INDIAN CHARGE CHROME LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) The short question for consideration in this writ application is whether the coal which is imported by the petitioner for generation of electricity in his captive power plant is exempted from levy of basic and additional duties of customs under the notification of the Government for 100% Export -oriented undertakings No. 13/81 -Cus., dated 9 -2 -1981, since electricity generated out of the captive power plant has to be used for the purpose of manufacture of charge -chrome to be exported out of India.

(2.) THE short facts necessary for the aforesaid determination are that the petitioner has set up a plant for manufacture of charge -chrome at Choudwar in the district of Cuttack within the State of Orissa and it has also an existing plant at Theruballi where ferro -chrome is being produced. The Government of India in the Department of Commerce issued a resolution declaring that in order to bridge the increasing deficit in the balance of trade and running down of exchange reserves, it has become necessary to step up the growth of export and accordingly Government have decided to implement a scheme to facilitate the setting up of 100% export oriented units and such units are entitled to certain concessions to enable them to meet the rigours of foreign demand in terms of pricing, quality precision, etc. According to the said resolution, a 100% export oriented unit would imply an industrial unit offering for export its entire production excluding permitted levels of rejects. It further stipulated that the intending entrepreneur should make applications to the Secretariat for Industrial Approvals, Ministry of Industry, Department of Industrial Development, in the relevant form which would be considered by a Board and if the unit is approved by the Board, then the terms and conditions embodied in the said resolution would apply. One of the concessions that is provided under the said resolution in respect of such units is that import of capital goods, component, raw materials, spares, consumables, office equipments, material handling equipments, such as fork -lifts, over -head cranes including construction materials shall be exempt from import duty. The Central Government in exercise of powers conferred by Sub -section (1) of Section 25 of the Customs Act, 1962, issued a notification exempting the capital goods, raw materials, components, etc. as described in the Schedule to the said notification imported by 100% export oriented undertakings from levy of basic and additional duties of custom subject to prescribed conditions. This notification is commonly called '100% export oriented undertakings 13/81 -Cus., dated 9 -2 -1981' and has been annexed as Annexure -6 to the writ petition. According to the said notification, the goods specified in the table when imported into India for the purpose of manufacture of articles for export out of India or for being used in connection with the production or packaging of goods for export out of India by 100% export oriented undertakings approved by the Board of Approvals, are exempted from the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 (Act 51 of 1975) and the additional duty, if any, leviable thereon under Section 3 of the Customs Tariff Act, 1975, subject to the conditions prescribed therein. The case of the petitioner, in brief, is that the petitioner has its export oriented undertaking duly approved by the Board of Choudwar and Theruballi producing charge -chrome and ferro -chrome and further has its own captive power plant for generation of electricity to be used in the two aforesaid export oriented undertakings of the petitioner and consequently, the coal imported from outside to be used in turn is necessary for the manufacture of charge -chrome and/or ferro -chrome must be held to be either 'raw materials' described in Item No. 2 of the table, or 'consumables required for manufacture of goods' described in Item No. 5 of the table to the Notification 13/81 (Annexure -6) so as to be entitled to the exemption from levy of duty of customs and additional duty as contained in the said notification.

(3.) THE opposite parties have filed a counter affidavit sworn to by the Assistant Collector, Central Excise and Customs. The main stand taken in the counter affidavit is that coal cannot be considered to be a raw material or 'consumables required for manufacture of goods' for the export oriented undertaking of the petitioner, namely the factories for manufacture of charge -chrome and ferro -chrome and, therefore, it will not come within any of the goods described in the table attached to the notification entitled for exemption in case of 100% export oriented undertakings commonly called the Notification 13/81 -Cus., dated 9 -2 -1981. It has, however, been categorically stated in paragraph 7 of the counter affidavit that the capital goods and allied power generating equipments for the captive power plant have been cleared out free in favour of the petitioner in consonance with the order of the Hon'ble Supreme Court.