance with the Petitioners Restricted Licence dated 05.04.2024, along with the Amended Licence dated 24.12.2024, the Petitioners are only authorized to import its allocated quota of RPC on or before 31.03.2025. Therefore, the Petitioners seek urgent intervention of this Court in order to enable them to import their allocated RPC quota under their Restricted Licence before 31.03.2025, against Advance Authorisation which it is rightfully entitled to under the FTP. Even in the event that the Petitioners import the incoming consignments of RPC against the payment of import duties, the Petitioners will not be able to utilize the imported RPC, as the Petitioners would be unable to supply CPC to the Vedanta SEZ unit on account o....
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.... to the aggrieved party and it may dispense with such a requirement. It may do so by making an express provision to that effect as those contained in the Administrative Procedure Act, 1946 of U.S.A. and the Administrative Decisions (Judicial Review) Act, 1977 of Australia whereby the orders passed by certain specified authorities are excluded from the ambit of the enactment. Such an exclusion can also arise by necessary implication from the nature of the subject matter, the scheme and the provisions of the enactment. The public interest underlying such a provision would outweigh the salutary purpose served by the requirement to record the reasons. The said requirement cannot, therefore, be insisted upon in such a case. 40. For the reasons aforesaid, it must be concluded that except in cases where the requirement has been dispensed with expressly or by necessary implication, an administrative authority exercising judicial or quasi-judicial functions is required to record the reasons for its decision. 37. The learned Senior Counsel submitted that the counter affidavit has been filed by the respondent No.1 on authorisation on behalf of the respondents No.2 and 3. Since the....
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....e disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with." 38. The learned Senior Counsel would further submit that Chapter 4 deals with Duty Exemption / Remission Schemes wherein Clause 4.03 deals with Advance Authorisation. Clause 4.03 (a) reads that "(a) Advance Authorisation is issued to fallow duty free import of input, which is physically incorporated in export product (making normal allowance for wastage). In addition, fuel, oil, catalyst which is consumed / utilized in the process of production of export product, may also be allowed." 39. Clause 4.05 deals with Eligible Applicant / Export / Supply: Clause 4.05 (c) reads that "Advance Authorisation shall be issued for: (i) Physical export (including export to SEZ)." 40. The learned Senior Counsel has drawn the attention of this Court to Chapter 7, which deals with Deemed Exports. Clause 7.01 (i) and (ii) reads that "(i) 'Deemed Exports' for the purpose of this FTP refer to those transactions....
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....es 176. The relevant Paras No.38 to 41 are extracted hereunder: "38. That brings us to Chapter 8 of FTP. The heading of Chapter 8 is "Deemed Exports". The original Para 8.1 specified that deemed exports refer to those transactions in which goods supplied do not leave country and payment for such supplies is received either in Indian rupees or in free foreign exchange. By way of amendment, it further provided that the supply of specified goods (noted in Para 8.2) shall be regarded as deemed exports provided goods are manufactured in India. 39. The original Para 8.1 reads thus: "8.1. Deemed exports.-"Deemed exports" refer to those transactions in which goods supplied do not leave country, and payment for such supplies is received either in Indian rupees or in free foreign exchange." 40. Para 8.1, after amendment, in 2012-2013 reads thus: "8.1. Deemed exports.-"Deemed Exports" refer to those transactions in which goods supplied do not leave country, and payment for such supplies is received either in Indian rupees or in free foreign exchange. Supply of goods as mentioned in Para 8.2 below shall be regarded as "Deemed Exports" provided goods....
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....n Advance Authorisation gives to the importer (petitioner No.1 herein) two rights i.e. (i) to import free of duty and (ii) to supply to domestic aluminium industry including the Vedanta SEZ. In view of the dispute surrounding the fourth application for Advance Authorisation regarding 54,900 MT of RPC and in view of the fact that the deadline for import was 31st March, 2025, and the deadline was approaching, the petitioner No.1 was advised that irrespective of the pendency of this writ petition, the petitioner No.1 may import 54,900 MT of RPC by paying the duties. In the said circumstances, the petitioner paid duty of Rs.40,82,84,128/- (Rupees Forty Crore Eighty Two Lakh Eighty Four Thousand One Hundred and Twenty Eight only) for import of approximately 54,900 MT of RPC on 29th March, 2025. 46. It is further submitted that if the petitioner No.1 succeeds in the present writ petition, then would be entitled to refund of duties of Rs.40,82,84,128/- (Rupees Forty Crore Eighty Two Lakh Eighty Four Thousand One Hundred and Twenty Eight only) as well as supply CPC to the Vedanta SEZ. Pending the writ petition, the petitioner prayed for an interim order enabling the petitioner to supply....
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.... be permitted to cater entirely to the domestic needs of Aluminium industry (including Vedanta SEZ), for the processes as permitted under the relevant regulations / statues. iii. Import of RPC by Calciners shall be on Actual User basis and shall not be transferred to any other unit(s) including SEZ unit(s). Export of CpC by Calciners shall not be permitted. iv. Import of CPC by Aluminium Industry shall be on Actual User basis. Export of Anode by Aluminium Industry shall not be permitted. v. All other conditions as mentioned in the Commission for Air Quality Management in NCR & Adjoining Areas Order No-F.No.160014/16/2021-MERD/PetCoke-35 dated 14.02.2024 should also be complied with. 49. The learned Senior Counsel further refers to the import allocation for Raw Pet Coke (RPC) wherein the petitioner No.1 was allocated to import 4,84,169 MT., and further submits that there are contractual obligations with the Indian Company and that the 3/4th of the contractual obligations have been completed and by virtue of that, the Government has already collected the import duty and now the CPC remains in godown and that they are duty paid goods. Therefore, the impug....
