2016 (10) TMI 520 - HC - Customs

Reimbursement of the Central Sales Tax paid on goods supplied from one Export Oriented Unit to another Export Oriented Unit - intention of the Foreign Trade Policy - Held that - A clarification has been issued by the Under Secretary, Ministry of Commerce and Industry, Department of Commerce, EOU Section, dated 11.4.2014, by way of an Office Memorandum. In the said office memorandum, it has been stated that paragraph 6.11 and paragraph 9.21 of the Foreign Trade Policy, read with Appendix 14-I-I, does not provide for the reimbursement of the Central Sales Tax paid on goods supplied from one Export Oriented Unit to another Export Oriented Unit. It has also been suggested that the Directorate General of Foreign Trade may consider a suitable amendment, in the Foreign Trade Policy, as deemed fit, in order to include a clause, providing for the reimbursement of the Central Sales Tax, for the goods supplied from one Export Oriented Unit to another Export Oriented Unit. The above facts make it clear that it has not been the intention of the Foreign Trade Policy 2009-2014, for the reimbursement of the Central Sales Tax paid on the goods supplied from one Export Oriented Unit to another Export Oriented unit. In such circumstances, this Court is of the considered view that the reliefs prayed for by the petitioner, in the above writ petitions, cannot be granted. Hence, both writ petitions stand dismissed. No costs. However, it goes without saying that it may be open to the petitioner to challenge the Office Memorandum, issued by the Ministry of Commerce and Industry, Department of Commerce, EOU Section, dated 11.4.2014, and the communication, dated 15.06.2015, issued by the Assistant Development Commissioner, Government of India, Ministry of Commerce and Industry, if so advised, in the manner known to law. Unless the said communications, clarifying the position relating to the Foreign Trade Policy 2009-14 and the Foreign Trade Policy 2015-20, are challenged and set aside, such clarifications would hold the field, with regard to the claims made by the petitioner, for the reimbursement of the Central Sales Tax, paid in respect of the goods supplied from one Export Oriented Unit to another Export Oriented Unit, relating to the financial years 2013-14 and 2014-15.

Summary

Issues:
1. Interpretation of Foreign Trade Policy for reimbursement of Central Sales Tax.
2. Application of reimbursement provisions to goods supplied between Export Oriented Units.

Analysis:
1. The petitioner, a 100% Export Oriented Unit, sought reimbursement of Central Sales Tax under the Foreign Trade Policy for the financial years 2013-14 and 2014-15. The petitioner claimed entitlement to reimbursement based on the policy provisions for goods manufactured in India. However, the respondent denied reimbursement for purchases made from a Special Economic Zone unit, citing an amended procedure effective prospectively. The court noted that the Policy did not intend to reimburse Central Sales Tax for goods supplied between Export Oriented Units. The petitioner's claims were dismissed, allowing for a challenge to the relevant communications if desired.

2. The court considered the clarification issued by the Ministry of Commerce and Industry, stating that the Policy did not provide for reimbursement of Central Sales Tax on goods supplied between Export Oriented Units. The respondent's decision to reject the petitioner's claim for reimbursement for the specified period was upheld based on the communication dated 15.06.2015. The court emphasized that unless challenged and set aside, the clarifications would govern claims for reimbursement of Central Sales Tax paid for goods supplied between Export Oriented Units for the financial years 2013-14 and 2014-15. The judgment highlighted the importance of adhering to the specific provisions and interpretations of the Foreign Trade Policy to determine eligibility for reimbursement of Central Sales Tax.