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Judgment
Prafulla C. Pant, C.J.—This writ appeal is directed against judgment and order dated 13.08.2010, passed by the learned single Judge in WP(C) No. 198(SH) 2009, whereby, writ petition has been allowed, and decision of Board of Approval (for short BOA) dated 23.09.2004 (withdrawing the exemption granted earlier to the writ petitioner vide Board Resolution dated 31.05.2004 from payment of import duty), is quashed. Learned single Judge has further set aside the demand notice dated 08.04.2009, issued by the appellants, and restrained them from giving effect to the Board of Approval decision dated 23.09.2004.
Heard learned counsel for the parties and perused papers on record.
Brief facts of the case as stated in the writ petition are that the petitioner is a company incorporated under Companies Act, 1956, having its registered office at Hotel Polo Towers, Polo Grounds, Oakland Road, Shillong. The petitioner-company is a wholly owned subsidiary of Lafarge Surma Cement Ltd., a public limited company incorporated under the laws of Bangladesh. M/s. Lafarge Surma Cement Ltd. (for short LSC) has set up an integrated cement manufacturing unit at Chhatak in District Sunamgonj of Bangladesh as there is no limestone available in Bangladesh. Limestone and shale required for manufacture of cement by LSC in its cement plant are extracted from the mines located at Nongtrai and Shella Villages in the State of Meghalaya, which is the only source of raw material for the cement plant in Bangladesh. The distance between cement plant in Chhatak, Bangladesh and mines in Meghalaya (India) is about 17 kilometers. The petitioner-company which holds mining leases, extracts limestone and shale from the mines, crushes and processes the limestone and exports the same to the cement plant of LSC in Bangladesh by a 17 kilometers long elevated belt conveyor (for short LEBC). Though the two establishments are physically located in two different countries, but the cement plant in Bangladesh, mines in India, and long belt conveyor across international border are parts of one integrated-cement unit. The Lafarge Surma Cement Ltd. (LSC) of Bangladesh obtained approval of the Secretariat of Industrial Approval (for short SIA) of the Government of India vide letter No. FCII: 393(98)/471(98) dated 11.08.1998 to set up a 100% subsidiary company for the mining and export operations. The writ petitioner''s (present respondent) case is that in the State of Meghalaya (India) under the flagship of petitioner-company (i.e. subsidiary company of LSC) manufacturing process of cement commences from mining and limestone and shale crushing the same so as to make it consumable for cement production through the continuous long belt conveyor system till the Indian Border for its destination at the manufacturing plant in Bangladesh. It has been stated by the writ petitioner in its petition that 7 kilometers of long conveyor belt system out of 17 Kilometers lies within the territory of India and remaining 10 kilometers lies within the limits of territory of Bangladesh. The stretch of land over which long conveyor belt passes through has been acquired by LSC. Thus, the entire project is an integrated cement manufacturing facility set up on a continuous stretch of projects land.
The writ petitioner has pleaded that Board of Approval notification dated 07.08.2001 provided that Board of Approval shall consider proposal under Export Oriented Unit (for short EOU/SEZ) scheme that falls out side the automatic approval procedure as notified from time to time. The writ petitioner on 05.07.2002 moved an application for setting up of EOU i.e. limestone mining project in Meghalaya. It was made clear in said application that the petitioner in the process of setting up two millions tonnes per annum limestone mining project, and the entire produce was to be exported to Bangladesh through a continuous elevated conveyor system after crushing and screening of the limestone at the mines sites. Said application was submitted by the petitioner to the development Commissioner, Falta Special Economic Zone (FSEZ), Kolkata for consideration of approval in accordance with Notification dated 14/2001-EPZ dated 19.06.2001. The capital cost of project was estimated at Rs. 977 million out of which Rs. 300 million was capital cost of the long belt conveyor system. The jurisdictional Development Commissioner, FSEZ, Kolkata communicated the grant of approval by the Government of India. The Board of Approval was the competent authority to grant the Letter of Permission (for short LOP), which issued letter dated 16.10.2002 as a 100% export oriented unit for production of export of limestone (for manufacturing cement) for the entire premises comprising the entire project in India i.e. mining area, crusher and crushing area and long conveyor belt system extending right up to the Indian Border. It is further pleaded by the writ petitioner that it executed an agreement dated 14.10.2003 with Development Commissioner, and in terms of letter of permission read with the agreement, petitioner was entitled to import/purchase indigenous plant and machinery, raw materials, components, spares and consumables free of customs/central excise duty as specified in the agreement.
