SC notice to Centre on RInfra plea against DGFT circular

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: Sep 21 2013, 10:00am hrs
The Supreme Court on Friday issued notice to the Centre, GMR Power Corporation, Alstom India and others on a petition filed by Reliance Infrastructure (RInfra) challenging a 2011 DGFT circular that withdrew the benefit of 'deemed export' granted to the power firms under the Foreign Trade Policy.

A bench headed by Justice HL Dattu sought response from the commerce ministry, the director general of foreign trade (DGFT), KSK Energy Ventures, Arasmeta Captive Power Company, GMR Vemagiri Power Generation, GMR Rajahmundry Energy, Gujarat State Electricity Corporation and others as to why a batch of petitions pending before high courts of Delhi and Gujarat should not be transferred to the apex court.

RInfra and Rosa Power Supply Company said all the petitions raise a common substantial question of law and continuance of litigation in different HCs would be inappropriate and might lead to conflicting judgments.

Challenging refusal and withdrawal of 'deemed export' benefits provided to them under the earlier Foreign Trade Policy (FTP), the power firms said that the benefits were withdrawn in 2011 on an erroneous interpretation of the policy by the Policy Interpretation Committee (PIC).

Terming such a decision as 'illegal and arbitrary', Rinfra and other firms had challenged the PIC minutes at its meeting of March 15, 2011, the April 2011 circular and demand notices on following grounds: It retrospectively amended the FTP which is not permissible; the foreign trade office does not have power to seek refund already granted; the PIC was constituted in June 2012 and, therefore, it does not have power in relation to duty drawbacks granted prior to its coming into existence.

In accordance with the FTP, RInfra and others had supplied and procured goods for power projects under the international competitive bidding. Against such supplies, the firms were granted duty drawbacks running into hundred of crores.

Subsequently, the DGFT demanded refund of the benefit of R215 crore and R116 crore from RInfra and Rosa, respectively, via a non-speaking order on the basis that PIC had issued clarifications that do not entitle them to the benefit. Subsequently, the department issued a circular in April 2011, instructing regional authorities to review all the cases where payments were made contrary to PIC minutes.