IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF JANUARY 2019 BEFORE THE HON’BLE MR. JUSTICE H. T. NARENDRA PRASAD W.P.Nos.27052-27053 OF 2012(GM-RES) BETWEEN:
1. M/s Velankani Infrastructure & Projects Pvt. Ltd.
Plot No.43, Electronic City Phase-II, Hosur Main Road Bangalore-560 010 Represented by its Director Mr/Sri. Ramakrishnaiah.
2. M/s Prodigy Hydro Power (P) Ltd., # 32, 28th Cross, Industrial Layout Banashankari II Stage Bangalore-560 070. Represented by its Director Mr/Sri. Yechreddy Harish. … Petitioners (By Sri. B.G. Chidananda Urs, Advocate for Smt. Rukmini Menon, Advocate) AND:
1. The Joint Director of Foreign Trade Kendriya Sadan, Bangalore 2. The Joint Director General of Foreign Trade Udyog Bhavan, New Delhi.
3. The Deputy Director General of Foreign Trade Department of Commerce Directorate General of Foreign Trade Udyog Bhavan, New Delhi.
4. The Directorate General of Foreign Trade Udyog Bhavan, New Delhi.
5. The Deputy Commissioner of Customs (Import) MP & SEZ, Mundra, Gujarat. ... Respondents (By Sri. H. Jayakara Shetty, CGC for R1 to R4 Sri. Y. Hari Prasad, CGC for R5) These writ petitions are filed under Articles 226 & 227 of the Constitution of India praying to direct the R1 to R3 to withdraw the impugned letter dated: 15.02.2012, vide Annexure-A denying advance authorization benefit to the petitioner No.1 in terms of para 8.3(a) of the Foreign Trade Policy and to quash the Policy Circular dated 28.12.2011 vide Annexure-B and etc.
These writ petitions, coming on for final hearing, this day, this Court, made the following:
ORDER The petitioners have challenged the letter dated 15.02.2012 (Annexure A) issued by the respondent No.3 wherein it is stated that the first petitioner is not entitled to get any benefit of Advance Authorization.
2. The case of the petitioners is that second petitioner is the Project Authority developing Small Hydro Electric Power Project in Himachal Pradesh, India. The second petitioner entered into contract with the first petitioner for supply of materials for the Power Project. Subsequently, the petitioners have entered a second contract on 27.07.2010 (Annexure-C) for installation of plant and equipment. Pursuant to that contract, the first petitioner had placed an order for supply of E & M Equipment from M/s. Global Hydro Energy, Austria to supply the same to the second petitioner who is the Project Authority developing Hydro Electric Power Project in Himachal Pradesh. For the said import, advance authorization was issued by the first respondent which would exempt the first petitioner from paying the customs duty for a sum of Rs.1.5 crores. The advanced authorization was issued with CAF (Cost Insurance and Freight) value allowed for Rs.6,41,03,057.28, FOB (Freight on Board) value allowed for Rs.10,18,10,820.00 and the value addition at 58.824%.
3. The further case of the petitioners is that pursuant to the agreement first petitioner has imported the components, assembled the same in India and supplied the finished products to the second petitioner. Hence, as per the Foreign Trade Policy the petitioner is entitled for deemed export benefits. As per the Foreign Trade Policy the petitioners have applied for deemed export benefit and they have furnished the relevant documents to show that they have imported the components and assembled the same in India and supplied the finished product to the second petitioner. The respondents, without considering the documents submitted by the petitioners and without giving any notice, unilaterally taken a decision on the basis of the meeting held on 27.01.2012 issued Annexure-A dated 15.03.2012 stating that the first petitioner is not entitled for deemed export benefit. Being aggrieved by the same, petitioners have filed these petitions.
4. Sri B.G.Chidananda Urs, learned counsel for the petitioners submits that as per the contract, first petitioner is importing various components from outside the country, assembling the same in India and making finished products and supplying the same to the second petitioner. Hence, the first petitioner was the ‘manufacturer’ as defined under para 9.36 of Foreign Trade Policy. Accordingly, first petitioner is entitled for the deemed export benefit. The first petitioner has furnished the relevant documents to show that he has imported the components and assembled the same in India. The respondents, without giving any notice and without considering the documents submitted by the first petitioner have taken a unilateral decision and issued the impugned letter at Annexure A.
5. Per contra, Sri H.Jayakara Shetty, learned CGC for the respondents submits that the products which are supplied are boilers, turbines and generators which are the final products and there is no manufacturing done by the first petitioner in India as per the Foreign Trade Policy. He has imported the finished products and supplied the same to the second petitioner. Therefore, the petitioners are not entitled for the deemed export benefits. He further submits that subsequently the first petitioner has given a letter dated 21.03.2012 (Annexure-M) seeking for cancellation of Advance Authorization. Pursuant to his request, by order dated 30.03.2012, his request has been accepted and the Advance Authorization has been cancelled. Hence, he is not entitled for any relief.
6. Sri Y.Hariprasad, learned counsel appearing for respondent No.5 has adopted the arguments advanced on behalf of learned counsel appearing for respondent Nos. 1 to 4.
7. Heard learned counsel for the parties and perused the writ papers.
[8. The specific case of the petitioners is that the first petitioner has imported various components from outside the country, assembled the same in India and supplied the finished product to the second petitioner. To establish their case they have also furnished the relevant documents to the respondents to show that they are ‘manufacturers’ as defined in para 9.36 of the Foreign Trade Policy and as per para 8.2 they are entitled for deemed export benefit. The respondents have not given any opportunity to the petitioners to establish their case and they have not considered the documents produced by the petitioners. They have unilaterally taken a decision and passed the impugned order at Annexure-A. Therefore, there is violation of principles of natural justice. To give one more opportunity to the petitioners Annexure-A dated 15.02.2012 is treated as show- cause notice. The petitioners are permitted to submit their reply with the relevant documents to respondent No.3 within a period of four weeks from the date of receipt of the certified copy of this order. The third respondent is directed to consider the reply given by the petitioners along with the relevant documents and pass a detailed order in accordance with law.
9. With the above observations, the writ petitions stand disposed of.
Sd/- JUDGE Cm/-