It is also pleaded in the writ petition that pursuant to facility/exemption granted by the Board of Approval as mentioned above, the writ petitioner made substantial investment which included capital cost of long belt conveyor system. The process of importation commenced in November, 2003, including the long belt conveyor system which was completed in October, 2005. The writ petitioner has further pleaded that it was only because of letter of permission granted by the Board of Approval that the petitioner-company made huge investment. It is stated in the writ petition that the writ petitioner on faith and on the basis of the aforesaid expressed assurance of respondent authorities, had made the investment to the tune of more than Rs. 59 crores by September, 2005.
On 12.05.2004, on the basis of the permission accorded to the writ petitioner as a 100% EOU, the petitioner-company had approached jurisdictional Custom authorities for declaring the entire EOU premises comprising of mining area including crusher and crushing area and the long belt conveyor system till the Indian border as a Customs Warehousing Station, in terms of letter of permission issued by the Development Commissioner, FSEZ, Kolkata. But the Commissioner of Customs (Preventive), Shillong issued notification No. 3/2004-CUS(NT) dated 19.05.2004, whereby, only a part of EOU permits comprising of 100 % hectares of limestone mining area and 7.6. hectares of land from crushing area were declared as a customs warehousing station (as such area pertaining to long elevated conveyor belt (in India) was left out). In terms of said notification, the Assistant Commissioner of Customs, Shillong granted licence No. 01/PB-Warehouse/Customs/SHG/2004 dated 25.05.2004 to the writ petitioner under Sections 58 and 65 of Customs Act, 1962 for deposit of imported capital goods, plant machinery, components, spares, raw-materials and consumables without payment of duty and for the purpose of manufacture of articles in the specified premises for export out of India. In this licence also long belt conveyor area was not mentioned. On the basis of the permission, the petitioner-company has a 100% EOU project jurisdictional Excise authorities for grant of excise registration for their entire EOU premises as a whole for issuance of CT-3 forms for duty free procurement of import goods and raw materials for mining, crushing and long belt conveyor system used in connection with the production and export of limestone. In response to said application, Central Excise authorities granted registration by issuing letter C. No. IV(7)4/SHCEXDIV/REGN-LAFARGE/2004-2009 dated 19.04.2004 but in this registration also entire EOU premises as approved by the Development Commissioner were not included, and long belt conveyor system (in India) was excluded. On this, the writ petitioner made a representation on 22.04.2004 to Commissioner of Central Excise, Shillong to grant excise registration in respect of the entire premises of EOU (including long conveyor belt system) and issuance of CT-3 Forms. In reply to this, the Deputy Commissioner, Central Excise, Shillong and Addl. Commissioner, Technical, Central Excise, Shillong vide letters dated 30.04.2004 and 06.05.2004 denied issuance of CT-3 Form for procurement of material for construction of long belt conveyor system (in India) on the ground that said conveyor would be used for the purpose of transportation of crush limestone and shale to Bangladesh for which duty free procurement under the aforesaid notification is not permitted. This made writ petitioner to seek clarification from Development Commissioner, Kolkata, for which it wrote letter dated 13.05.2004 regarding the fact that the integrated manufacturing process is being conducted right up to the Indian border as a single EOU premises. The matter was referred to the Board of Approval (BOA) by the Development Commissioner, and BOA, in its meeting held on 31.05.2004 specifically approved procurement of conveyor belt for the unit as a capital goods liable for duty free import keeping in view the fact that is the composite cement plant with units both in India and Bangladesh, and is a part of joint collaboration between India and Bangladesh. Accordingly, the communication was made vide letter No. 2(1)/L-2/2004/2403 dated 30.06.2004 acknowledging that the project is a 100% EOU which included long conveyor belt system. On receipt of said communication, the writ petitioner approached Assistant Development Officer, Falta, Kolkata for amending the notification No. 3/2004-CUS (NT) dated 19.05.2004 to include long belt conveyor system within warehouse station u/s 9 of the Customs Act, 1962. No reply was received for almost one year, and by a belated letter dated 25.07.2005, Superintendent, Office of Commissioner of Central Excise, Shillong Range communicated to the writ petitioner that subsequently BOA in its meeting held on 28.10.2004 has revised its own decision dated 31.05.2004. By then, the petitioner had already made huge investment in the project.
