2015 (10) TMI 2615 - HC - Customs

Advance Authorisation scheme - issuance of Export Obligation Discharge Certificate - denial on the ground that petitioner does not satisfy third condition namely, imported goods shall be manufactured in India - Held that - Deemed Exports benefit for non-mega power project would be available for supply of capital goods if the categories of supply of goods by main/sub-contractors as mentioned in Paras 8.2(a) to 8.2(g), provided goods are manufactured in India . In the case on hand, capital goods like Turbine, Generators, etc., have been imported and as such, they have been installed in the power project - Since export policy having been brought for import substitution and if the project authorities were to import the same, then said project authority cannot be heard to contend that imports substitution has taken place. From facts on hand, it is explicitly clear that the goods imported under advance authorisation licence have been supplied as such to the project and they have not been manufactured in India and as such, these goods as capital goods would not be entitled for exemption under advance authorisation. Petition dismissed - decided against petitioner.

Summary

Issues Involved:
1. Quashing of the order dated 18-1-2013 and communication dated 11-2-2013.
2. Issuance of Export Obligation Discharge Certificate (EODC).
3. Definition and interpretation of "Deemed Exports" and "Manufacture" under the Foreign Trade Policy (FTP).
4. Applicability of Policy Circular No. 50/2009-2014.
5. Compliance with the conditions for duty exemption under the Advance Authorisation Scheme.

Issue-wise Detailed Analysis:

1. Quashing of the Order and Communication:
The petitioner sought to quash the order dated 18-1-2013 and the communication dated 11-2-2013, which rejected their claim for the issuance of an Export Obligation Discharge Certificate (EODC). The petitioner argued that they had fulfilled the export obligation by supplying goods to a Hydel Project and had undertaken the required activities such as assembly, erection, testing, and commissioning of the imported goods.

2. Issuance of Export Obligation Discharge Certificate (EODC):
The petitioner claimed that they were entitled to the issuance of an EODC as they had complied with the conditions under the Advance Authorisation Scheme. They argued that the activities undertaken by them amounted to "manufacture" as defined in Paragraph 9.36 of the FTP. However, the respondents contended that the goods supplied were not manufactured in India, which is a mandatory condition for availing the deemed export benefits.

3. Definition and Interpretation of "Deemed Exports" and "Manufacture":
The court examined the definitions and provisions under the FTP, specifically Paragraphs 8.1, 8.2, and 9.36. It was emphasized that for a transaction to qualify as "Deemed Exports," the goods must be manufactured in India. The petitioner argued that their activities fell within the definition of "manufacture" as it included assembly, erection, and installation. However, the court held that the goods were imported and supplied "as such" without any manufacturing activity in India, thus not meeting the criteria for deemed exports.

4. Applicability of Policy Circular No. 50/2009-2014:
The respondents relied on Policy Circular No. 50/2009-2014, which clarified that deemed export benefits are admissible only if the goods are manufactured in India. The circular further stated that if capital goods like turbines and generators are imported and supplied as such, they do not qualify for deemed export benefits. The court upheld this circular, stating that it was clarificatory in nature and did not impose any new conditions.

5. Compliance with Conditions for Duty Exemption under Advance Authorisation Scheme:
The court analyzed the conditions under the Advance Authorisation Scheme and the FTP. It was found that the petitioner had not complied with the condition of manufacturing the goods in India. The goods were directly imported and supplied to the project site, which does not fulfill the requirement of deemed exports. The court emphasized that the policy aims at import substitution, and the petitioner's actions did not align with this objective.

Conclusion:
The court dismissed the writ petition, affirming the order dated 18-1-2013. It held that the petitioner did not meet the necessary conditions for availing deemed export benefits as the goods were not manufactured in India. The court supported the respondents' interpretation of the FTP and the applicability of Policy Circular No. 50/2009-2014. The petitioner's contentions were rejected, and the costs were made easy.