LexM/S. HINDUSTAN GRANITES versus UNION OF INDIA AND ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
MIS. HINDUSTAN GRANITES
A
v.
UNION OF INDIA AND ORS.
APRIL 3, 2007
[DR. ARITITPASAYAT ANDS. H. KAPADIA, JJ.]
B
....
Import-Export:
Foreign Trade Policy 2004-2005-Para 6.8(a) and para 6.8{h)- c
Circular dated 30.8.2005 and Notification 24 dated 31.8.2005-By impugned
circular/Notification, EOU's prevented from making DTA sales of finished
marble from imported rough marble-Validity of circular/Notification-Held,
valid as it fulfils the test of public interest and reasonableness qua restriction
imposed on 100% EOU-DTA sales not an integral part of EOU scheme-
Director General also found that over the years, entire export of marble tiles l)
made out of poor quality indigenous rough marble blocks for achieving
1
NFE-On account of above practice, Restricted Import Policy of marble
during EOU scheme(unamended) circumvented-Marble is in restricted
category because mining industry depends on that resource as it generates
employment-Unamended policy had no correlation between input imported
and finished product exported
E
EOU scheme-Object of-Discussed
The challenge in this appeal is to the validity of policy Circular dated
30.8.05 and Notification No. 24 dated 31.8.05 which has the effect of amending
para 6.S(a) and para 6.S(h) of the Foreign Trade Policy 2004-2009. Para 6.S(a) F
of the 2004-2009" provided that goods, upon 50% of FOB Value of exports,
could be sold on payment of concessional rate of duty in the DT A subject to
fulfillment of positive NFE. Under para 6.S(b), sale of finished products could
be made in DTA against payment of full duty, provided the said good was freely
importable under the Policy. Further, under para 6.8(h) sale of by-products G
and sale of waste beyond the entitlement of para 6.8 was permissible on
payment of full duty.
'"'
On 31.8.05, the impugned Notification was issued amending para 6.8(a)
and para 6.8(h) of FTP 2004-2009. By the impugned Notification the EOUs
743
H
744
SUPREME COURT REPORTS
(2007] 4 S.C.R.
A were prevented from making DT A sales of the finished marble from imported
rough marble, with immediate effect
The contention of petitioners was that on account of the impugned
notification, the quantity of marble sold by it in the DT A stood reduced; that
the quantity which could be imported by Special Import License Units (SIL
B Units) was arbitrarily increased resulting in unreasonable discrimination
between 100% EOUs and SIL Units; that the quanHty of Marble sold by the
EOUs in the domestic area has been reduced and the quantity of marble sold
by SIL Units from the same imported rough marble stood sfgnificantly
increased which has resulted in the loss to the EOUs; that the impugned
C . circular/notification was against public interest since the SIL Units had no
Export Obligations, they were not Foreign Exchange Earners and they were
required to pay lesser rate of duty; that DT A sales constituted essential feature
of the EOU Scheme since vide para 6.1, 100% EOUs undertook to export their
entire production of goods, except permissible sale in the DTA, and, therefore,
the DTA sales constituted an integral part of EOU Scheme; that in the absence
D ofDTA sales, an EOU would be compelled to sell its entire production in the
export market and that the impugned Circular/Notification has been published
with the view to protect the SIL Units at the cost of 100% EOUs.
E
Disposing of the IAs, appeals, transfer petitions and transfer cases, the
Court
HELD: 1. Thtre is no merit in the challenge to the impugned Circular/
Notification for the following reasons: Firstly, it is important to note that under
para 6.1 of the unamended FfP 2004-2009, 100% EOUs undertook to export
their entire production except permissible sales in DTA. Therefore, DTA sales
F constituted an exception or an incidental facility. DTA sales were not an
integral part of the EOU Scheme. Para under 6.1, EOUs were allowed to be
set up on the condition that they would export their entire production. It is on
this condition that 100% EOUs should avail of various benefits under Customs
and Excise Act The said DT A sales or sales of rejects were exceptions. DTA
sales were not an integral part of the EOU Scheme in the sense that if for
G reasonable reasons if these exceptions are eliminated, as in this case, the
Scheme would become unworkable. Secondly, 100% EOUs have been
importing rough marble blocks from whkh they are producing marble tiles/
slabs and whatExcerpt shown. Read the full judgment & AI analysis in Lexace.