Aggrieved by aforesaid communication regarding change in stand by the appellant, taking the ground of doctrine of promissory estoppel, the writ petitioner (in first round of litigation), filed earlier WP(C) No. 8686 of 2005 which was heard by the then Gauhati High Court and during hearing of said case, the present appellant expressed desire to hear the writ petitioner before taking a fresh decision. However, said writ petition was disposed of vide order dated 27.07.2007 holding that:
(i) That an opportunity of being heard cannot be accepted at this stage although affording opportunity of pre-decisional hearing in a particular situation is also in consonance with the fairness.
(ii) That rectification of the earlier decision and alteration on the condition on the ground that there has been defiance of terms and conditions may be done on obtaining fact finding report of such defiance and only in consonance to the provisions of law.
(iii) The decision of BOA dated 31.05.2004 had been recalled behind the back of the petitioner company. The Central Excise authorities on acting upon the Ministry communication dated 28.10.2002 conveyed that duty exemption is not available as BOA has amended its earlier decision.
(iv) The decision taken as referred to in letter dated 28.10.2002 and reference thereto in letter dated 25.07.2005 is contrary to the principles of natural justice and passed without affording opportunity of being heard in the facts and circumstances of the present case.
(v) Without analysis of other points for considerations, the impugned order has been passed behind the back of the company and therefore is set aside and writ petition is accordingly allowed.
It appears that Union of India challenged the aforesaid order by filing WA No. 31(SH) 2007 before the Division Bench of the Gauhati High Court which was heard and disposed of vide order dated 05.03.2008, which shows that the Union of India and its authorities withdrew the writ appeal with opportunity to pass fresh order by giving reasonable opportunity of being heard to the petitioner-company. The order passed in WA No. 31(SH) 2007 reads as under:
05.03.2008
Heard Mr. D. Choudhury, learned Central Government Counsel (for short CGC) representing the Union of India/appellants as well as Mr. SP Sharma, learned counsel representing the respondent.
Mr. Choudhury, learned CGC submits that he may be permitted to withdraw this writ appeal with a liberty to pass fresh order(s) by giving reasonable opportunity to the respondent.
Liberty is granted.
This writ appeal stands disposed on withdrawal.
In the event, the respondent/writ petitioner is aggrieved by any decision taken by the appellants after giving them reasonable opportunity, the respondent shall be at liberty to approach the appropriate forum.
