The Central Government may prescribe the manner in which benefits shall be granted to the Developer: High Court Of New Delhi


The petitioner has filed the present petition under Article 226 of the Constitution of India impugning an order dated 28.12.2016, The petitioner also prays that the petitioner may be allowed benefits under Section 26 of the Special Economic Zones Act, 2005 ( ‘the SEZ Act’) in respect of maintenance and duty-free imports of raw materials and consumables for operation W.P.(C) No.662/2017 and maintenance of the power plant and the same issue was held in the judgement passed by a single bench judge comprising HON’BLE MR JUSTICE VIBHU BAKHRU, in the matter M/S MOSER BAER INDIA LTD  V. UNION OF INDIA & ANR. dealt with an issue mentioned above

The petitioner is a company, inter alia, engaged in the generation of electricity, which is captively consumed and also supplied to other units in the Special Economic Zone (SEZ Units). The petitioner had submitted its proposal seeking approval for its power generating unit in MBIL-SEZ. The said proposal was accepted and by a Letter of Approval dated 08.10.2009. The said approval was subject to certain terms and conditions as stipulated in the LoA including that, the approval was valid for one year from the date of issue, within which the petitioner was obliged to implement the project and commence production. It was also stipulated that the LoA would be valid for five years from the date of commencement of production.

On 21.03.2012, the Government of India, Ministry of Commerce and Industry, Department of Commerce issued fresh guidelines for power generation in SEZ which superseded the 2009 Guidelines. The said Guidelines continued till 31.03.2015 and during this period the petitioner continued to operate its unit and availed O&M benefits as available under Section 26 of the SEZ Act. In the meanwhile, with the expiry of five years, the LoA expired and in terms of the letter dated 04.12.2014, the LoA was renewed for a further period of five years, that is, till 08.10.2019.

So the petitioner submitted its proposal for a fresh Letter of Approval for a power plant unit in the non-conventional energy SEZ, MBIL-SEZ. The same was placed before the Approval Committee at its meeting held on 01.04.2016. The Approval Committee was of the view that a fresh Letter of Approval was not required as the petitioner’s unit was already approved for power generation. However, it noted that O&M benefits were not allowed to the petitioner’s unit during the period 01.04.2015 to 15.02.2016 under the 2009 Guidelines as restored by the Government of India by its letter dated 06.04.2015.The relevant extract of the said letter setting out the few conditions in it.

In its appeal, the petitioner raised two issues. First, it claimed that it was entitled to O&M benefits during the period 01.04.2015 to 15.02.2016 under Section 26 of the SEZ Act and the Rules made W.P.(C) No.662/2017 thereunder. Second, it claimed that it was entitled to sell surplus power under Rule 47(3)(c) of the Special Economic Zone Rules, 2006 and the Approval Committee had no power to demand the duties imposed on inputs consumed by an SEZ unit.

The Board of Approval rejected the petitioner’s appeal by the impugned order dated 28.12.2016. And, this led the petitioner to file the present petition.

It was apparent from the above that the controversy involved in the present petition relates to the questions, (a) whether the petitioner is entitled to O&M for the period 01.04.2015 to 15.02.2016; and (b) whether the condition that no duty-free benefits for transfers to EOU are contrary to the SEZ Act and the Rules made thereunder.

The court perused the facts and argument’s presented, it thought that- “In view of the above, the present petition is allowed to the limited extent that the condition imposed by Unit Approval Committee of refunding the O&M benefits obtained by the petitioner during the period 01.04.2015 to 15.02.2016 by its letter dated 18.04.2016, is set W.P.(C) No.662/2017 Page 33 of 33 aside. The impugned order upholding the said condition of the Unit Approval Committee is also set aside. 56. The petition is disposed of in the aforesaid terms”.

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Judgment Reviewed by: Mandira BS

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