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....ted. (4) All other conditions as mentioned in the Commission for Air Quality Management in NCR & Adjoining Areas Order No.-F.No.160014/16/2021-MERD/PetCoke-35 dated 15.02.2024 should also be complied with. (5) The authorisation is issued with the validity upto 31.03.2025. Imports must be completed on or before 31.03.2025 i.e. consignments must be cleared by Custom Authorities on or before 31.03.2025." 54. The learned Additional Solicitor General refers to the license amendment dated 24.12.2024 issued to the petitioners Company for 705600.000 MT, which would validate the authorisation for import is 31.03.2025 with the same conditions and further submits that earlier consignments issued are also under review. 55. Heard the learned counsel for the parties and perused the material made available on the record. ANALYSIS AND CONCLUSIONS : 56. The Hon'ble Supreme Court in order dated 09.10.2018 in the case of M.C. Mehta Vs. Union of India and others (Writ Petition (Civil) No.13029 of 1985) while hearing interlocutory applications, wherein the Union of India through the Ministry of Environment, Forests and Climate Change filed and affidavit on 08th October, 20....
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.... view of the other aspects being delegated to the Commission, the facts of the present case be also examined by the Commission itself. This request is accepted and thus, the reliefs in this application are also delegated for consideration before the Commission. The application stands disposed of." 60. For better appreciation, it is necessary to extract the order dated 15.02.2024 passed by the Commission for Air Quality Management in National Capital Region and Adjoining Areas. The relevant paras No.3 and 4 and 10 are extracted for reference: "3. The Hon'ble Supreme Court vide its Order dated 10.10.2023 in WP(C) No.13029 of 1985 titled as M.C. Mehta Vs. Union of India & Ors., delegated certain issues related to pet coke, to the Commission, inter alia observing that "... a holistic view would have to be taken as to the distribution of the Pet Coke available in the country and the Pet Coke required to be imported and how both of them should be distributed inter se the industries...". 4. The Commission vide its Order dated 25.10.2023 accordingly constituted a Sub-Committee comprising members from CAQM, Ministry of Environment, Forest and Climate Change (MoEF&CC), M....
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....ustry respectively shall be permissible from 2025-26 onwards, subject to the following conditions: i. Import of RPC & CPC shall be permitted only as a feedstock / raw material and under no circumstances shall be used as fuel. ii. Import of RPC and CPC shall be permitted to cater entirely to the domestic needs of aluminium industry, for the processes as permitted under the relevant regulations / statutes. iii. Import of RPC by Calciners shall be on Actual User basis and shall not be transferred to any other unit(s) including SEZ Unit(s). Export of CPC by Calciners shall not be permitted. iv. Import of CPC by Aluminium Industry shall be on Actual User basis. Export of Anode by Aluminium Industry shall not be permitted. v. The RPC/CPC Processing capacity as on the date of the CAQM Order i.e. 15.02.2024 shall be taken on record for any pro-rata allocations. vi. All other conditions as mentioned in the Commission for Air Quality Management in NCR & Adjoining Areas Order No-F.No.160014/16/2021-MERD/PetCoke-35 dated 15.02.2024 should also be complied with." 62. Subsequently, authorisation for import of restricted item of Raw Petrole....
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...., which is a 'Deemed Export' and categorically permitted by the said CAQM Order. ...." 66. Thereafter, the respondents have issued the impugned rejection letter dated 05.02.2025 without discussing the explanation given by the petitioner on 20.01.2025 and has referred the revised policy conditions in DGFT Notification dated 07.03.2024. However, has not considered the Clause 6(b) that all the conditions as mentioned in the Commission for CAQM dated 15.02.2024 should also be complied with. While referring to the orders passed respondent No.1, Office of the Additional Director General of Foreign Trade, Hyderabad, did not refer to the order of the Commission for CAQM that deemed export to SEZ units would be permitted. 67. At this juncture, it is necessary to refer to Chapter 4 of Foreign Trade Policy, 2023, which deals with Duty Exemption/Remission Schemes. For the facility, the relevant Clause 4.05 is extracted for reference. "4.05 Eligible Applicant / Export/Supply (a) Advance Authorisation can be issued either to a manufacturer exporter or merchant exporter tied to supporting manufacturer. (b) .... (c) Advance Authorisation shall be ....
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.... CPC manufactured by it to SEZ Units and granted advance authorisations to the petitioners on 14.05.2024, 13.08.2024 and 28.10.2024, and in view of the preceding analysis there is no justification in issuing DGFT Notification No.68/2023 dated 07.03.2024 to the extent of revising the policy conditions i.e. 06(b)(iii) import of RPC by calciners and the said revised policy is not in consonance to the CAQM order dated 15.02.2024 passed in pursuance to the Hon'ble Supreme Court order in M.C. Mehta in W.P. (Civil) No.13029 of 1985 and the Minutes of the Meeting held on 27.03.2024, which is again in consonance to interpretation of policy under Chapter-II of General Provisions Regarding Imports and Exports of Foreign Trade Policy, 2023. 70. For reference, Clause 2.58 Interpretation of Policy is extracted hereunder: "2.58 Interpretation of Policy (a) The decision of DGFT shall be final and binding on all matters relating to interpretation of Policy, or provision in Handbook of Procedures, Appendices and Aayat Niryat Forms or classification of any item for import / export in the ITC (HS). (b) A Policy Interpretation Committee (PIC) may be constituted to aid and ....