Thereafter, the writ petitioner made fresh representation before the Board of Approval through Development Commissioner, FSEZ), Kolkata and hearing went on before the BOA on 03.06.2008, 29.08.2008 and 19.11.2008. However, earlier decision dated 23.09.2004/13.10.2004 was reiterated and communicated to the writ petitioner vide letter dated 06.01.2009 by Development Commissioner, FSEZ, Kolkiata. Aggrieved by said order, fresh round of litigation started and writ petitioner filed WP(C) No. 198(SH) 2009. In the present round of litigation, it is pleaded by the writ petitioner that no reason has been disclosed for rejecting the application of the petitioner-company. It is further pleaded that letter dated 06.01.2009 issued by the Development Commissioner, FSEZ is an antithetic to the principle of fair play in action. No minutes of the proceedings held on 03.06.2008, 29.08.2008 and 19.11.2008 were supplied to the writ petitioner. By its letter of permission, a huge investment of Rs. 59 crores has been invested by the writ petitioner in installing the long belt conveyor system. It is also alleged in the present round of litigation that the conclusion reached by the BOA without mentioning any reason therefore shows arbitrariness of the decision in rejecting the application of the writ petitioner. It is also stated in the writ petition that long conveyor belt is not mere means of transportation but a machine carrying crush limestone from the mines to the cement plant for the production of clinker and cement, which every cement plant has to install this type of equipment for transfer of minerals to the cement plant. Only for the reason that the belt is longer it cannot be excluded from EOU premises. It is further pleaded that the BOA has failed to appreciate that the cement plant was the composite plant as mutually agreed between the Government of Bangladesh and Government of India. With the above pleadings, the writ petitioner sought quashing of the communication dated 06.01.2009 issued by the Development Commissioner, FSEZ, Kolkata and decision of Board of Directors in its meeting held on 23.07.2004. It is also submitted that on the basis of principle of promissory estoppel, the writ petitioner who has made huge investment, facility given to him cannot be withdrawn to his disadvantage.
The appellants (respondents before learned single Judge) contested the writ petition and filed their counter affidavits in which it is pleaded that even if the mining of limestone and crushing units located in India, and cement manufacturing unit located in Bangladesh are connected by 17 kilometers long belt conveyor system, the rules relating to Customs, Central Excise Act etc. are operational to the units located in the respective countries. It is further stated in the counter affidavits that if the conveyor belt system for seven long kilometers in India is declared as area for which exemption is granted, it will be ultra vires to the Central Excise Act and Customs Act. It is also pleaded by the appellants in their counter affidavits filed before the learned single Judge that the Government of India never intended to grant exemption of transportation for manufacturing of product for export purposes. It is alleged by them that the petitioner-company misrepresented the fact regarding crushing of limestone and its ancillary activities in their unit for their selfish interest by ascertaining that 7 kilometers long conveyer belt is also covered by the exemption covering EOU. It is contended on behalf of the appellants that the previous approval made by the respondent authorities (present appellants) was based on the misrepresentation of facts and they have right to correct their decision after correct fact was brought to the notice of the authority concerned. It is also pleaded that if 7 KM long conveyor belt is treated as capital goods eligible for duty free import, it would mean that all similar units meant for carrying finished exports goods shall be recognized as an activity attributed to manufacture of article for export or for being used in connection with production or package or job work for export of goods or services by export oriented undertaking. Notification dated 31.03.2003, according to the appellants, does not allow means of transportation of export of goods eligible for exemption, as such, only crushing of limestone can be recognized for the purposes of duty exemption and not for parting long belt conveyor system. Since the petitioner-company has procured goods for operating LBS without payment of Customs and Excise duty, the duty not paid is liable to be recovered from them. It is stated in the counter affidavits that there has never been any permission made by the appellants for exemption of duty of long belt conveyor system out side the declared area of EOU. As per the stand taken by the appellants, a doctrine of promissory estoppel is not applicable to the facts of the present case. According to the appellants, process of manufacturing their raw material to finished product is complete when the said raw material in its new form was made available for export. Lastly, it is stated that the writ petition is not maintainable as the petitioner has failed to approach the Board of Central Excise to challenge the impugned decision of the appellant authorities.
