1. In this writ petition, the petitionercompany is aggrieved by the Notification dated 19.5.2004 issued by the Commissioner of Customs, Shillong (respondent No. 8) declaring only a part of 100 hectares of its limestone mining area and 7.6 hectares of land for crushing area as a Customs Warehousing Station under section 9 of the Customs Act, 1962 without the long elevated belt conveyor system for the purpose of setting of 100% ExportOriented Unit (''EOU'').
2. The facts giving rise to this case, as projected in the writ petition, are that the petitionercompany is duly incorporated under the Companies Act, 1956 with its registered office at Shillong, is a wholly owned subsidiary of Lafarge Surma Cement Ltd., a public limited company incorporated under the laws of Bangladesh; that the majority shareholder of Lafarge Surma Cement Ltd. is Surma Holding B.V. incorporated under the laws of the Netherlands; that Surma B.V. is a 50%50% ownership concern of Financiere Lafarge S.A. of France and Cemolins International S.A. of Spain. Thus, the ultimate sponsors of the petitionercompany are Lafarge of France and Molins of Spain. Lafarge is a world leader in building materials operating in more than 75 countries, while Molins of Spain is a reputed cement manufacturer having its operations in 6 countries. Lafarge Surma Cement Limited (''LSC'') has set up an integrated cement manufacturing facility at Chhatak under Sunamgonj District of Bangladesh. As Bangladesh has no limestone of its own, the limestones and shale required for the manufacture of cement by LSC in its cement plant in Chhatak, Bangladesh are extracted from the mines located at Nongtrai and Sheila villages in the State of Meghalaya, which are the only sources for limestones for the LSC. The distance between cement plant in Chhatak, Bangladesh and the mines in Meghalaya, India is about 17 kilometres across the international border between India and Bangladesh. The petitionercompany is holding the mining leases, and extracts the limestones and shale from those mines, crushes and processes the limestone and exports the same to the cement plant of LSC in Bangladesh by a 17 kilometres long elevated belt conveyor. These raw materials are then used by LCS cement plant in Bangladesh to produce clinker and cement. Though the two establishments are physically located in two different countries across international borders, the cement plant in Bangladesh, the mines in India and the long belt conveyor across international border are treated as parts of one integratedcement manufacturing unit. As the aforesaid integrated cement manufacturing facility falls within two separate territorial jurisdictions, i.e., India and Bangladesh, letters have been exchanged between the Government of India and Government of Bangladesh for early implementation of the project and grant of necessary approvals as a milestone for excellent relations and close economic cooperation between the two neighboring countries.
3. It is the further case of the petitionercompany that the LSC obtained the approval of the Secretariat of Industrial Approval (SIA) of the Government of India vide the letter Nos. FCII:393(98)/471(98) dated 1181998 to set up a 100% subsidiary company for the mining and export operations. Accordingly, the petitionercompany was set up for the purpose of mining and export operations. The long conveyor belt system is approximately 17 k.m. long, out of which 7 k.m. lies within the Indian border and the balance of 10 k.m. falls within Bangladesh. For setting up of the long belt conveyor system, the entire stretch of land falling within the Indian border on which the said continuous belt conveyor system is being set has been acquired by the petitionercompany from the respective landowners and similar arrangement was also made for the cement plant in Bangladesh by the LSC. Thus, the entire project is an integrated cement manufacturing facility set up on a continuous stretch of purchased land, even though they physically fall in two separate jurisdictions. The Board of Approval (BOA) in its Notification dated 7.8.2001 had clearly provided that it shall consider proposals under EOU/SEZ scheme that falls outside the Automatic Approval procedure as notified from timetotime and clause 3 of this Notification required that all cases would be submitted before it by the Development Commissioner, Falta Special Economic Zone, Kolkata (respondent 7) so that units have a single interface at the level of the Development Commissioner. On 5.7.2002, the petitionercompany accordingly made an application to the respondent No. 7 for approval by the BOA in accordance with the Notification No. 14/1/2001 EPZ dated 19.6.2001 for setting up Export Oriented Unit (EOU), that is, Limestone Mining Project in Meghalaya in which it was made clear that it is in the process of setting up 2 million tones per annum limestone mining project for exporting the entire produce to Bangladesh through a continuous elevated conveyor system after crushing and screening of the limestone at the mining site. The petitionercompany claimed therein EOU status for the said project which would include the mine, crusher and the long belt conveyor system. The capital cost of the project was estimated at Rs. 977 million out of which Rs. 350 million was the capital cost of the long belt conveyor system. Such estimated capital cost was duly disclosed by the petitionercompany in the Annexure to the said application. The respondent No. 7 thereafter communicated the grant of approval by the Government of India, i.e., the BOA vide the Letter of Permission dated 16.10.2002 to the petitionercompany as an 100% EOU for production and export of limestone (manufacture of cement) for the entire premises comprising of the entire project in India, i.e., the mining area, crusher and crushing area and the long belt conveyor system extending to the India border (hereinafter called "EOU Premises". This was followed by the execution of the Legal Agreement dated 14.10.2003 in the prescribed pro forma, with the respondent No. 7. In terms of the Letter of Permission read with the Legal Agreement, the petitionercompany would, thus, be eligible to import/purchase indigenous plant and machinery, raw materials, components, spares and consumables free of customs/central excise duty as specified in the Legal Agreement, which comprises of all goods requiring for mining and crushing of limestone as well as for export by a continuous long belt conveyor system till the Indian border. It was specifically provided by way of AnnexureI to the Legal Agreement that the long belt conveyor system was included in the list of duty exemption materials.
