Vedanta is also given many tax and duty exemptions for conducting operations in SEZ. Nalco had challenged the Odisha High Court's March order that allowed Vedanta’s Jharsuguda unit to participate in its tender.
The Supreme Court on Tuesday allowed UK-based Vedanta Resources or its overseas subsidiary to participate in state-run aluminium producer National Aluminium Company’s tender for the sale of surplus 30,000 mt of metallurgical-grade calcined alumina.
Nalco, the leading producer of low-cost metallurgical-grade alumina in the world, had earlier opposed the participation of Vedanta’s Jharsuguda unit, Odisha, on the grounds that the tender for alumina exports can be issued only to overseas customers and, therefore, Vedanta cannot participate in its tender.
The PSU said that since 2005 it sold alumina to overseas firms only and if at all Vedanta wanted to participate, it could apply only as a foreign buyer through its London-based company and not as a domestic purchaser. While the PSU uses the commodity to meet its in-house need of metal smelter at Angul, the surplus alumina of over 1.2 million tonne is exported annually.
A Bench led by Chief Justice SA Bobde, while disposing Nalco’s appeal, took note of the arrangement arrived at between the parties. It said that Vedanta Resource can participate in the tender, but the delivery of consignment will take place at Vishakhapatnam on FOB basis, though the same will be for use in Vedanta’s SEZ unit at Jharsuguda.
Vedanta also undertook to provide Nalco the bill of export and certification of goods having been admitted into the SEZ by the concerned SEZ officer as per the SEZ rules.
Alleging Vedanta of predatory approach, Nalco had said that if Vedanta participated, other overseas bidders would lose as they were placed in Vizag. “We have 30,000 tonne transported to Vizag via rakes. Other bidders would lose level field if Vedanta is allowed to pick up from Damanjodi. Vedanta would be highest bidder perpetually as they would save on logistics… Vedanta doesn’t want Calcina to be exported by Nalco, but exports by itself,” Nalco senior counsel Ranjit Kumar said.
Vedanta is the highest in production and exports and commands almost 48% market share, Nalco stated, adding that Vedanta is also given many tax and duty exemptions for conducting operations in SEZ. Nalco had challenged the Odisha High Court’s March order that allowed Vedanta’s Jharsuguda unit to participate in its tender.
Vedanta, on the other hand, argued that it is an Indian company and operations in other countries doesn’t change its parentage. “We may be registered at some other place, but are still considered to be an Indian company,” Vedanta’s senior counsel Mukul Rohtagi argued.
Vedanta, being a SEZ unit, is deemed to be foreign buyer located outside the territory of India, hence, it should be treated at par with the overseas entities, Rohtagi said. As per the provisions of SEZ Act 2005, the SEZs are categorized as a territory outside of India and supplies from Domestic Tariff Area to SEZ is considered as export.
Vedanta said that the PSU’s stand was against public interest as the conditions prevented the government company from realising maximum revenue from the sale of its alumina. Vedanta, which has established a SEZ Unit at Jharsuguda, Odisha, for aluminum production with capacity of 12.5 lakh tonne per year, made a huge investment of Rs 12,000 crore with the understanding that Calcined Alumina would be supplied by its Lanjigarh alumina refinery, which is entirely dependent upon alumina from third-party sources. The Lanjigarh plant ran into problem due to denial of mining at Niyamgiri on grounds of ecology and tribal protests. The HC had, while allowing Vedanta, noted the lack of economic sense requiring the Anil Agarwal firm to apply as a foreign firm. “Because, on one hand, it (Nalco) refuses Vedanta to participate in the tender and on the other hand Nalco has allowed it to apply through a sister concern based in London and spend huge foreign exchange to transport it to London and back to its plant in the SEZ, it does find any favour with commercial sense.”