9911796707
TMI Blog2010 (8) TMI 925X X X X Extracts X X X X X X X X Extracts X X X X ..... hat Surma B.V. is a 50%-50% ownership concern of Financiere Lafarge S.A. of France and Cemolins International S.A. of Spain. Thus, the ultimate sponsors of the petitioner-company are Lafarge of France and Molins of Spain. Lafarge is a world leader in building materials operating in more than 75 countries, while Molins of Spain is a reputed cement manufacturer having its operations in 6 countries. Lafarge Surma Cement Limited (LSC) has set up and integrated cement manufacturing facility at Chhatak under Sunamgonj District of Bangladesh. As Bangladesh has no limestone of its own, the limestones and shale required for the manufacture of cement by LSC in its cement plant in Chhatak, Bangladesh are extracted from the mines located at Nongtrai and Shella villages in the State of Meghalaya, which are the only sources for limestones for the LSC. The distance between cement plant in Chhatak, Bangladesh and the mines in Meghalaya, India is about 17 kilometres across the international border between India and Bangladesh. The petitioner-company is holding the mining leases, and extracts the limestones and shale from those mines, crushes and processes the limestone and exports the same to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. On 5-7-2002, the petitioner-company accordingly made an application to the respondent No. 7 for approval by the BOA in accordance with the notification No. 14/1/2001 - EPZ dated 19-6-2001 for setting up Export Oriented Unit (EOU), that is, Limestone Mining Project in Meghalaya in which it was made clear that it is in the process of setting up 2 million tones per annum limestone mining project for exporting the entire produce to Bangladesh through a continuous elevated conveyor system after crushing and screening of the limestone at the mining site. The petitioner-company claimed therein EOU status for the said project which would include the mine, crusher and the long belt conveyor system. The capital cost of the project was estimated at ₹ 977 million out of which ₹ 350 million was the capital cost of the long belt conveyor system. Such estimated capital cost was duly disclosed by the petitioner-company in the Annexure to the said application. The respondent No. 7 thereafter communicated the grant of approval by the Government of India i.e. the BOA vide the Letter of Permission dated 16-10-2002 to the petitioner-company as an 100% Export Oriented Unit (EOU) fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said decision was communicated to the petitioner) 29,145 (iii) Period from 26th July 2005 to 30th September 2005 3,000 Total investment made in long belt conveyor system during the period 16.10.2002 to 30 th September 2005 59,586 On 12-5-2004, the petitioner-company, on the basis of the permission accorded to it as a 100% EOU, approached the jurisdictional customs authorities for declaring the entire EOU Premises comprising of the mining area including the crusher and crushing area and the long belt conveyor system till Indian border as a Customs Warehousing station. However, the respondent No. 8 issued the notification dated 19-5-2004 declaring only a part of the EOU Premises comprising of 100 hectares of limestone mining area and 7.6 hectares of land for crushing area as a Customs Warehousing station. In terms of this notification, the Assistant Commissioner of Customs, Shillong (respondent 10) granted license to the petitioner-company for private customs bonded warehouse vide license No. 01 / PB-WAREHOUSE / CUSTOMS / SHG / 2004 dated 25-5-2004 under Sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whether the mining and crushing activity in India and the cement manufacturing activity in Bangladesh, connected through the long belt conveyor system till the Indian border is an integrated manufacturing process and asserted that it is entitled to duty free procurement of capital goods/raw materials, etc. for the entire EOU Premises. In response to this, the matter was referred by the respondent No. 7 to the BOA, which in its meeting held on 31-5-2004 specifically approved the procurement of conveyor belt for the unit as capital goods liable for duty free import, keeping in view the fact that it is a composite cement plant with units both in India and Bangladesh and is a part of joint collaboration between the two countries, and the same was communicated to the respondent No. 8 and the respondent No. 9 by the Assistant Development Commissioner, Falta Special Economic Zone, Kolkata under letter dated 30-6-2004, a copy where was endorsed to the petitioner-company thereby acknowledging that the project is a 100% EOU which included the conveyor belt system. Pursuant to this letter, the petitioner-company approached the respondents No. 8 and 9 to amend the notification dated 19- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de fresh representation before the BOA through the respondent No. 7 by invoking the doctrine of promissory estoppel and prayed for restoring their decision dated 31-5-2004. The BOA heard the petitioner-company on 3-6-2008, 29-8-2008 and 19-11-2008. The respondent No. 7 by his letter dated 6-1-2009 communicated to the petitioner-company that the BOA after due deliberation decided to reiterate its decision dated 23-9-2004/13-10-2004 that the conveyor belt installed outside the EOU Premises for transportation of goods was not eligible for duty free import/procurement under EOU Scheme. Since a copy of the said decision of the BOA was not forwarded to the petitioner-company nor was it communicated the date on which such a decision was taken or on what basis the same was taken, the petitioner-company approached the Chief