2019 (9) TMI 136 - HC - Customs

100% EOU - Transfer of capital goods in question from their unit to the writ petitioner - satisfaction of condition of N/N. 52 of 2003, dated 31-3-2003 - Extension of time limit for installation of machinery - HELD THAT - The said notification requires that in the case of capital goods they should have been installed or otherwise used within the unit within a period of one year from the date of import or procurement. Of course, the petitioner could have obtained extension of the time limit not exceeding 5 years. In this case, the petitioner did not obtain such an extension. Therefore, on account of the operation of the Clause 3(d)(1)(i) of Notification No. 52/2003, dated 31-3-2003, the petitioner came under a liability. It is true that this notification was later amended on 25-5-2015 vide Notification No. 34/2015. It is also true that the notification reads as if it is a substitutive amendment. But then, when liability has already accrued, the same cannot be washed away or effaced by a subsequent notification, because, there is no clause in the Notification No. 34/2015, dated 25-5-2015 stating that it would cover even antecedent cases which failed to satisfy the conditions laid down in the Notification No. 52/2003, dated 31-3-2003. It is well-settled that even a retrospective amendment will not take away the vested rights of the parties. The same logic and principle will apply in the case of accrued liability also - The writ petitioner had already come under a liability on account of non-adherence to conditions stipulated in the Notification No. 52/2003, dated 31-3-3013. Petition dismissed.

Summary

Issues:
1. Interpretation of Notification No. 52/2003 regarding capital goods installation timeline.
2. Impact of Notification No. 34/2015 on retrospective applicability.
3. Vested rights and accrued liability in case of non-compliance.

Analysis:

1. The case involved a 100% export-oriented unit engaged in manufacturing matchsticks, which received capital goods from another unit under a letter of permission. The issue arose when the petitioner failed to meet the installation timeline requirement as per Notification No. 52/2003, which mandated installation within one year of import or procurement, extendable up to five years. The petitioner did not secure an extension, leading to a liability as per the notification's clause.

2. The petitioner argued that Notification No. 34/2015, issued on 25-5-2015, amended the installation timeline requirement, making it applicable within the validity period of the Letter of Permission (LOP). However, the court held that while the amendment seemed retrospective, it did not explicitly cover cases where conditions under the previous notification were not met. The court emphasized that a retrospective amendment cannot erase accrued liabilities or vested rights, maintaining that the petitioner's liability persisted due to non-compliance with the original notification.

3. The judgment highlighted the principle that even retrospective amendments cannot nullify vested rights or accrued liabilities. As the petitioner had already incurred liability by not adhering to the conditions under Notification No. 52/2003, the court upheld the impugned order, dismissing the writ petition without costs. The decision underscored the importance of honoring obligations arising from initial regulations, even in the face of subsequent amendments, to preserve legal sanctity and uphold established liabilities.