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2018 Supreme(Mad) 1761
IN THE HIGH COURT OF JUDICATURE AT MADRAS
V. PARTHIBAN, J.
M/s. Premier Mills Pvt. Ltd., Rep. by its Managing Director K.V. Srinivasan – Appellant
Versus
The Chairman, Board of Approvals, Ministry of Commerce & Industry, New Delhi & Others – Respondents
W.P. Nos. 4330 to 4337 of 2011
Decided On : 13-07-2018
For the Petitioner:T. Mohan, SC, M/s. G. Mani, Nidhin Jaya Chander, Advocates.
For the Respondents: G. Karthikeyan, Asst. Solicitor General.
The geographical location of goods outside the Export Oriented Units should not be the sole basis for denying Duty Drawback benefits if the goods are integral to the manufacturing activity of the petitioners.
Headnote:
Duty Drawback - Wind Electrical Generators - Foreign Trade Policy - [WEGs - Duty Drawback - Foreign Trade Policy]
Fact of the Case:
The petitioners, involved in manufacturing cotton yarn, sought Duty Drawback claim for Wind Electrical Generators (WEGs) used for electricity generation and consumption. The claim was rejected by the first respondent, and subsequent appeals were also dismissed.
Finding of the Court:
The court found that the rejection of the Duty Drawback claim was not based on sound legal consideration and appreciation of relevant factual materials. The first respondent's decision was deemed unsustainable in law, and the matter was remanded back for fresh consideration.
Issues: The main issue was the denial of Duty Drawback claim for WEGs based on their location outside the Export Oriented Units (EOUs).
Ratio Decidendi: The court held that the geographical location of WEGs outside the EOUs should not be the sole reason for denying the Duty Drawback benefit, especially when the energy generated was exclusively used by the petitioners' units.
Final Decision: The court set aside the communications rejecting the Duty Drawback claim and remanded the matter back to the first respondent for fresh consideration, directing them to pass final orders within 12 weeks.
1. Since common grounds and issues have been raised in all these Writ Petitions, they are taken up together for common disposal.
2. The writ petitioners, viz., M/s.Premier Mills Pvt. Limited and M/s.Sree Narasimha Textiles Pvt. Limited, which filed these writ petitions, are private limited companies involved in manufacturing of cotton yarn. The companies have their Export Oriented Units (hereinafter referred to 'EOUs') located at Coimbatore. The grievance of the petitioners is that Duty Drawback claim provided under Foreign Trade Policy has not been extended to the petitioners in respect of procurement of Wind Electrical Generators (in short, 'WEGs') for generation of electricity and its consumption.
3. The facts and the circumstances necessitating the filing of the Writ Petitions are stated hereunder:
The petitioners are involved in manufacturing of cotton yarn and the companies have their Export Oriented Units, exporting the cotton yarn manufactured by them. For generation and consumption of electricity, the petitioners have procured WEGs through local suppliers in Udumalpet District in Tamil Nadu. The energy generated by WEGs was transmitted to the grid of Tamil Nadu Electricity Board (TNEB) and required quantity of electricity in units was drawn and used for the petitioners' consumption. In this regard, the petitioners have also entered into an Energy Wheeling Agreement with the Tamil Nadu Electricity Board (TNEB). The energy drawn by the High Tension Service Connection at the EOU premises were used for running the machinery installed which in turn used for manufacture of the export product, i.e. cotton yarn. According to the petitioners, the identification of the location of Wind Mills was at the instance of Centre for Wind Energy Technology (c-WET) which is an autonomous body under the Ministry of New and Renewable Energy and certain areas were identified for location Wind Mills on the basis of availability of constant wind resources. After the procurement of WEGs, the same were located in various places on the basis of locational advantageous for effective functioning of Wind Mills and for effective generation of energy.
4. According to the petitioners, several factors were taken into consideration for location of Wind Mills like, environmental pollution, diversification of energy supply, elimination of imported fuel and thereby provides energy security and prevention of conflict over natural resources, etc. According to the petitioners, the wind energy is one of the cheapest sources of electrical energy. The supplier of WEGs, namely, M/s.Vestas Wind Technology India P. Limited imported vital components such as Main Gear Boxes, Generators, Nacelle base frames, Hubs, HV Cables, etc., on payment of customs duty and used the same in the manufacture of WEGs. In addition to that the supplier used the indigenous components like blades, blade tips and towers for manufacture of the said WEG. The petitioners under the Foreign Trade Policy, have a right to claim Duty Drawback on the components imported by the Supplier, meaning seeking refund of the customs duty paid by the supplier at the time of import of the components. The issue of Duty Drawback was placed before first respondent for their approval. However, it appears that in the meeting held in March 2008, the first respondent refused to approve the claim for Duty Drawback for the petitioners only on the ground that the WEGs are located outside the EOUs. The decision of the first respondent was communicated by the third respondent which is also impugned in the Writ Petitions.
5. Aggrieved by the decision of the first respondent in not granting approval towards Duty Drawback, the petitioners have made a representation to the Chairman, Grievance Redressal Committee, Department of Commerce (GRC), New Delhi in terms of provisions of the Foreign Trade Policy in May 2008. The Grievance Redressal Committee, on receipt of the representation from the petitioners, placed