4. It is also the case of the petitionercompany that pursuant to the approval granted by the BOA as communicated by the respondent No. 7 and in view of the assurance/promise held out by the Government of India, it altered its position to its disadvantage by making substantial investment of about Rs. 977 million, which included the capital cost of the long belt conveyor system and for importing goods. The cost of importation commenced in November, 2003 and the importation of goods including the long belt conveyor systme was completed within October, 2005. It made investments in this project only because of the Letter of Permission granted by the BoA otherwise it would not have made investment in this project as it would not have been financially viable. The breakup of investment made in the long belt conveyor system during the relevant period can be divided into three parts:
Particulars Amount of investment (in Rs. crores)
(i) Period from 16.10.2002 to 13th/28.10.2002 (that is, from the date of letter of permission till the date on which the Board of Approval recalled its decision to exempt the long belt conveyor system 27,441
(ii) Period from 29th October, 2004 to 25th July, 2005 (that is, from the date of recalling order till the date on which the said decision was communicated to the petitioner) 29,145
(iii) Period from 26th July, 2005 to 30th September, 2005 3,000
Total investment made in long belt conveyor system during the period 16.10.2002 to 30th September, 2005 59,586
5. It is also pleaded by the petitioner that on the basis of the permission accorded to the petitionercompany as a 100% EOU, it also approached the jurisdictional excise authorities for granting excise registration for their entire approved EOU Premises as well as for issue of CT3 forms for duty free procurement of capital goods and raw materials for mining, crushing and long belt conveyor system used in connection with the production and export of limestone (manufacture of cement). However, the Deputy Commissioner, Central Excise Division, Shillong vide his letter dated 19.4.2004 granted the registration only for the purpose of crushing limestone and not for the entire EOU Premises as approved by the respondent No. 7 by, contending that CT3 forms would not be issued for the long belt conveyor system as the same cannot be said be brought in connection with the manufacture of limestone and is, therefore, not eligible for exemption under the Notification dated 31.3.2003 (as amended). The Customs authorities did not even register the lone belt conveyor system as part of the Customs 100% Warehousing station, which was contrary to the approval communicated by the respondent No. 7. This led the petitionercompany to submit the representation dated 22.4.2004 to the Commissioner of Central Excise, Shillong (respondent 9) explaining the entire project description with a prayer to issue necessary direction for grant of excise registration for the entire EOU premises and also for issue of CT3 forms so as to enable it to procure duty free capital goods and raw materials for mines, crusher and conveyor belt system. The respondent No. 9 rejected the representation on the ground that the said conveyor belt would be used for transportation of crushed limestone and shale to Bangladesh for which duty free procurement would be inadmissible. The petitionercompany in the meantime also made a request to the respondent No. 7 to clarify as to whether the mining and crushing activity in India and the cement manufacturing activity in Bangladesh, connected through the long belt conveyor system till the Indian border is an integrated manufacturing process and asserted that it is entitled to duty free procurement of capital goods/raw materials, etc., for the entire EOU Premises. In response to this, the matter was referred by the respondent No. 7 to the BOA, which in its meeting held on 3152004 specifically approved the procurement of conveyor belt for the unit as capital goods liable for duty free import, keeping in view the fact that it is a composite cement plant with units both in India and Bangladesh and is a part of joint collaboration between the two countries, and the same was communicated to the respondent No. 8 and the respondent No. 9 by the Assistant Development Commissioner, Falta Special Economic Zone, Kolkata under letter dated 30.6.2004, a copy where was endorsed to the petitionercompany thereby acknowledging that the project is a 100% EOU which included the conveyor belt system. Pursuant to this letter, the petitionercompany approached the respondent Nos. 8 and 9 to amend the Notification dated 19.5.2004 declaring only a part of the EOU Premises as a Customs Warehousing station and to include the long belt conveyor system within the Warehousing station under section 9 of the Customs Act, 1962. No communication was received from these authorities for a period of one year till 25.7.2005. However, by a belated letter dated 25.7.2005, the Superintendent. Office of the Commissioner of Central Excise, Shillong Range communicated to the petitionercompany that the BOA in its meeting dated 28.10.2004 had revised its own decision dated 31.5.2004. The copy of this decision of the BOA was not enclosed in the letter dated 25.7.2005. By this revised decision (which was in fact taken by the BOA in its meeting dated 23.9.2004 as revealed by AnnexureW series), the BOA held that since the conveyor belt is a means of transportation, it would not be possible to extend duty exemption to the unit for procurement of the same.
