HYDERABAD: The AP High Court on Thursday barred a biodiesel export company from disposing of its stocks until it hears a dispute relating to a tax demand slapped on the company by the Union Commerce Ministry.
Xtraa Clean Cities Ltd, located in a special economic zone (SEZ) in Visakhapatnam, is locked in a dispute with the ministry over a tax demand raised by the latter on export of fatty acid methyl ester (FAME) valued at `71 crore till Monday.
The ministry contended that the company was exporting US-origin biodiesel under the false cover of Indian- origin produce to claim a tax break.
However, the company challenged the ministry’s tax demand of Rs 70 crore and obtained a stay.
Hearing the case, Justice Ashutosh Mohunta vacated a three-week stay granted by a vacation judge on the ministry’s proceedings and directed the company not to dispose of the stocks till the hearing next Monday.
The vacation judge, while granting a stay, had directed the ministry to file a counteraffidavit.
The ministry’s counsel N V Ramanujam contended in its submission that the petitioner, under cover of the stay, was trying to dispose of stocks.
This would make it difficult for the authorities to recover the penalties imposed on the company.
Indian origin biodiesel enjoys preferential tariff in the European Union wher it attracts no customs duty and other duties.
The company imported biodisel stocks from the US and reexported them under the cover of Indian produce, he noted.