TMI Blog2023 (9) TMI 1147X X X X Extracts X X X X X X X X Extracts X X X X ..... HONOURABLE MR. JUSTICE BIREN VAISHNAV AND HONOURABLE MR. JUSTICE BHARGAV D. KARIA Appearance: For The Petitioner(S) No. 1,2 : Kuntal A Parikh (7757) For The Respondent(S) No. 1 : Mr Ankit Shah (6371) For The Respondent(S) No. 3,4 : Mr Nikunt K Raval (5558) For The Respondent(S) No. 2 : Notice Served ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BIREN VAISHNAV) 1. Rule returnable forthwith. Mr. Nikunt Raval, learned advocate, waives service of rule on behalf of the respondent. With consent of the learned advocates appearing for the respective parties, the matters are taken up for final hearing today. 2. While issuing notice for final disposal, this Court, by an order dated 29.09.2021, in Special Civil Application No. 14484 of 2021 had reproduced the prayers, which read as under: (a) That this Honourable Court be pleased to quash and set aside Notification No. 26/2017-Custom, dated 29.06.2017 annexed as Annexure-F to the extent amending Notification No. 16/2015-Customs, dated 01.04.2015, annexed as Annexure- B ; and (b) That this Honourable Court be pleased to quash and set aside Trade Notice 11/2018, dated 30.06. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s. Prince Spintex Pvt Ltd vs. Union of India. 5. Having considered the submissions made by the learned counsels appearing for the respective parties, it is borne on reading the decision in the case of Prince Spintex (supra), that an identical issue as the one raised in these petitions was decided by this Court considering the policy and the relevant notifications. The Division Bench of this Court, accordingly, held as under: 6. From the facts and contentions noted hereinabove, it emerges that the refund claim of the petitioner has been rejected on the ground that Notification No. 33/2015-2020 dated 13.10.2017 of the Ministry of Commerce and Notification No. 79/2017-Cus dated 13.10.2017 of the Ministry of Finance under which such imported goods were exempted from payment of IGST, came into force only on 13.10.2017, but the petitioner had filed the bill of entry on 3.8.2017. As there was no notification exempting import of such goods from payment of IGST, it has been held that IGST was chargeable on the capital goods imported by the petitioner under the EPCG Scheme. 7. For the purpose of examining the validity of the petitioner s claim for exemption from payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export competitiveness. Towards that end, authorisations are issued to importers permitting them to import capital goods at zero customs duty. An authorisation is valid for import for eighteen months from the date of issue of authorisation, and under the authorisation the importer is allowed to import capital goods at zero customs duty. The scheme also casts an obligation on the importer who imports capital goods under the Scheme at zero customs duty to fulfill export obligation at six times of the duty saved. Thus, while granting exemption from payment of customs duty, a corresponding obligation has been cast on the importer to fulfill export obligation as provided under the EPCG scheme. Thus, exemption from payment of customs duty under the EPCG Scheme is not an exemption simpliciter, but is an exemption with a corresponding obligation on the authorisation holder to export goods equivalent to six times the duty saved on import of such capital goods. 11. To give effect to the above policy of permitting import of capital goods at zero customs duty, the Central Government, in exercise of powers under section 25 of the Customs Act, issued Notification 16/2015-Cus dated 1st Apr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iers of India, shall be treated to be a supply of goods in the course of inter-State trade or commerce. Thus, under section 7(2) of the IGST Act, import of goods is deemed to be inter-state supply of goods. 16. Sub-section (1) of section 5 of the IGST Act, which is relevant for the present purpose, reads as under:- 5. Levy and collection.- (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 of the Central Goods and Services Tax Act and at such rates, not exceeding forty per cent, as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person: Provided that the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of Section 3 of the Customs Tariff Act, 1975 (51 of 1975) on the value as determined under the said Act at the point when duties of customs are levied on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and (5) of section 3 of the Customs Tariff Act. 21. Vide Trade Notice 11/2018 dated 30.6.2017 issued by the DGFT, under Chapter 5 of the Foreign Trade Policy it was stated that importers would need to pay IGST and take input tax credit as applicable under GST rules. 22. Since vide Notification No. 26/2017, the words and figures sub-sections (1), (3) and (5) of section 3 of the Customs Tariff Act were inserted, the petitioner was not granted the benefit of exemption from payment of IGST, despite the fact that it was an additional duty introduced by way of sub-section (7) and sub-section (9) of section 3 of the Customs Tariff Act. The petitioner therefore paid the IGST. 23. Subsequently, vide Notification No. 33/2015- 2020, dated 13th October, 2017, issued in exercise of powers conferred by section 5 of Foreign Trade (Development and Regulation) Act, 1992, read with paragraph 1.02 of the Foreign Trade Policy, 2015- 20, as amended from time to time, the Central Government made amendments in the Foreign Trade Policy 2015-2020. Para 2 of the said notification, to the extent the same is relevant for the present purpose, reads thus: 2. Para 5.01 (a) is amended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EPCG Scheme from payment of integrated tax. 27. Thus, import of capital goods under the EPCG Scheme was totally exempt from payment of customs duty and additional duty, except for the short period between the coming into force of the IGST Act till the amendment in the Foreign Trade Policy 2015-20 vide Notification No. 33/2015- 2020 dated 13th October, 2017 issued in exercise of powers conferred by section 5 of Foreign Trade (Development and Regulation) Act, 1992 read with paragraph 1.02 of the Foreign Trade Policy, 2015- 20, and corresponding amendment in Notification No. 16/2015-Cus dated 1st April, 2015. The intention of Central Government is, therefore, clear that total exemption from payment of additional duty was to be granted under the EPCG Scheme. This was also the promise held out to the petitioner and similarly situated persons when they were granted the authorisation under the EPCG Scheme. At the time when the authorisation was granted, by virtue of Notification No. 16/2015-Cus dated 1st April, 2015, there was total exemption from payment of additional duty under section 3 of the Customs Tariff Act. However, subsequently, upon the coming into force of the GST regime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rting sub-sections (7) and (9) providing for levy of integrated tax and goods and service compensation cess, in the corresponding amendment made in Notification No. 16/2015-Cus vide Notification No. 26/2017-Cus dated 29th June, 2017, sub-section (7) and sub-section (9) of section 3 were left out. However, within a short time thereafter, vide notification dated 13th October, 2017, Notification No. 16/2015- Cus came to be further amended and the imports under EPCG Scheme were exempted from additional duty under subsection (7) and sub-section (9) of the Customs Tariff Act. It is therefore, apparent that it was on account of inadvertence or oversight that while amending notification No. 16/2015-Cus dated 1st April, 2015 by Notification No. 26/2017-Cus, the words, figures and brackets sub-section (7) and sub-section (9) were not inserted and that it was always the intention of the Central Government to exempt imports of capital goods under the EPCG Scheme from payment of additional duty under section 3 of the Customs Tariff Act. Notification No. 79/2017 dated 13th October, 2017, therefore, has to be read as clarificatory or curative in nature, inasmuch as, otherwise it would leave as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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