Public Information Officer, Ministry of Commerce, Government of India for obtaining such information. The Chief Public Information Officer disposed of the application by providing the minutes of the meeting held by BOA. No reason was, however, disclosed in the minutes of the meeting of BOA for rejecting the application of the petitioner-company, but it came to learn that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne mining area and 6-7 hectares of crushing area as warehousing station for customs duty exemption. The petitioner-company is thus held not entitled to the benefit of the exemption notification outside the declared area. In other words, the 7 kilometer long belt conveyor transport system for transporting the crushed limestone to Bangladesh is outside the purview of duty exemption benefit. If the conveyor system for the seven long kilometre from the declared area is granted exemption of all duties under the Central Excise Act and Customs Act, then it would be ultra vires these two Acts and would invite illegal exemption claims in respect of capital investment on transport system. 8. It is also the case of the respondent authorities that the intention of the Government of India is not to grant exemption on transportation but to grant exemption for manufacturing of product herein for crushing of limestone for export purpose. The petitioner-company has misrepresented the facts regarding the crushing of limestone and its ancillary activities in their unit for their selfish interest by asserting that the seven kilometer long conveyor belt is also covered by the exemption covering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is merely utilized for transportation of the crushed limestone to the manufacturing unit located in Bangladesh. The petitioner-company also admitted that the long belt conveyor extending across the international border of the two countries is a device for carrying the crushed limestone, which is the final product of the EOU located inside India, to the cement plant located in Bangladesh which purchases the final product of the petitioner-company. The process of manufacturing from raw materials to finished product is complete when the said raw material is collected from the quarry of the mines and subsequently crushed and made available for export. The petitioner-company is a 100% EOU approved by the respondent No. 7 and the basic requirement of EOU is to achieve minimum export performance as prescribed: it was allowed to install the conveyor belt for transportation outside the declared area under EOU to enable them to meet the requirement of minimum export performance. The writ petition is premature and is not maintainable as the alternative remedy provided for in the instruction dated 31-1-2005 issued by the Central Board of Excise has not been exhausted by the petitioner-company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fall within the expression used in or in relation to the manufacture of goods and so construed, the expression in the manufacture of goods should normally encompass the entire process carried on by the manufacturer/producer of converting raw materials into finished goods. Contending that the impugned decision of the BOA holding that the LBC installed outside the EOU premises for transportation of goods was not eligible for duty free input/procurement under EOU Scheme is illegal and barred by the doctrine of promissory estoppel, the learned senior counsel urges this Court to quash the same. In support of his various, the learned senior counsel relies on the following decisions:- (a) Union of India v. M/s Anglo-Afghan Agencies, AIR 1968 SC 718; (ii) Motilal Padampat Sugar Mills v. State of U.P., (1979) 2 SCC 409; (iii) Pournami Oil Mills ors. v. State of Kerala anr., 1986 (Supp) SCC 728; (c) State of Punjab v. Nestle India Ltd., (2004) 6 SCC 465; (d) Birla Corporation Ltd. v. Commissioner of Central Excise, (2005) 6 SCC 95; (e) Commissioner of Customs (Imports), Mumbai v. Tullow India Operations Ltd., (2005) 13 SCC 789, (f) MRFF Ltd., Kottayam v. Asst. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o take place between the parties. 12. It has been settled by this Court that the doctrine of promissory estoppel is applicable against the Government also particularly where it is necessary to prevent fraud or manifest injustice. The doctrine, however, cannot be pressed into aid to compel the Government or the public authority to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make . There is preponderance of opinion that to invoke the doctrine of promissory estoppel clear, sound and positive foundation must be laid in the petition itself by the party invoking the doctrine and that bald expressions, without any supporting material, to the effect that the doctrine is attracted because the party invoking the doctrine has altered its position relying on the assurance of the Government would not be sufficient to press into aid the doctrine. In our opinion, the doctrine of promissory estoppel cannot be invoked in the abstract and the courts are bound to consider all aspects including the result sought to be achieved and the public good at large, because while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... November 29, 2000 which reads as follows: I have the honor to refer to the proposed cross-border cement manufacturing project being set up by KLafarge Surma Cement Ltd. of Bangladesh and Lum Mawshun Pvt. Ltd. and Lafarge Umium Mining Pvt. Ltd. Of India. The project involving mining operations in a quarry located in the State of Meghalaya in India and the export of limestone and shale to the cement plant in Bangladesh. The Government of India and the Government of Bangladesh confirm that