Vedanta Power Limited vs. Assistant Commissioner

Facts

Vedanta Power Limited (the petitioner) applied for a license under the Manufacture and Other Operations in Warehouse (No. 2) Regulations, 2019 (MOOWR) for its thermal power plant in Chhattisgarh. The application was rejected by the Assistant Commissioner (respondent No. 1) on January 31, 2025. The rejection was based on several grounds, including the inability to affix a one-time-lock to electricity (resultant goods) for removal from the warehouse, the inapplicability of MOOWR to electricity as it cannot be stored in a warehouse, and the fact that electricity generated by thermal power plants has not been exempted by the Board from MOOWR provisions. The rejection also cited Instruction No. 13/2022-Customs, which, although mentioning solar power units, was considered applicable to other power generating units. The petitioner received the order via email on March 6, 2025, and filed this writ petition challenging the rejection order.

Held

The Court allowed the writ petition, quashing the impugned order dated January 31, 2025. The Court noted that Instruction No. 13/2022-Customs, which formed a significant basis for the rejection, had been struck down by the Delhi High Court. Furthermore, the Court observed that the petitioner's application was rejected solely on the basis of this instruction and that respondent No. 1 had granted a license to another company under similar circumstances. The Court reasoned that since the grounds raised by the petitioner were not duly considered, the petition was maintainable despite the availability of an alternative remedy. The Court directed respondent No. 1 to decide the petitioner's application afresh, taking into account the Delhi High Court's order and the order granting a license to another company (Annexure-RJ/1), within a period of 60 days. The ratio decidendi is that if a key instruction forming the basis of a rejection order is struck down by a higher court, and a similarly situated entity has been granted relief, the rejection order should be reconsidered.

Key Issues

1. Whether Instruction No. 13/2022-Customs dated 09.07.2022, which was the basis for rejecting the petitioner's application, is applicable to thermal power plants, especially considering it was struck down by the Delhi High Court in the case of Acme Heergarh v. Central Board of Indirect Taxes & Customs. 2. Whether the petitioner's thermal power generating plant is disentitled from being granted a license under the Manufacture and Other Operations in Warehouse (No. 2) Regulations, 2019, due to the nature of electricity as a resultant product and the inability to comply with certain conditions like affixing a one-time-lock. 3. Whether the petitioner is entitled to a license, and if so, from what date, considering the grounds raised in its application were not duly considered, thus violating principles of natural justice. Petitioner's arguments: The petitioner contended that Instruction No. 13/2022-Customs was wrongly applied as it pertained only to solar energy and had been struck down by the Delhi High Court. They also argued that a similarly situated company was granted a license. The petitioner sought reconsideration of its application in light of the Delhi High Court's order and the license granted to another company, asserting that the grounds for rejection were not properly considered, violating natural justice principles. Respondent's arguments: The respondents opposed the petition, stating the petitioner failed to fulfill requisite norms. They argued that the Delhi High Court's order was challenged before the Supreme Court and was pending. They further contended that the license granted to another company was for a different purpose and did not create a right to parity for the petitioner. The respondents also raised the issue of an efficacious alternative remedy being available, making the petition not maintainable.