M/s. Marble Art & Ors. v. Union of India & Ors.

1. The Petitioner No.l is a registered partnership firm engaged in the production of marble articles for the export market. It is a 100% exportoriented unit (EOU) registered with the Development Commissioner at the Noida Special Economic Zone. The Petitioners 2 and 3 are the partners of Petitioner No.l. It is stated that the Petitioners were conducting a domestic tariff area (DTA) sales alongside exports since 2010:DHC:12671 1.e., raw materials imported by the Petitioners which was thereafter transformed by the Petitioners into finishedproducts.

2. In terms of Para 6.8(a) of the Foreign Trade Policy (FTP) 2004-09 which came into force on 1^' April 2004, goods up to 50% of the FOB value of exports couldbe sold on paymentof concessional rate of duty in the DTA subjectto fiilfilment of positive Net ForeignExchange Earnings (NFE). The ceiling included sale of rejects as well as sale of waste scrap/remnants and by-products. Sale of finished products in the DTA could be made against the payment of full duty provided they were freely importable under the policy. Sale of by-products and sale of waste beyond entitlement was permissible on payment of full duty.

3. On 30'*^ August 2005 a policy circular was issued and consequently on 31^' August 2005 a notification was issued by the Director General of Foreign Trade (DGFT) amending Para 6.[8] (a) and 6.[8] (h) of FTP 2004-

09. As a result EOUs were prevented from making DTA sales of the finished marble made from imported rough marble with immediate effect.

4. Aggrieved by the aforementioned circular/amended Para 6.8(a) and Para 6.8(h) of the FTP a large number of EOUs, including the Petitioner No.l, filed writ petitions in the various High Courts as well as the of India (2007) 12 SCC 178. While dismissing the challenge to the circular and notification by the 100% EOUs, the Supreme Court, inter alia, noted that the amended policy stopped the procurement of domestic roughmarbleblocksfor achieving NFE of 100% EOUs.

5. Inthepresent petition, it is sought to be contended thatthejudgment of the Supreme Court in Hindustan Granites v. Union of India was restricted to examining the validity of the policy circular and notification which amended Paras 6.8(a) and 6.8(h) ofthe FTP 2004-09. According to the Petitioners, the judgment in Hindustan Granites v. Union ofIndia did not deal with the question of retrospectivity of the aforementioned notification. In other words, it was not clear whether the EOUs could make sales in the DTA of the accrued entitlements and the vested rights prior to the notification coming into force. It is statedthat the Petitioners had earned DTA sale permissions against export entitlements which were issued prior to the date ofthe notification.

6. A reading of the judgment of the Supreme Court in Hindustan Granites v. Union of India shows that on 10'^ January 2007 an interlocutory order was passed by the Supreme Court, the full text of which is set out in para 20 of the final judgment dated 3'^'^ April 2007. That order dated 10^ January 2007 notes the contention of one of the EOUs that "they have accumulated wastes which they are entitled to sell ^7 they were entitled to sell the accumulated wastes in the domestic market (DTA) under Para 6.8(h) on payment of full duty". The Supreme Court then permitted the EOUs to make a representation "giving facts and figures regarding the quantity of waste which has accumulated and it will be open to DGFT if possible to decide the question regarding sale of the said waste in the DTA".

7. In para 21 in Hindustan Granites v. Union ofIndia, it is noticed that on 7'*^ February 2007 "the Director General of Foreign Trade after hearing the parties and after considering their representations passed an order rejecting the various representations made by M/s Hindustan Granites Ltd., M/s Abhishek Exports, M/s Pacific Industries Limited, M/s Jain Grani Marmo Pvt. Limited and M/s Marble Art (all 100% EOUs). The said order is also under challenge before us".

8. It is plain to this Court from the above paragraph of the judgment dated 3'"'^ April 2007 of the Supreme Court that the Petitioner No.l also made a representation to the DGFT regarding disposal of the accumulated wastes in the DTA under Para 6.8(h) on payment of ftill duty. The rejection of the representation made by the Petitioner was also challenged before the Supreme Court. In the circumstances, it is not possible for this Court to accept the submission that the judgment of the Supreme Court in Hindustan Granites only dealt with the question of the

9. After the judgment of the Supreme Court in Hindustan Granites, the Petitioners wrote to the Commerce Ministry stating that there was nothing in the judgment of the Supreme Court which could be said to militate against their request to allow the DTA sales against prior entitlements, and accordingly sought a written clarification that they may proceed with the DTA sales against past entitlements. It is stated that on 8"^ Februaiy 2006 itselfthe Commerce Ministry had written tothe DGFT clarifying that the notification could not be retrospective. The Development Commissioner had also clarified in December 2005 to the DGFT that the permissions already issued could not be disallowed. However, no clarification as requested by the Petitioners was issued by the Commerce Ministry. In the circumstances, the Petitioners were "constrained" to approach the Supreme Court seeking clarification of its judgment dated 3'^'^ April 2007 and for an appropriate direction that the notification dated 31^' August 2005 did not bar the Petitioner from making DTA sales in respect of the entitlements accrued to it prior to the said notification coming into force". A copy of the said application seeking clarification/direction filed before the Supreme Court has been enclosed with the petition. It is stated that the above application of the Petitioners was summarily dismissed of the Supreme Court on 29^'' September 2009. The order dated 29^*^ September 2009 did not give any reasons. A copy ofthe said order has also been enclosed. which was dismissed by the Supreme Court on 29^^ September 2009.

11. Mr. Ganesh, the learned Senior counsel for the Petitioners sought to urge that the m.ere dismissal of an application by the Supreme Court without giving reasons would not prevent this Court in exercise of its jurisdiction under Article 226 to entertain a substantive writ petition raising the very same issue which was raised in the above application dismissed by the Supreme Court. He further contended that it was open to this Court to interpret the judgment in Hindustan Granites, and hold that it was confined to examining the validity of the amended Notification dated 31'' August 2005 and fijrther hold that the said Notification was not retrospective.

12. This Court is unable to accept the above submission. As already noticed hereinbefore, the judgment in Hindustan Granites notes that even during the pendency of those cases, the issue of sale by the EOUs of accumulated wastes in the DTA was raised; the Petitioners were permitted to make a representation to the DGFT; the DGFT rejected those representations; and the order of the DGFT was also challenged before the Supreme Court. After the final judgment dated 3*^^ April 2007 the Petitioner went back to the Supreme Court with an application for clarification on the very issue. That application was dismissed. This Court fails to understand how in the above circumstances this Court can dismissal by it oftheir lA by the order dated 29^^ September 2009 will not prevent this Court from examining the issue in a substantive petition under Article 226 ofthe Constitution, this Court cannot possibly entertain this petition.

13. The writ petition is accordingly dismissed.

S. MURALIDHAR, J.

FEBRUARY 04, 2010 ak