6. As the petitionercompany was aggrieved by the latest decision of BOA, it filed WP(C) No. 8686 of 2005 before this court for directing, among others, the respondent authorities to honor their promise contained in the earlier decision of the BOA dated 31.5.2004 and to allow exemption in respect capital goods brought from outside as well as purchased indigenously for the long belt conveyor system. The decision of the BOA reviewing and reversing the earlier decision dated 31.5.2004 communicated by the Ministry of Finance, Department of Revenue to the respondent No. 9 was made available to the petitionercompany only during the course of hearing of the said writ petition.
The learned Single Judge of this court by the judgment and order dated 27.7.2007 disposed of the writ petition by holding that the decision of the BOA reversing its earlier decision dated 31.4.2004 had been done behind the back of the petitionercompany in violation of the principles of natural justice and accordingly quashed the impugned decision of the BOA. The respondent authorities thereafter preferred an appeal being WA No. 31(SH) of 2007 against the judgment of the learned Single Judge. The Division Bench of this court by the judgment dated 5.3.2008 allowed the respondent authorities to withdraw the appeal by giving them the liberty to pass fresh order after giving reasonable opportunity of hearing to the petitionercompany. Thereafter, the petitionercompany made fresh representation before the BOA through the respondent No. 7 by invoking the doctrine of promissory estoppel and prayed for restoring their decision dated 31.5.2004. The BOA heard the petitionercompany on 3.6.2008, 29.8.2008 and 19.11.2008. The respondent No. 7 by his letter dated 6.1.2009 communicated to the petitionercompany that the BOA after due deliberation decided to reiterate its decision dated 23.9.2004/13.10.2004 that the conveyor belt installed outside the EOU Premises for transportation of goods was not eligible for duty free import/procurement under EOU Scheme. Since a copy of the said decision of the BOA was not forwarded to the petitionercompany nor was it communicated the date on which such a decision was taken or on what basis the same was taken, the petitionercompany approached the Chief Public Information Officer, Ministry of Commerce, Government of India for obtaining such information. The Chief Public Information Officer disposed of the application by providing the minutes of the meeting held by BOA. No reason was, however, disclosed in the minutes of the meeting of BOA for rejecting the application of the petitionercompany, but it came to learn that the impugned action of the respondent authorities are based on the decision taken by the BOA held on 23.9.2004. Dissatisfied with and aggrieved by the decision of BOA and the consequential refusal by the respondent authorities to grant duty exemption in respect of the long belt conveyor system, the petitionercompany is making this second round of litigation for appropriate directions.
7. The writ petition is resisted by the respondent authorities through the affidavitsinopposition filed by the Assistant Development Commissioner, Ministry of Commerce and Industry, Government of India, Falta Special Economic Zone, Kolkata and the Deputy Commissioner of Customs, Customs Division, N.E.R. Shillong. A perusal of both the counteraffidavits will reveal that the stance taken by all the respondents are substantially one and the same. Therefore, suffice it to refer to the counteraffidavit of the Ministry of Commerce and Industry. It is the case of the customs authorities that even if the limestone/shale mines and the crushing units of the petitionercompany located in India and the cement manufacturing unit located in Bangladesh along with the 17 k.m. long belt conveyor system connecting the two units are parts of one integrated cement manufacturing unit, for the application of Customs/Central Excise, VAT rules and regulations and procedure, separate laws operating in each individual country will apply to the unit located in each country. The long belt conveyor system (LBC) connecting the said two units is meant for transportation of the raw materials to the manufacturing unit located in Bangladesh, and the required raw materials such as crushed limestone and shale could as well have been transported to the factory at Bangladesh by any other means of transportation, i.e., by land route (i.e. by rail, road or conveyor belt), by reverie or sea route if feasible or by air route. The petitionercompany has chosen the mode of transportation by conveyor belt because it is most profitable and convenient for them. It is not a precondition for a cement manufacturing unit to have the raw materials transported by conveyor belt only. In other words, LBC is not an essential component of the said manufacturing unit. Taking into account the viability and administrative feasibility, the respondent No. 8 rightly declared the 100 hectares of limestone mining area and 67 hectares of crushing area as warehousing station for customs duty exemption. The petitionercompany is, thus, held not entitled to the benefit of the exemption notification outside the declared area. In other words, the 7 kilometer long belt conveyor transport system for transporting the crushed limestone to Bangladesh is outside the purview of duty exemption benefit. If the conveyor system for the seven long kilometers from the declared area is granted exemption of all duties under the Central Excise Act and Customs Act, then it would be ultra vires these two Acts and would invite illegal exemption claims in respect of capital investment on transport system.