they shall upon application by the relevant parties and subject to compliance with necessary conditions and regulatory requirements as may be specified from time to time, cause to be granted of such consent, clearances and approvals within the existing legal frame work, as are necessary for: (a) installation of a continuous elevated conveyor belt linking the mines in India and the cement plant in Bangladesh across a portion of restricted border area and its uninterrupted operation for transportation of limestone and shale from the mines to the cement plant. (b) Facilities and permission for convenient border crossing and re-crossing for the personnel required to cross the India-Bangladesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us: We are pleased to inform that Lafarge Umiam Mining Private Limited registered under the Indian Companies Act, 1956 having its registered office at Polo Towers, Polo Grounds, Oakland Road, Shillong, 793001, is in the process of setting up 2 million tones per annum limestone mining project at Phlangkaruh, Nongtrai, Shella Confederacy, East Khasi Hills District in Meghalaya. The entire produce is proposed to be exported to Bangladesh through a continuous elevated belt conveyor system after crushing and screening of the limestone at the mine site. Under the Exim Policy of Government of India, we wish to apply for grant of EOU status for the export. Enclosed please find our application as per appendix 14A of Exim Policy, 2002. We request you kindly to consider our application and grant EOU status for the project at the earliest convenience. We remain. 13. The respondent No. 7 by his letter dated 16-10-2002 atAnnexure-E addressed to the petitioner informed of the extension of all the facilities and privileges admissible and subject to the provisions of Export Oriented Unit Scheme envisaged in Export-Import Policy, 2002-2007 for the establishment by the petitioner-company of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with the said Legal Agreement, filed an application bearing dated 12-5-2004 to the Commissioner of Customs, Customs House, Shillong (respondent 8) for customs bonding for the entire EOU premises comprising of mining area, crusher and crushing area and the long distance belt conveyor system till the Indian border. The respondent No. 8 thereafter issued the notification dated 19-5-2004 declaring the 100 hectares of limestone mining area and 7.8 hectares of land for crushing area belonging to the petitioner to be Warehousing station under Section 9 of the Customs Act, 1962 for the limited purpose of setting up of a 100% EOU as per the LOP dated 16-10-2002 issued by respondent 7. From this notification, it is obvious that the LBC was not considered a part of the Warehousing station. The petitioner by the letter dated 22-4-2004 also requested the Commissioner of Central Excise, Shillong (respondent 9) for grant of excise registration to it for the entire EOU premises comprising of the mining area, the crusher crushing area and the long distant belt conveyor system (LBC) till the India border. The respondent No. 9, however, rejected this application on the ground that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tially granting the approval had also recognized and accepted the case of the petitioner that the unit is an integrated cement plant even though it involved cross-border manufacturing process. In Birla Corpn. Ltd. v. Commissioner of Central Excise, (2005) 6 SCC 95, a somewhat similar question arose in the context of MODVAT credit on ropeway for used for transporting crushed limestone from mines. That was a case in which crushed limestone was brought to the appellant assessee s factory premises from the mines located 4.2 km away. Ropeway was used as a means of transportation for that purpose. The question is whether the duty paid on spares of such ropeway was entitled to MODVAT credit. The Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (CEGAT) answered in the negative on the ground that the ropeway was not a material handling equipment within the factory premises. The assessee then filed an appeal. There was no dispute that before the top court that the crushed limestone was brought from the mines to the factory premises where it was depositing utilizing the ropeway as a means of transportation. Dismissing the appeal, the Apex Court held: 4. Learned counsel app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of hearing before this Court on 24-5-2007. Once it is found that the project of the petitioner is an integrated cement manufacturing facility, there is no difficulty in holding that the LBC is a part and parcel in the manufacturing process of cement at the Bangladesh plant of the petitioner-company, irrespective of whether it is used as a means of transportation, and is, therefore, deemed to be included in the EOU. As the LBC is deemed to be a part of the cross-border integrated cement manufacturing facility, the promise held out by the respondent authorities cannot be said to be contrary to the Notification dated 31-3-2003, and is within the scope of authority of the respondent authorities. The BOA in reversing its earlier decision granting duty exemption to the petitioner in respect of LBC cannot be permitted to go back upon it. The doctrine of promissory estoppel is clearly applicable to the facts of this case. In the view that I have taken, the decision of the BOA dated 23-9-2004 adopted in its 5th Meeting (2004 Series) contained in the letter dated 6-1-2009 of the respondent No. 7 and the consequential notice of demand dated 8-4-2009 cannot be sustained in law. 17. For the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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