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TMI Blog2018 (10) TMI 483X X X X Extracts X X X X X X X X Extracts X X X X ..... EOU when the goods are supplied from a DTA, however, as is well settled, a title to a statutory provision or for that matter any other document would not necessarily govern the plain language used therein and can, at best, be used for guidance - Clause (b) of para. 6.11 provides that suppliers of precious and semiprecious stones, synthetic stones and processed pearls from DTA to EOU would be eligible for grant of replenishment authorisations at rates and for specified items. Thus these two clauses (a) and (b) specifically dealt with the supplies made by a DTA to an EOU or other similar units such as EHTP,STP, etc. In contrast clause(c) did not use any expression that the same would be confined to a sale by a DTA unit. Clause (c) starts with the expression “In addition, EOU/EHTP/STP/BTP units shall be entitled to the following”. Subcause (i) of clause(c) provides for reimbursement of Central Sales Tax (CST) on goods manufactured in India. Subclause(ii) provides for exemption from payment of Central Excise Duty on goods procured from DTA on goods manufactured in India. The Hand Book of Procedures and in particular Appendix14-I-I contained therein nowhere aims to lay down any polic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ures, an EOU would be entitled to reimbursement of CST in respect of only those purchases made from DTA which are used for production of goods meant for export or utilized for export services. The CST paid on raw materials etc purchased from DTA which are used in manufacture of goods sold in DTA would not be eligible for reimbursement of CST. 4. The petitioner replied to the said letter under communication dated 19.11.2013 contending inter alia that reimbursement of CST is granted under foreign trade policy 2004-09. Such substantive provision contained in the foreign trade policy did not envisage any restrictions on the right of reimbursement. The provisions contained in the handbook of procedures cannot override substantive provisions made in the foreign trade policy. 5. For nearly two years thereafter, no further developments took place. The respondents, however, issued a show cause notice dated 31.12.2015/04.01.2016 to the petitioners in exercise of powers conferred under section 9 of the Foreign Trade [Development and Regulation] Act, 1992 (hereinafter to be referred to as the Act of 1992]. Under such show cause notice, petitioner No.1 was called upon to show cause why ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance was placed on the decision of Division Bench of this Court in case of Ashahi Songwon Colors Ltd. (supra) in support of both the contentions. Reliance is also placed on another decision of this Court in case of Jayant Agro Organics Limited vs. Union of India dated 25.04.2018 in Special Civil Application No. 3434 of 2018. In such judgement, the Court, relying on the decision in case of Ashahi Songwon Colors Ltd. (supra) , quashed the demand primarily on the ground of delay and laches on part of the department. Counsel pointed out that the department's SLP against the judgement of Ashahi Songwon Colors Ltd.(supra) was dismissed by the Supreme Court. 10. On the other hand, learned counsel for the department resisted the petitions contending that the authorities have passed orders in accordance with law. The fact situation in case of the present petitioner and Ashahi Songwon Colors Ltd. (supra) was different. 11.Having thus heard learned counsel for the parties and having perused the documents on record we may notice that the Foreign Trade Policy 2004-09 contained Chapter-6 which pertained to Export Oriented Units, Electronic Hardware Technology Parks, Software ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T has been actually paid by the EOU/EHTP/STP. 14. The respondents therefore rely on this condition to contend that there was erroneous reimbursement of central sales tax to the petitioners for the goods procured from DTA units which were utilized for manufacture of goods not for export but for clearances in the local market. In this context, the main argument of the petitioners is that the procedure laid down by the Government of India for granting reimbursement of central sales tax, cannot contain a condition which will curtail the right granted in the substantive provision contained in the Foreign Trade Policy. 15. Under very circumstances, such an argument came to be considered by this Court in case of Ashahi Songwon Colors Ltd. (supra). It was a case in which, the petitioner-company was situated in Kandla zone and was a 100% EOU. In the course of its manufacturing activity, the petitioner had purchased raw material manufactured in India. The manufacturers of such goods were situated either in DTA or non-domestic tariff areas such as EOU. In terms of Foreign Trade Policy 2004-09 on the purchases made by the petitioner between 2006-08, it claimed central sales tax reimb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods manufactured in India. 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 subclause(i) what was envisaged was reimbursement of CST on goods manufactured in India. Subclause (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, subclause(i) of clause (c) of para 6.11 did not make any such reference to the procurement from a DTA unit but used the expression goods manufactured in India , it must be understood that this clause would govern the goods purchased by EOU unit from any unit as long as the condition of goods being manufactured in India is satisfied. In plain terms, therefore, the Foreign Trade Policy 20042009 did not limit the benefit of CST reimbursement to a EOU on purchases made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the law would amount to violation of the basic structure of the Constitution of India. The power to legislate is incorporated under Article 246 of the Constitution of India and such power has been conferred on the Parliament and the State Legislature. Moreover, the power to frame Duty Draw Back Rules under the FTDR Act can be legislated by the Central Government only in exercise of power conferred under Section 19 in the manner prescribed under the FTDR Act and the same cannot be delegated to the Respondent no. 2 as expressly prohibited by Section 6(3) of the above Act. 29. We, thus, find that any attempt by the executives to legislate without the authority of law should be branded as a colourable device and therefore, the same is in violation of Article 246 of the Constitution of India. If we accept the contention of Mr Raval that the Respondent No.2 is authorized to incorporate the duty drawback Rules by reference, it would amount to acceptance of the proposition that the Respondent No.2 is authorized to deal with under the FTDR Act, the similar matters relating to duty and tax refunds as provided under Section 75 of the Customs Act, Section 37 of the Central Excise Act and Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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