8. It is also the case of the respondent authorities that the intention of the Government of India is not to grant exemption on transportation but to grant exemption for manufacturing of product herein for crushing of limestone for export purpose. The petitioner company has misrepresented the facts regarding the crushing of limestone and its ancillary activities in their unit for their selfish interest by asserting that the seven kilometer long conveyor belt is also covered by the exemption covering the EOU. The previous approval made by the respondent No. 7 was based on misrepresentation of facts made by the petitionercompany and had the correct facts, namely, the declaration of 100 hectares of limestone mining area and 67 hectares of land for crushing area would include the LBC warehousing station for the purpose of setting up of 100% EOU, been brought to the notice of the respondent No. 7 at the relevant time, no approval would have been given by the BOA. It is asserted that cement manufacturing activities in Bangladesh and the long conveyor belt for transporting crushed limestone cannot be considered to be an integrated manufacturing process for the purpose of vailing of duty exemption benefits. If the 7 kilometer long conveyor belt is treated as capital good eligible for duty free import, it would mean that for all similar units, a road and means for carriage of finished export goods could as well be recognized as an activity attributed to "manufacture of articles for export or for being used in connection with the production or packaging or job work for export of goods or services by export oriented undertaking" in terms of the Notification dated 31.3.2003. This Notification amply makes it clear that means of transporting export goods are not eligible for the exemption as the same is nowhere mentioned or figured in the eligible list of activities for the purpose of exemption. The initial approval of the BOA granting free import of good for construction of the LBC, thus, appeared to be ultra vires the said Notification. Therefore, only crushing of limestone can be recognized for the purpose of duty exemption and not the operation of LBC. As the petitionercompany has procured the goods for operating the LBC without payment of customs and excise duties, the duties not paid are liable to be recovered from it. There has never been any promise made by the answering respondents for duty exemption in respect of the long belt conveyor system, which is outside the declared area of EOU or is meant for transportation of limestone to the purchasing unit in Bangladesh. Therefore, the doctrine of promissory estoppel is clearly not applicable to the facts of this case. The BOA, on reviewing its earlier decision, came to know the true information and correctly decided not to grant duty exemptions in respect of the LBC, which is merely utilized for transportation of the crushed limestone to the manufacturing unit located in Bangladesh. The petitionercompany also admitted that the LBC extending across the international border of the two countries is a device for carrying the crushed limestone, which is the final product of the EOU located inside India, to the cement plant located in Bangladesh which purchases the final product of the petitionercompany. The process of manufacturing from raw materials to finished product is complete when the said raw material is collected from the quarry of the mines and subsequently crushed and made available for export. The petitionercompany is a 100% EOU approved by the respondent No. 7 and the basic requirement of EOU is to achieve minimum export performance as prescribed: it was allowed to install the LBC for transportation outside the declared area under EOU to enable them to meet the requirement of minimum export performance. The writ petition is premature and is not maintainable as the alternative remedy provided for in the instruction dated 31.1.2005 issued by the Central Board of Excise has not been exhausted by the petitionercompany. These are the sum and substance of the contentions of the answering respondents.
I have heard at length Mr. D. Pal, the learned senior counsel, assisted by Mr. S.S. Dey and Mr. V.G.K. Kynta, the learned counsel for the petitioners, and Mr. R. Debnath, the learned CGC appearing for the Revenue. Mr. D. Pal, the senior counsel for the petitioner, contends that the Board of Approval discharges quasijudicial functions, and the order disposing of the application for exemption of duty filed by the petitioner involves civil consequences and that the impugned decision of the Board indicated in the Memo dated 6.1.2009 issued by the respondent No. 7 is antithetical to fairplay in action which is an essential part of the principles of natural justice. It is his further contention that the Board of Approval, which is a quasijudicial body and a creature of statute, has no power of review its own order when no power of review is conferred by a statute, and the impugned order reviewing its earlier decisions dated 16.10.2002 and dated 31.5.2004 is without jurisdiction and cannot, therefore, be sustained in law. The learned senior counsel also submits that the petitionercompany is set up in the area declared as 100% exportoriented unit, which, in turn, is accepted by the parties as a composite and integrated unit for the manufacture of limestone and cement, and as the long conveyor belt (LBC) is to be treated as an integrated unit for the production of limestone and for the manufacture of cement in Bangladesh, for which alone the limestone is to be produced in the State of Meghalaya, full exemption regarding import duty and excise duty on the LBC was granted to it in terms of the order of permission granted by the Board of Approval on 16.10.2002 and the legal agreement dated 14.10.2003 executed between them: it is, therefore, not permissible for the BOA to deny/withdraw the exemption from import duty and excise duty on the ground that cement is being manufactured in Bangladesh outside India or that the LBC is only a means of transportation, for which import duty and excise duty cannot be exempted. The learned counsel maintains that where any particular process is so integrally connected with the ultimate production of goods and but for that process, manufacture or processing of goods would be commercially inexpedient, the articles so required in that process would fall within the expression "used in or in relation to the manufacture of goods" and so construed, the expression "in the manufacture of goods" should normally encompass the entire process carried on by the manufacturer/producer of converting raw materials into finished goods.