Before further discussion, we think it just and proper to look into the root, as to how two interconnected units are established at a distance of 17 KM one in Bangladesh and another in India. In this connection, we would like to quote the letter dated 29.11.2000 written by High Commissioner of People''s Republic of Bangladesh, New Delhi to the Foreign Secretary of Government, Republic of India. Said document is annexed A1 on the record which reads as under:
High Commissioner for the People''s Republic of Bangladesh New Delhi
Commissioner No. 01.20.31.2000
29 November 2009
Excellency,
I have the honour to refer to the proposed cross-border cement manufacturing project being set up by Lafarge Surma Cement Ltd. of Bangladesh and Lum Mawshun Pvt. Ltd. and Lafarge Umium Mining Pvt. Ltd. of India. The project involves mining operations in a quarry located in the State of Meghalaya in India and the export of limestone and shale to the cement plant in Bangladesh.
The Government of India and the Government of Bangladesh confirm that they shall, upon application by the relevant parties and subject to compliance with necessary conditions and regulatory requirements as may be specified from time to time, cause to be granted of such consent, clearances and approvals within the existing legal framework, as are necessary for:
a) Installation of a continuous elevated conveyor belt linking the mines in India and the cement plant in Bangladesh across a portion of restricted border area and its uninterrupted operation for transportation of limestone and shale from the mines to the cement plant.
b) Facilities and permission for convenient border crossing and recrossing for the personnel required to cross the India-Bangladesh border at a location to be mutually agreed upon, during construction and operation of the project.
c) Setting up of a Customs and Immigration post to be conveniently located in an area to be mutually agreed upon at the cost of Lafarge Surma Cement Ltd.
The Government of India and the Government of Bangladesh look forward to the early implementation of the project as a milestone of the excellent relations and close economic cooperation between our two neighbouring countries.
I would be grateful if Your Excellency could confirm that the above correctly sets out the understanding reached between our two Governments.
Please accept, Excellency, the assurances of my highest consideration.
In reply to above letter, Foreign Secretary, Ministry of External Affairs, New Delhi wrote the following letter on 30.11.2000 (copy Annexure A2) which is reproduced below:
Foreign Secretary Ministry of External Affairs New Delhi-110011
No. 1/ii/113/8/97
30 November 2000
Excellency
I have the honour to refer to your letter No. 01.20.31.2000 dated November 29, 2000 which reads as follows:
I have the honour to refer to the proposed cross-border cement manufacturing project being set up by Lafarge Surma Cement Ltd. of Bangladesh and Lum Mawshun Pvt. Ltd. and Lafarge Umium Mining Pvt. Ltd. of India. The project involves mining operations in a quarry located in the State of Meghalaya in India and the export of limestone and shale to the cement plant in Bangladesh.
The Government of India, and the Government of Bangladesh confirm that they shall, upon application by the relevant parties and subject to compliance with necessary conditions and regulatory requirements as may be specified from time to time, cause to be granted of such consent, clearances and approvals within the existing legal fame work, as are necessary for:
(a) Installation of a continuous elevated conveyor belt linking the mines in India and the cement plant in Bangladesh across a portion of restricted border area and its uninterrupted operation for transportation of limestone and shale from the mines to the cement plant.
(b) Facilities and permission for convenient border crossing and recrossing for the personnel required to cross the India-Bangladesh border at a location to be mutually agreed upon, during construction and operation of the project.
(c) Setting up of a Customs and Immigration post to be conveniently located in an area to be mutually agreed upon at the cost of Lafarge Surma Cement Ltd.
The Government of India and the Government of Bangladesh look forward to the early implementation of the project as a milestone of the excellent relations and close economic cooperation between our two friendly neighbouring countries.
I would be grateful if Your Excellency could confirm that the above rightly sets out the understanding reached between our two Governments.
I have the honour to confirm that the above correct sets out the understanding reached between out two Governments.
Please accept, Excellency, the assurances of my highest consideration.
In the above background, the writ petitioner Lafarge Umiam Mining Ltd. moved an application dated 05.07.2002 (Copy Annexure D) for grant of EOU status for establishing its unit in Meghalaya, and for grant of EOU status. Said application is reproduced below:
July 5, 2002
The Development Commissioner Export Processing Zone, 4th Floor Nizam Palace, AJC Bose Road, Kolkata.
