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TMI Blog2016 (10) TMI 819X X X X Extracts X X X X X X X X Extracts X X X X ..... s, but does not necessarily form part of end product items, but substantially or totally consumed in the process aforesaid, is a "consumable". The electricity, in our considered opinion, not only participates, but is substantially consumed in manufacturing process of zinc, thus, is a "consumable" as per para 9.15 of FTP. Clause (a) of para 6.6.1 of HBP-I mentions raw materials, consumables, intermediates, spares and packing materials. All these terms give a general connotation and each and every term may include several goods. The electricity, as already discussed above, comes within the purview of "consumables" as defined under para 9.15 of the FTP, hence, we are of considered opinion that it is nothing but a goods permitted to be imported/procured from DTA. True it is, in para 6.6.1 of HBP-I, certain electricity equipments including DG sets, Captive Power Plants and transformers are specifically mentioned, but these are the equipments to generate electricity, whereas the electricity is a goods "consumable" for production of zinc. In view of it, it is having its separate identity which is required to be appreciated with its own qualities. The process of electrolytic canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of electrical energy is NIL, and (c) electrical energy is not tangible goods, how and under which provision a unit can claim benefit of deemed export on uose of electrical energy. The petitioner, under a letter dated 1.6.2010, provided all details and grounds to support the claim in terms as under:- (i) Petitioner's (DTA Division) had filed application for deemed export benefit for the supply of electric energy to 100% EOU Unit for the period 8th May 08 to 30th Sept. 2008. The said claim is the first claim as there was no supply of electric energy to 100% EOU Unit before 08th May 2008 (i.e. date of conversion into 100% EOU). (ii) This claim has been filed for fixation of brand rate of drawback under Para 8.3.3 of HBP (Hand Book of Procedure) Vol.I which provides Where All Industry Rate of Drawback is not available or.........., an application in ANF 8 along with prescribed documents may be made to RA or Development Commissioner (DC) for fixation of brand rate. Further, as per Circular No.13/2008 dated 29.08.2008 it has been clarified that where all Industry Rate of Duty Drawback is prescribed as NIL, the exporters are eligible for claiming brand rate of drawb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting dated 28.11.2011, considered the representation and rejected the same. The petitioner then preferred a review petition before the Board of Approval, which came to be considered and rejected on 6.7.2012. The Board of Approval refused to extend benefits on basis of the opinion given by NOIDA Special Economic Zone and Directorate General of Export Promotion with assertion that it will not be practicable to segregate the quantum of power used in relation to manufacturing zinc. An appeal then was preferred by the petitioner, which also came to be rejected on 14.9.2012. The petitioner again made the claim, that too was rejected on 15.10.2012. In this factual background, instant petition for writ is preferred. THE FOUNDATION TO CLAIM DEEMED EXPORT BENEFIT - As per provisions of Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as 'the Act of 1992'), the Central Government notified FTP, Chapter VI of that pertains to Export of Oriented Units (EOUs), Electronics Hardware Technology Parks, Software Technology Parks and Bio-Technology Parks. The provisions relevant for setting up EOUs, the import/export of goods, domes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of exportable goods i.e. zinc, electricity is an integral consumable ,therefore, is entitled to have benefits as per Chapter VIII of the FTP. ARGUMENTS ADVANCED IN SUPPORT OF THE PETITIONER'S CLAIM - Shri Dinesh Mehta, learned counsel appearing on behalf of the petitioner, submits that the Board of Approval, while examining claim made by the petitioner, failed to appreciate that electric energy is nothing but a consumable as per para 9.15 of the FTP. The electricity, used for production of zinc, is a good required for manufacturing process to manufacture zinc ingots. The electricity in this manufacturing process does not form part of end product, but certainly satisfies the requirements as given in para 9.15 of the FTP, the electricity being substantially consumed. Shri Dinesh Mehta explained the entire process of production of zinc ingots which is having different steps including electro winning process, melting and casting, leaching purification and roaster. It is asserted that the basic principle to have zinc is electrolysis reaction. In this process, zinc sulphate is required to be broken by the process of electrolysis in zinc and sulfur oxide. The zinc is furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturing process. Concentrate is transferred from RMH section to Roaster day bin through motorized conveying system run on electric energy and sent to roaster furnace. The air flow is given in the roaster furnace through electrically operated motor which is an integral part of the process. The concentrate is converted into calcine in roaster furnace and this calcine is being transferred to storage silo through various electrically operated equipments like chain conveyors, rotary walls, ESP, drum coolers, ball mill etc. which consume substantial electrical energy. The calcine is recovered in roaster section and the flew gases are being treated in gas cleaning plant through QT/ PGCT WET ESP equipments which are run on electrically energy. These gases are transferred to the acid plant where sulphuric acid is being produced. It is also stated that the electricity used in the process of electrolysis stands consumed absolutely and that does not remain available for its reuse or use for any other purpose. RESPONSE BY THE RESPONDENTS TO THE CONTENTION OF THE PETITIONER - The submissions made by learned counsel for the petitioner are vociferously contested by learned counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TP to treat the electrical energy as a consumable . APPRECIATION OF THE ISSUE BY US - Precisely, the issue under consideration is that whether in production of zinc, the electricity power is a consumable as defined under para 9.15 of the FTP and as referred in para 6.6.1 of HBP-I (6.5.1 of HBP)? To appreciate the issue, it is necessary to understand the entire process of obtaining the final product i.e. zinc. As per the material supplied by counsel for the parties, the zinc is processed either of two primary processing methods, electrolytic or pyrometallurgical. 85-90% of the world's zinc is produced by the electrolytic method. The appellant is also producing the zinc by adopting electrolytic method. The first stage, as already referred, is to roast the zinc sulphide concentrate to zinc oxide in the presence of oxygen (i.e. in air), the sulphur being converted to sulphur dioxide. The sulphur dioxide is then further oxidised to sulphur trioxide which is dissolved in strong sulphuric acid. The strong sulphuric acid is then diluted with water for reuse. Some impurities in the original concentrate have to be removed in order not to contaminate the sulphuric acid. Sulphu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly indicates that the electrolytic process is necessary to have final produce i.e. zinc. For electrolytic process the essential input is electricity. It is not in dispute that the electricity is a goods and that goods, though intangible, is consumed in obtaining the final product. True it is, the electricity is not a part of end product, but it is substantially consumed in the process to manufacture the end product. Para 9.15 of the FTP in specific terms provides that any item, which participates in or is required for manufacturing process, but does not necessarily form part of end product items, but substantially or totally consumed in the process aforesaid, is a consumable . The electricity, in our considered opinion, not only participates, but is substantially consumed in manufacturing process of zinc, thus, is a consumable as per para 9.15 of FTP. We do not find any merit in the argument advanced on behalf of the respondents that the electricity being intangible cannot be treated as a consumable . There may be hundred kinds of goods including several gases, which may not be intangible but fulfilling all the requirements of goods. Electricity itself is a production which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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