Contending that the impugned decision of the BOA holding that the LBC installed outside the EOU premises for transportation of goods was not eligible for duty free input/procurement under EOU Scheme is illegal and barred by the doctrine of promissory estoppel, the learned senior counsel urges this court to quash the same. In support of his various, the learned senior counsel relies on the following decisions:
(a) Union of India v. Mis AngloAfghan Agencies, AIR 1968 SC 718; (ii) Motilal Pada''mpat Sugar Mills v. State of U.P., (1979) 2 SCC 409; (iii) Pournami Oil Mills and ors. v. State of Kerala and Anr.., 1986 (Supp) SCC 728; (c) State of Punjab v. Nestle India (Ltd.), (2004) 6 SCC465; (d)Birla Corporation (Ltd.) v. Commissioner of Central Excise, (2005) 6 SCC 95; (e) Commissioner of Customs (Imports), Mumbai v. Tullow India Operations (Ltd.)., (2005) 13 SCC 789, (f) MRFF Ltd., Kottayam v. Asst. Commissioner, (2006) 8 SCC 702; (g) U.P. Power Corporation (Ltd.) v. Sant Steels and Alloys (P) (Ltd.). and Anr.., (2008) 2 SCC 777, (h) State of Bihar and ors. v. Kalyanpur Cement (Ltd.)., (2010) 3 SCC 274 and (i) Raj Cement (Ltd.) v. Union of India, 2006 (197) ELT 491 (Raj). Mr. R. Debnath, the learned CGC appearing for the Union of India and others, however, supports the impugned decision of the BOA and submits that as the first decision of BOA granting tax exemption to the petitionercompany was subsequently found to be contrary to the Notification No. 52/2003Customs, dated 31.3.2003, the BOA had no alternative but to recall the same: there can be no promissory against law. He also contends that no promise was ever made by the answering respondents to the petitioner for granting exemption from import duty and/or excise duty in respect of the LBC and even if such a promise was held out by the answering respondents, which is not the case as contended by the petitioner, such promise cannot bind them: to do so would be contrary to law. He, therefore, submits that the writ petition has not legs to stand and is liable to be dismissed with costs.
10. Before proceeding further, it will be profitable to reiterate the legal principles concerning the applicability of the doctrine of promissory estoppel in a particular case, which are succinctly explained by the Apex Court in Kasinka Trading v. Union of India, (1995) 1 SCC 274 at paragraphs 11 and 12 of the judgment:
"11. The doctrine of promissory estoppel or equitable estoppel is wellestablished in the administrative law of the country. To put it simply, the doctrine represents a principle evolved by equity to avoid injustice. The basis of the doctrine is that where any party has by his word or conduct made to the other party an unequivocal promise or representation by word or conduct, which is intended to create legal relations or effect a legal relationship to arise in the future, knowing as well as intending that the representation, or assurance or a promise would be acted upon by the other party to whom it has been made and in fact has been so acted upon by the other party, the promise, assurance or representation should be binding on the party making it and that party should not be permitted to go back upon it, if it would be inequitable to allow him to do so, having regard to the dealings, which have taken place or are intended to take place between the parties.
12. It has been settled by this court that the doctrine of promissory estoppel is applicable against the Government also particularly where it is necessary to prevent fraud or manifest injustice. The doctrine, however, cannot be pressed into aid to compel the Government or the public authority ''to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make''. There is preponderance of opinion that to invoke the doctrine of promissory estoppel clear, sound and positive foundation must be laid in the petition itself by the party invoking the doctrine and that bald expressions, without any supporting material, to the effect that the doctrine is attracted because the party invoking the doctrine has altered its position relying on the assurance of the Government would not be sufficient to press into aid the doctrine. In our opinion, the doctrine of promissory estoppel cannot be invoked in the abstract and the courts are bound to consider all aspects including the result sought to be achieved and the public good at large, because while the applicability of the doctrine, the courts have to do equity and the fundamental principles of equity must forever be present in the mind of the court, while considering the applicability of the doctrine. The doctrine must yield when the equity so demands if it can be shown having regard to the facts and circumstances of the case that it would be inequitable to hold the Government or the public authority to its promise, assurance or representation."
The following principles for invoking the doctrine of promise estoppel may be culled from the aforesaid observations of the Apex Court to invoke the doctrine of promissory estoppel:
(1) a party must make an unequivocal promise or representation by word or conduct to the other party;
(2) the representation was intended to create legal relations or affect the legal relationship, to rise in future;
(3) a clear foundation has to be laid in the petition, with supporting documents;
(4) it has to be shown that the party invoking the doctrine has altered its position relying on the promise;
(5) it is possible for the Government to resile from its promise when public interest would be prejudiced if the Government were required to carry out the promise;
(6) the doctrine cannot be pressed into service to compel the Government or public authority to carry out the representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make.
(7) The court will not apply the doctrine in the abstract.