Subject: Application for setting up EOU-Nongtrai Limestone Mining Project in Meghalaya of Lafarge Umiam Mining Private Limited, Shillong, Meghalaya.
Dear Sir,
We are pleased to inform that Lafarge Umiam Mining Private Limited, registered under the Indian Companies Act, 1956 having its registered office at Polo Towers, Polo Grounds, Oakland Road, Shillong, 793001, is in the process of setting up 2 million tones per annum limestone mining project at Phlangkaruh, Nongtrai, Shell Confederacy, East Khasi Hills District in Meghalaya. The entire produce is proposed to be exported to Bangladesh through a continuous elevated belt conveyor system after crushing and screening of the limestone at the mine site. Under the Exim Policy of Government of India, we wish to apply for grant of EOU status for the project. Enclosed please find our application as per appendix 146 of Exim Policy 2002. We request you kindly to consider our application and grant the EOU status for the project at the earliest convenience. We remain.
Thanking you.
On consideration of above letter, licence dated 25.05.2004 (copy Annexure H) was granted to the writ petitioner which is reproduced below:
Government of India Ministry of Finance Office of the Assistant Commissioner of Customs Division: Shillong
Crescens Building, 2nd Floor, Mahatma Gandhi Road, Shillong-01.
Licence for Private Customs Bonded Warehouse Licence No. 01/PB-Warehouse/Customs/SHG/2004
Date of Issue; 25.04.2004
With reference to the application dated 19.05.2004 of M/s. Lafarge Umiam Mining Private Limited, a 100% Export Oriented Unit having their premises at Phlangkaruh; Village Nongtrai, East Khasi Hills District in the State of Meghalaya, for Customs Bonded Warehouse, Licence is hereby issued u/s 58 & 65 of the Customs Act 1962 for deposit of imported capital goods, plant and machinery, components, spares, raw materials and consumables without payment of duty and for the purpose of manufacture of articles in the premises specified below for export out of India, by the said 100% Export Oriented Unit, approved by the Development Commissioner, Falta Special Economic Zone, Kolkata, in terms of Notification No. 53/97-Cus., dated 03.06.97 as amended from time to time, subject to the conditions as set out.
Description of the premises [declared as Warehousing Station by Commissioner of Customs (Preventive), NER, Shillong vide Notification No. 3/2004-Cus.(NT) dated 19.05.2004 u/s 9 of the Customs Act, 1962]
The 100 hectares of Limestone Mining Area as detailed in approved ground plan, bounded as follows:
a) North (1000 metres) Ka Risenf u Kyrnah (Elaka Nongtrai).
b) South (1000 metres) Ka Risenf u Kyrnah (Elaka Nongtrai)
c) East (1000 metres) Ka Risenf u Kyrnah (Elaka Nongtrai)
d) West (1000 metres) Ka Risenf u Kyrnah (Elaka Nongtrai)
The 7.6 hectares of land for crushing area as detailed in approved ground plan, bounded as follows:
a) North Land of Durbar of U Sandi Nongtrai leased to the Lessee for Limestone mining.
b) South PWD Road.
c) East Land of Durbar.
d) West Land of Durbar of U Sandi Nongtrai/Land of Durbar of U Sandi Nongtrai leased to the Lessee for belt conveyor.
The above Licence is granted to M/s. Lafarge Umiam Mining Private Limited. It is not transferable to any per/persons and shall remain in force up to 24.05.09 unless specifically revoked before the expiry of that period u/s 58 of the Customs Act, 1962, read with Regulation 14 of Manufacture & Other Operations in Warehouse Regulations, 1966.
(GM Kamei) Assistant Commissioner.
