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TMI Blog2017 (8) TMI 432X X X X Extracts X X X X X X X X Extracts X X X X ..... n Trade Policy for entitling the petitioner -Company to claim such reimbursement of CST paid under the Central Sales Tax Act, 1956. Moreover, the specific amendment in the said Foreign Trade Policy for the year 2015-2020 removed the said anomaly and discrimination as to the source of Units from which the petitioner may purchase such goods in the course of inter-state trade and commerce and the said amendment can be treated only as a clarificatory one and can be applied to the previous period also - petition allowed - decided in favor of petitioner. - Writ Petition Nos. 54015/2016 & 54173-184/2016 (T-CST) - - - Dated:- 3-8-2017 - Vineet Kothari, J. For the Petitioner : Mr. N. Venkatraman, Senior Counsel for Mr. Tushar Jarwal, Mr. C.K. Nandakumar, Mr. Raghuram Cadambi, Advocates For the Respondent : Mr. Krishna S. Dixit, ASG a/w Mr. C. Shashikantha, Advocate ORDER JUDGMENT 1. The controversy involved in these petitions lies in a narrow compass and is no longer res integra and is covered by three Division Bench decisions of different High Courts -Madras, Gujarat and Allahabad rendered in recent past and there is no contrary view of any other High Court avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 and 19.05.2016 (Annexure R) issued by R3 and after examining their proprietary and correctness, quash them as being legally and constitutionally invalid; being ultra vires the provisions of the paragraph 6.11 of the Foreign Trade Policy; (B) Issue a writ of Mandmus or other appropriate writ, direction or order in the nature of a Mandamus directing the Respondents to forthwith allow the pending claims amounting to ₹ 20 crores approximately of the petitioner along with appropriate interest under the respective FTPs with respect to Reimbursement of the CST paid on the goods procured from other EOU Units/SEZs as per para.6.12/6.11 of the relevant Export-Import Policy/Foreign Trade Policy as applicable; and (C) Grant such other relief as reliefs as this Hon'ble Court may deem fit and proper in the circumstances of the case. 6. The learned counsels for the petitioners have drawn the attention of the Court towards the recent decisions rendered by the three High Courts which are extracted below to the relevant extent, which not only contain the arguments raised before this Court also similarly raised before these respective High Courts and the reasons for negati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rajagopalan had argued that since, goods manufactured by an EOU were not treated as goods manufactured in India, they were not amenable to excise duty. Based on this, it was contended that sub- clause (i) of clause (c) of paragraph 6.11 would not enable an EOU to seek reimbursement of CST qua supplies received or purchases made from a unit other than a DTA unit. 14. According to us, both contentions are fallicious, for the following reasons. (i) An EOU is nothing, but a unit, which undertakes to export its entire production of goods and services under the relevant EOU Scheme. Therefore, clearly, these are goods, which are manufactured in India. The production of such goods is, however, incentivised, under the relevant EOU Scheme only to promote exports, in order to enable generation of foreign exchange for the Country. (ii) As correctly argued by Mr.Venkataraman, the Central Excise Duty will be payable by an EOU unit qua domestic sales. The only exception in this behalf (which is provided in Section 3 of the 1944 Act), are goods produced and/or manufactured in SEZs. Furthermore, in so far as the 100% EOUs are concerned, excise duty is levied and collected on any exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18.1 xxx xxx xxx 18.2 xxx xxx xxx 19. This brings us to other limb of the argument advanced by Mr.Rajagopalan, which is that, the provisions of Paragraph 6.11 (c)(i) should be read along with paragraph 2 of Appendix 14-I-I. 19.1. This argument proceeds on the basis that the 2009 FTP and the said Appendix is formulated by the same juridical entity, i.e., Central Government. This argument is not only factually erroneous, but also legally untenable. The reason for the same is that the FTP is formulated by the Central Government by issuing a notification under Section 5 of the FTDR Act. The DGFT is the implementing authority, as is clearly discernible on a plain reading of sub-section (2) of Section 6 of the very same Act. The amendments, if any, in the FTP can only be made by the Central Government; a position, which clearly emerges upon a reading of sub-section (3) of Section 6. The Central Government is entitled to delegate all powers to the Director General (DG) or an officer subordinate to him, except those contained in Sections 3,5,15,16 and 19. Clearly, the power of formulation of FTP, which is vested in the Central Government, by virtue of Section 5 cannot be de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of the appellants. 22. Thus, having regard to the scheme of Chapter 6, we are of the view that a plain reading of the provisions of paragraph 6.11 (c)(i), would have us hold that notwithstanding the fact that the respondent company/Writ Petitioner made purchases from an EOU as against DTA unit, it would be entitled to seek reimbursement of CST. 8. Following the aforesaid Madras High Court Division Bench decision, the Allahabad High Court Division Bench in Writ Tax No.991/2015 (M/s. Samsung India Electronics Pvt.Ltd. Vs. Union of India and three others) in its judgment delivered on 18/07/2017 held as under: The matter was taken up in appeal to the Division Bench. The Division Bench dismissed the appeal holding that having regard to scheme of chapter 6 of the FTP and the plain reading of provisions of paragraph 6.11(c)(i) makes it clear that even purchases of the goods from EOU as against DTA unit by an EOU would entitle it to seek reimbursement of CST. In view of reasons recorded above and the Division Bench decision of the Madras High Court, we are also of the opinion that the petitioner is an EOU, who is purchasing goods as a raw material from another EOU or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in Asahi Songwon Colors Ltd. Vs. Union of India [2017 (0) AIJ-GJ 237880) in a decision rendered in Special Civil Application No.16301/2016 decided on 06/07/2017, also similarly held that such benefit of CST reimbursement cannot be denied to the Companies/Industries under the Foreign Trade Policy for the year 2009-14. The relevant extract from para graphs 18 and 21 of the said judgment are also quoted below: 18. A minute scrutiny of these provisions contained in para. 6.11 would reveal that the language used in clauses (a), (b) and (c), in general, was not made limited to the supplies from a DTA unit. As noted, clauses(a) and (b) both confined their application to the supplies made by the DTA unit. Clause(c) itself contained two situations. In sub-clause (i) what was envisaged was reimbursement of CST on goods manufactured in India. Sub-clause (ii) envisaged exemption from payment of CST on goods purchased from DTA on goods manufactured in India. Thus the policy wherever intended to limit the benefit of an EOU on procurement made from a DTA unit, it was so specifically provided. When therefore, sub-clause(i) of clause (c) of para 6.11 did not make any such reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in the course of inter-state Trade and charging CST, the goods continue to be the Goods manufactured in India which is the requirement in the said Foreign Trade Policy for entitling the petitioner -Company to claim such reimbursement of CST paid under the Central Sales Tax Act, 1956. 12. Moreover, the specific amendment in the said Foreign Trade Policy for the year 2015-2020 removed the said anomaly and discrimination as to the source of Units from which the petitioner may purchase such goods in the course of inter-state trade and commerce and the said amendment can be treated only as a clarificatory one and can be applied to the previous period also as held by the aforesaid Division Bench decisions by the three different High Courts. 13. Therefore, respectfully agreeing with the same, the present petitions also deserve to be allowed and the same are accordingly allowed and quashing the impugned Circulars and communications as indicated in the prayers of these petitions quoted above, the Writ Petitions are allowed with no order as to costs and the Respondents are directed to give the CST reimbursement/refund to the petitioner - Company in respect of the inter-state purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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