11. There is no dispute between the parties that the petitioner has invested Rs. 977 million in the project including the cost of the LBC. The first point for consideration in this writ petition is as to whether any unequivocal promise was made by the respondent authorities that the petitionercompany would be granted exemption from payment of import duty and excise duty in respect of the LBC. To answer this question, it will be appropriate to refer to the correspondences exchanged between the High Commissioner for the People''s Republic of Bangladesh, New Delhi and the Foreign Secretary, Ministry of External Affairs, Government of India, New Delhi, which are best reflected in the letter dated 30.11.2000 of the latter, the relevant portions whereof read thus:
"I have the honor to refer to your letter No. 1.20.31.2000 dated 29th November, 2000 which reads as follows :
''I have the honor to refer to the proposed crossborder cement manufacturing project being set up by Lafarge Surma Cement (Ltd.) of Bangladesh and Lum Mawshun Put. (Ltd.) and Lafarge Umium Mining (P.) (Ltd.) of India. The project involving 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 timetotime, cause to be granted of such consent, clearances and approvals within the existing legal frame 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 IndiaBangladesh border at a location to be mutually agreed upon, during construction and operation of the project.
(c) Setting up of a Customs and Immigration posts 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 neighboring countries.
I would be grateful if Your Excellency could confirm that the above correctly sets out the understanding reached between our two Governments''.
I have the honor to confirm that the above correctly sets out the understanding reached between our two Governments."
12. From the above correspondences, it is obvious that an understanding was reached between the two Governments whereby the proposed crossborder cement manufacturing project involving 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 being set up by the petitionercompany had been allowed subject to fulfillment of certain terms and conditions. It was also agreed upon by the two countries that the proposed cement manufacturing project contemplated, among others, 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 at Bangladesh. At this stage, it may be noted that the Government of India in the Ministry of Commerce and Industry by the Notification dated 7.8.2001 constituted a combined Board of Approvals for EOU/SEZ Schemes (BOA), among others, for considering proposals under EOU/SEZ Schemes that fall outside the automatic approval procedure and notified from timetotime with a stipulation that all cases would be submitted before the Board by the Development Commissioner along with his comments so that the units have a single interface at the level of Development Commissioner. The Development Commissioner in the context of this case means the Development Commissioner, Falta Special Economic Zone (respondent 7). In the meantime, the petitioner by the letter dated 5.7.2002 addressed to respondent 7 stated thus:
"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, Sheila 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 export. Enclosed please find our application as per appendix 14A of Exim Policy, 2002. We request you kindly to consider our application and grant EOU status for the project at the earliest convenience. We remain."
13. The respondent No. 7 by his letter dated 16.10.2002 at AnnexureE addressed to the petitioner informed the latter of the extension of all the facilities and privileges admissible and subject to the provisions of Export Oriented Unit Scheme envisaged in ExportImport Policy, 20022007 for the establishment by the petitionercompany of the Nongtrai Limestone Mines in the State of Meghalaya. It was however, stipulated in paragraph 2(viii) therein that FBI approval from competent authority was to be obtained by the petitioner to set up a continuous elevated conveyor belt linking the mines in India and the Cement Plant in Bangladesh and that it should enter into a Legal Agreement in the prescribed form with DC, FEPZ for fulfilling the terms and conditions mentioned in the LOP. In my opinion, the letter also reveals that the respondent No. 7 had clearly understood that though the mining of limestone and shale and the crushing thereof in the State of Meghalaya in India on the one hand and the manufacture of cement from these crushed limestone in Bangladesh physically fall in two different countries, they would form an integrated manufacturing facility and that the LBC is an integral part of this composite unit. In my judgment, a combined reading of the letter dated 29.11.2000 of the Foreign Secretary, Ministry of External Affairs, Government of India, the letter dated 16.10.2002 plainly shows that a definite representation/assurance was made by the respondent authorities to the petitioner that its unit is a composite unit irrespective of whether the same involves cross border, cement manufacturing process through the LBC and that the petitioner would be entitled to free import and excise duty for the import/purchase of plant, machinery, raw materials, component spare and consumables including the LBC. This is reinforced by the letter dated 16.10.2002 of the respondent No. 7 at AnnexureE with reference to the application dated 18.7.2002, informing the latter of the extension of the facilities and privileges admissible and subject to the provisions of Export Oriented Unit Scheme as envisaged in the Export Import Policy, 20022007. It is interesting to note that the respondent No. 7 in this letter clearly mentioned that FDI approval from competent authority should be obtained for setting up of the LBC linking the mines in India and the Cement Plant in Bangladesh. This clearly gives an impression that the respondent No. 7 was aware of the duty exemptions sought by the petitioner in respect of the LBC and that the LBC is eligible for duty exemptions: no whisper of statement was made therein that the LBC would not eligible for the duty exemptions. As a matter of fact, this letter also flies in the face of the contention of the learned CGC that the respondent authorities were under the bona fide belief that the LBC was meant to be used within the warehouse and not outside the same.
14. The next question to be determined is under what circumstances an assurance can be deduced from a set of facts. The legal position is explained by the Apex Court in Amrit Vanaspati Co. (Ltd.) v. State of Punjab, (1992) 2 SCC 411 at paragraph 4 of the judgment in the following manner:
"4......It is, thus, obvious that there was representation to the appellant that it would be entitled to concessions and incentives announced by the Government if it sets up its unit in the focal point. Whether such representation resulted in binding agreement is a different issue but the representation coming from the Industries Secretary and the Director of Industries in pursuance of Government policy cannot be held to be unauthorized or beyond the scope of authority. The Government functions through its officials and so long they are acting bona fide in pursuance of Government policy the Government cannot be permitted to disown it as a citizen can have no means to know if what was being done was with the tacit approval of the Government. And if it found that the representation made by the official concerned was such that any reasonable person would believe it to have been made on behalf of the Government then unless such representation is established to be beyond scope of authority it should be held binding on the Government........................... Acting on the assurance, both express and implied, the appellant invested substantial amount in setting up the unit requesting, in the meanwhile, for grant of written sanction from the Government which, too, came. But even if it would not have made any difference in law as the equity arose in favor of the appellant not by the letter dated 16th June, 1969 but by altering its position on assurance given by authorities.