Thereafter, agreement dated 14.10.2003 (copy Annexure E1) appears to have been executed between the writ petitioner and the President of India, through Development Commissioner, FSEZ. Said agreement has been executed in pursuance to communication dated 16.10.2002 and it is mentioned that the unit (writ petitioner) has been permitted to import/purchase indigenously plant and machinery, raw materials, components, spares and consumables free of import/central excise duty as per details given at Annexure (i) with such agreement (which is part of Annexure E1 to the writ petition). Page 2 of said Annexure to agreement discloses that conveyor belt has been shown as mechanical equipment for which no central excise duty is required to be paid.
Now, we come to the approval given by the BOA which is a backbone of this case, in favour of the writ petitioner. Approval given by the Government of India, FSEZ, Ministry of Commerce and Industry, Department of Commerce by its communication dated 2(1)/L-2/2004/2403 dated 30.06.2004 which is part of Annexure M1 reads as under:
Government of India Falta Special Economic Zone Ministry of Commerce & Industry Department of Commerce 234/4, A.J.C. Bose Road, Nizam Palace, 2nd MSO Building, 4th floor, Kolkata-700 020.
No. 2(1)/L-2/2004/2403
Dated: 30.06.2004
The Commissioner of Customs (Preventive), North Eastern Region, 110, Mahatma Gandhi Road, Shillong, Meghalaya.
The Commissioner of Central Excise, Morello Compound, M.G. Road, Shillong.
Sub: Request of M/s. Lafarge Umiam Pvt. Ltd-permission for duty Free procurement of conveyor belt system.
Sir,
In pursuance of the request of M/s. Lafarge Umiam Pvt. Ltd. holding LOP No. 2(1)L-2/2002/7064 dated 16.10.2002 for duty free procurement of conveyor belt system for their 100% EOU, I am directed to send herewith extract of the minutes of the BOA meeting on 31.5.2004 under the Chairmanship of Shri G.K. Pillai, Additional Secretary, Ministry of Commerce & Industry, New Delhi.
Yours faithfully,
Sd/- (Ms. A. Dhar) Asst. Development Commissioner
Cases Requiring Boa Approval
2.1. Request of M/s. Lafarge Umiam Pvt. Ltd.-Permission for duty free procurement of Capital goods, Raw Materials for making CG etc.
The Board decided to approve the procurement of conveyer belt for the unit as capital goods liable for duty free import, keeping in view the fact it is the composite cement plant with units both in India and Bangladesh and is part of a joint collaboration between India and Bangladesh.
(Action: FSEZ)
It is not disputed that after the above mentioned approval communicated to the writ petitioner, the writ petitioner made investment in crores with regard to long conveyor belt. It is in this light, the writ petitioner has taken the plea that the withdrawal of duty free import facility in respect of long conveyor belt and the appellants are bound of doctrine of promissory estoppel.
On behalf of the appellants, it is argued that since the writ petitioner had made misrepresentation as such the appellants were justified in changing their decision and withdrawing the facility. We agree with the principle that in case of misrepresentation, decision can be withdrawn but having gone through the entire record on the evidence discussed as above, we do not find any misrepresentation made by the writ petitioner. No doubt, area of warehouse was mentioned in the licence dated 25.05.2004 of the writ petitioner as 100 hectares for limestone mining area, and 7.6 hectares of land for crushing area. But the project report submitted in July, 2002 with application for licence clearly shows that the writ petitioner had mentioned in para 18 that it proposes to install the long belt conveyor from the mine site to the cement plant at Chhatak in Bangladesh to transport crushed limestone. Summary capital cost of 977 millions which is also part of the project discloses the amount to be spent on long belt conveyor facility. As such it cannot be said that the writ petitioner had concealed any fact from the appellants. Letter of Permission dated 16.10.2002 issued to the writ petitioner by the FSEZ, Kolkata is annexed at Annexure E to the writ petition.