Basic ingredients of promise by the Government, belief of the appellant that it was true and if acted upon shall entitle it to refund of sales tax and finally altering its position by investing substantial amount were, thus, established to invoke promissory estoppel against the government." (underlined for emphasis)
In pursuance of the aforesaid stipulation, the petitioner executed the Legal Agreement dated 14102003 (AnnexureEl) with the President of India through the respondent No. 7 permitting it 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". It may be noted that the items/equipments so permitted to be imported free of Import/Excise duties with respect to continuous elevated belt conveyor (LBC) are also found at AnnexureI. The fact that LBC and its components were mentioned in this Legal Agreement as some of the plants and machinery to be imported/purchased duty free further indicates that the respondent No. 7 had accepted that the LBC is a capital good and is used in the manufacturing process of the integrated cement plant of the petitioner.
15. Apparently, the petitioner, in accordance with the said Legal Agreement, filed an application bearing dated 12.5.2004 to the Commissioner of Customs, Customs House, Shillong (respondent 8) for customs bonding for the entire EOU premises comprising of mining area, crusher and crushing area and the long distance belt conveyor system till the Indian border. The respondent No. 8 thereafter issued the Notification dated 19.5.2004 declaring the 100 hectares of limestone mining area and 7.8 hectares of land for crushing area belonging to the petitioner to be Warehousing station under section 9 of the Customs Act, 1962 for the limited purpose of setting up of a 100% EOU as per the LOP dated 16.10.2002 issued by respondent 7. From this Notification, it is obvious that the LBC was not considered a part of the Warehousing station. The petitioner by the letter dated 22.4.2004 also requested the Commissioner of Central Excise, Shillong (respondent 9) for grant of excise registration to it for the entire EOU premises comprising of the mining area, the crusher and crushing area and the long distant belt conveyor system (LBC) till the India border. The respondent No. 9, however, rejected this application on the ground that the LBC was to be used as a means of transport of limestone to the production unit within the territorial jurisdiction of Bangladesh vide the letter dated 30.4.2004. This was followed by the letter dated 6.5.2004 of the Additional Commissioner (Tech), Office of the Commissioner of Central Excise, Shillong addressed to the petitioner informing the latter that CT 3 form for procuring materials for construction of conveyor belt for transportation of finished goods to Bangladesh could not be issued as the same were not eligible for dutyexemption under he Notification dated 31.3.2003. Thereafter, the petitioner by the letter dated 13.5.2004 requested the respondent No. 7 to issue clarification regarding duty free procurement of capital goods and raw materials for mining, crushing and long distant belt conveyor system. Ultimately, the BOA in the meeting held on 31.4.2004 decided to approve the procurement of conveyor belt for the unit as capital goods liable for duty free import as the unit was a composite cement plant with units both in India and Bangladesh and is a part of joint collaboration between India and Bangladesh. On the basis of the approval of the BOA, the petitioner wrote to the respondents No. 8 and 9 separately for customs bonding of the EOU premises by including therein the LBC for registration under Central Excise of the EOU premises by including therein the LBC for the purpose of issuing CT 3 Certificates for duty free procurement of capital goods and raw materials. Both the applications were rejected. It also transpired that the BOA had taken a decision on 23.9.2004 to withdraw the approval granted to the petitioner on 31.4.2004 for the duty free procurement of the conveyor belt as they had been informed by the CBEC that the LBC was a means of transportation.
16. From the undisputed facts noticed in the foregoing, the petitioner right from the beginning had made it known to the respondent authorities that their unit was an integrated cement plant with units both in India and Bangladesh. In other works, it was clearly understood by and between the petitioner and the respondent No. 7 as well as the BOA that the limestone mining, crushing and transportation of the crushed limestone from Meghalaya, India and the manufacture of the cement from these crushed limestone in Bangladesh through the LBC is nothing but an integrated manufacturing process. The BOA while initially granting the approval had also recognized and accepted the case of the petitioner that the unit is an integrated cement plant even though it involved crossborder manufacturing process. In Birla Corpn. (Ltd.) v. Commissioner of Central Excise, (2005) 6 SCC 95, a somewhat similar question arose in the context of MODVAT credit on ropeway for used for transporting crushed limestone from mines. That was a case in which crushed limestone was brought to the appellant assessor''s factory premises from the mines located 4.2 k.m. away. Ropeway was used as a means of transportation for that purpose. The question is whether the duty paid on spares of such ropeway was entitled to MODVAT credit. The Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (CEGAT) answered in the negative on the ground that the ropeway was not a material handling equipment within the factory premises. The assessee then filed an appeal. There was no dispute before the top court that the crushed limestone was brought from the mines to the factory premises where it was depositing utilizing the ropeway as a means of transportation. Dismissing the appeal, the Apex Court held:
"4. Learned counsel appearing on behalf of the appellant submitted before us that there are several decisions of the Tribunal which have followed the principles laid down in J.K. Udaipur Udyog (Ltd.) and Pepsico India Holdings (Ltd.) and the law is now wellsettled.
5. In the instant case the same question arises for consideration and the facts are almost identical. We cannot permit the Revenue to take a different stand in this case. The earlier involving identical issue was not pressed and was, therefore, dismissed. The respondent having taken a conscious decision to accept the principles laid down in Pepsico India Holdings Ltd. cannot be permitted to take the opposite stand in this case. If we were to permit them to do so, the law will be in a state of confusion and will place the authorities as well the assessee in the quandary.
6. We, therefore, allow this appeal and hold that MODVAT credit is available to the appellant in the facts and circumstances of the case. The appeal is accordingly allowed. The order of CEGAT is set aside."
17. To summarize my findings, the Lafarge Umiam Mining (P.) Ltd. (LUMPL) of India and Lafarge Surma Cement Limited (LSC) are an integrated cement manufacturing factory though they are physically located in two different countries. The various correspondences prior to the execution of the Legal Agreement dated 14.1.2003 manifestly show that a definite representation/assurance/promise has been given by the respondent authorities that the petitioner would be exempted from payment of import and excise duties in respect of, among others, the LBC. In other words, a categorical assurance was made by the respondent authorities that knowing or intending that such assurance would be acted upon by the petitioner or that the assurance was intended to create legal relations or affect the legal relationship, to arise in the future. There is no dispute that the petitioner, acting upon this representation, altered its position, by investing a sum of Rs. 59.586 crores from 16.10.2002 to 30.9.2005 for installation of the LBC. The representation was subsequently incorporated in the Legal Agreement dated 14.1.2004 and the decision of the BOA dated 31.5.2004. The subsequent decision dated 23.9.2004 of BOA reversing its earlier decision dated 31.5.2004 granting duty free import/purchase of LBC was made available to the petitioner only during the course of hearing before this court on 24.5.2007. Once it is found that the project of the petitioner is an integrated cement manufacturing facility, there is no difficulty in holding that the LBC is a part and parcel in the manufacturing process of cement at the Bangladesh plant of the petitionercompany, irrespective of whether it is used as a means of transportation, and is, therefore, deemed to be included in the EOU. As the LBC is deemed to be a part of the crossborder integrated cement manufacturing facility, the promise held out by the respondent authorities cannot be said to be contrary to the Notification dated 31.3.2003, and is within the scope of authority of the respondent authorities. The BOA in granting the duty exemptions to the petitioner in respect of LBC, upon which the petitioner acted upon, altered its position and in the process invested huge amounts of money cannot now be permitted to go back upon it. There has never been any misrepresentation of facts by the petitioner in obtaining the initial approval of the BOA in question. There is no material on record placed by the respondent authorities to indicate that BOA based the impugned decision on the ground of misrepresentation of facts by the petitioner: it merely said that LPC is a means of transportation and, therefore, not eligible for duty exemptions. The doctrine of promissory estoppel, on the established facts of the case, is clearly applicable to the facts of this case. In the view that I have taken, the decision of the BOA dated 23.9.2004 adopted in its 5th Meeting (2004 Series) contained in the letter dated 6.1.2009 of the respondent No. 7 and the consequential notice of demand dated 8.4.2009 cannot be sustained in law. Lastly, it is contended by Mr. R. Debnath, the learned CGC, that the writ petition is not maintainable as the petitioner did not avail of the alternative statutory remedies available under the Customs Act and the Excise Act. There is no gainsaying that in a given case, the High Court may not entertain a writ petition under article 226 of the Constitution on the ground of nonavailability of an alternative remedy, but the said rule cannot be said to be universal application. The rule of exclusion of writ jurisdiction due to availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of the availability of an alternative remedy, a writ court may still exercise its discretionary jurisdiction of judicial review, in at least three contingencies, namely, (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. In these circumstances, an alternative remedy does not operate as a bar. [See M.P. State Agro Industries Development Corpn. Ltd. v. Jahan Khan, (2007) 10 SCC 88]. In my opinion, the instant case is covered by (i) and (iii) above.
18. For the aforementioned reasons, this writ petition succeeds. Resultantly, the impugned decision of the BOA dated 23.9.2004 (AnnexureQ1 and W4) be and is hereby quashed. Similarly, the notice of demand dated 8.4.2009 (AnnexureX) issued pursuant to the impugned decision of the BOA cannot stand independently and is, accordingly, set aside. Let a writ of prohibition issue prohibiting the respondent authorities from giving effect to the impugned decision of BOA and the consequential notice of demand. However, the parties are directed to bear their respective costs.