On behalf of the writ petitioner/respondent, attention of this Court is drawn to the case of Indian Copper Corporation Limited Vs. Commissioner of Commercial Taxes, Bihar and Others, . In the mid of para 14 of the said judgment, the Apex Court has observed as under:
14........... We are also of the opinion that in a case where a dealer is engaged both in mining operations and in the manufacturing process-the two processes being interdependent-it would be impossible to exclude vehicles which are used for removing from the place where the mining operations are concluded to the factory where the manufacturing process starts. It appears that the process of mining ore and manufacture with the aid of ore copper goods is an integrated process and there would be no ground for exclusion from the vehicles those which are used for removing goods to the factory after the mining operations are concluded. Nor is there any ground for excluding locomotives and motor vehicles used in carrying finished products from the factory.
Also in Vikram Cement Vs. Commnr. of Central Excise, Indore, , the Apex Court has held that:
If mines are captive mines so that they constitute one integrated unit together with the concerned cement factory, Modvat/Cenvat credit on capital goods available-If mines are not captive mines but they supply to various other cement factories of different assesses, Modvat/Cenvat credit on capital goods used will be available to the assessee.
In paras 12 and 13 of Collector of Central Excise, Jaipur Vs. Rajasthan State Chemical Works, Deedwana, Rajasthan, , the Apex Court has made following observations:
Manufacture thus involves series of processes. Process in manufacture or in relation to manufacture implies not only the production but the various stages through which the raw materials are subjected to change by different operations. It is the cumulative effect of the various processes to which the raw materials is subjected to, manufactured product emerges. Therefore, each step towards such production would be a process in relation to the manufacture. Where any particular process is so integrally connected with the ultimate production of goods that but for that process manufacture or processing of goods would be impossible or commercially inexpedient, that process is one in relation to the manufacture.
The natural meaning of the word ''process'' is a mode of treatment of certain materials in order to produce a good result, a species of activity performed on the subject-matter in order to transform or reduce it to a certain stage. According to Oxford Dictionary one of the meanings of the word ''process'' is "a continuous and regular action or succession of actions taking place or carried on in a definite manner and leading to the accomplishment of some result." The activity contemplated by the definition is perfectly general requiring only the continuous or quick succession. It is not one of the requisites that the activity should involve some operation on some material in order to its conversion to some particular stage. There is nothing in the natural meaning of the word ''process'' to exclude its application to handling. There may be a process which consists only in handling and there may be a process which involves no handling or not merely handing but use or also use. It may be a process involving the handling of the material and it need not be a process involving the use of material. The activity may be subordinate but one in relation to the further process of manufacture.
Reliance is also placed on behalf of the present respondents in the case of J.K. Cotton Spinning and Weaving Mills Co. Ltd. Vs. Sales Tax Officer, Kanpur and Another, . In para 9 of said judgment, the Apex Court has observed as under:
In our judgment if a process or activity is so integrally related to the ultimate manufacture of goods so that without that process or activity manufacture may, even if theoretically possible, be commercially inexpedient, goods intended for use in the process or activity as specified in Rule 13 will qualify for special treatment......
Lastly, in Commissioner of Central Excise, Surat-I Vs. Favourite Industries, , the Apex Court quoting the case of Commissioner of Customs (Preventive), Mumbai Vs. M. Ambalal and Co., reiterates that:
......beneficial exemptions having their purpose as encouragement or promotion of certain activities should be liberally interpreted....
However, we are of the opinion that the principle contained in above cases cannot be made applicable to the cases where two different companies registered in two different countries have established their units dependant on each other. In our view the ground on which this writ appeal is liable to be dismissed is that the learned single Judge has rightly applied doctrine of promissory estoppel against the appellants, particularly when there was no misrepresentation made by the writ petitioner.
For the reasons as discussed above and after going through the papers on record, we concur with the view taken by learned single Judge. We find no misrepresentation made by the writ petitioner. As such, the impugned judgment and order dated 13.08.2010 passed by the learned single Judge in WP(C) No. 198(SH) 2009 does not require any interference. Accordingly, the writ appeal is dismissed. No order as to costs.