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TMI Blog2020 (2) TMI 1168X X X X Extracts X X X X X X X X Extracts X X X X ..... and Regulation) Act, 1992, the Central Government has notified the Foreign Trade Policy 2015-20 vide Notification No.1/2015-20 which came into effect from 1st April 2015. The objective of the EPCG Scheme is to facilitate import of capital goods for producing quality goods and services to enhance India's 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 3 of the Customs Tariff Act, and correspondingly, the importer would be obliged to fulfill export obligation to the extent provided in the Scheme. Since exemption from payment of customs duty and additional duty can only be granted under section 25 of the Customs Act, to give effect to the promise held out in Foreign Trade Policy 2015-2020, Notification No.16/2015-Customs dated 1st April, 2015 came to be issued exempting import of goods covered by a valid authorisation issued under the EPCG Scheme in terms of Chapter 5 of the Foreign Trade Policy, from the whole of the customs duty leviable under the First Schedule to the Customs Tariff Act and the whole of the additional duty leviable under section 3 of the Customs Tariff Act. In the facts of the present case, though the exemption notification has been issued under section 25 of the Customs Act, it has been issued for the purpose of implementing the EPCG Scheme which holds out a promise that import of capital goods under the scheme would be exempt from payment of additional duty under section 3 of the Customs Tariff Act. Therefore, the notification has to be read in the context of the EPCG policy keeping in mind the object e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customs duty subject to specified conditions. 2.1 In pursuance to Chapter 5 of the Foreign Trade Policy, 2015-20, Notification No.16/2015-Customs dated 1st April, 2015 came to be issued under section 25(1) of the Customs Act, 1962 whereby the Central Government has exempted capital goods from the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 and the whole of the additional duty leviable thereon under section 3 of the said Act, when specifically claimed by the importer. The said notification came into effect from 1.4.2015. 2.2 It is the case of the petitioner that pursuant to the above referred exemption, the petitioner entered into a contract with one M/s. Itema, Italy (hereinafter referred to as the exporter ) for importing fourteen units of capital goods, namely, Automatic Cone Winder Machines which fall under heading 84454090 of the Customs Tariff Act and covered under the exemption Notification No.16/2015-Cus. The exporter has sent proforma invoice dated 9.1.2017 whereby the terms of payment were fixed as 100% by means of an irrevocable letter of credit payable at sight against the presentation of shipping bills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in clause (ii) for the words and figures under section 3 , the words, figures and brackets under subsections (1), (3) and (5) of section 3 came to be substituted. The second respondent DGFT issued a Trade Notice bearing No.11/2018 dated 30.6.2017 wherein it was stated that the importers would need to pay IGST and take input tax credit as applicable under the GST rules. Due to such amendment in Notification No.16/2015-Cus with effect from 1.7.2017, IGST payable under sub-section (7) of section 3 of the Customs Tariff Act was left out from exemption. 2.6 It is the case of the petitioner that though sub-section (7) of section 3 of the Customs Tariff Act is excluded from exemption of additional customs duty granted under Notification No.16/2015, in the present case, the petitioner had already opened 100% irrevocable letter of credit before such restriction came to be imposed vide Notification No.26/2017- Cus and the goods were imported during the validity period of an irrevocable letter of credit. Further, on the basis of the exemption granted under Notification No.16/2015-Cus, the petitioner expanded its business and thus, vested rights had also accrued in favour of the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (7) of section 3 of the Customs Tariff Act on the import of goods. Thus, the importers who cleared the capital goods during the period 1.7.2017 to 12.10.2017 were not granted exemption from additional duty of customs though they were holding valid EPCG authorisation. 2.11 The petitioner filed a refund application dated 28.4.2018 before the Assistant Commissioner (Customs), ICD, Ahmedabad on 8.6.2018 and claimed that the import was planned under EPCG licence on the premise that no duty of customs whatsoever would be payable upon undertaking export obligation as stipulated in Foreign Trade Policy and sudden levy of huge amount of IGST resulted in blocking of huge working capital funds because in project financing this was not anticipated and hence, was not considered on project cost based on which project finance was tied up. Further vide Notification No.79/2017 dated 13.10.2017, imports were again exempted from payment of all duties of customs including IGST for EPCG holder. 2.12 The fifth respondent issued a show cause notice dated 18.8.2018 proposing to reject the refund application of the petitioner. The petitioner filed its reply dated 6.9.2018 in the personal hearing g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive of controlling the domestic sugar prices. This had nothing to do with the exporters such as the petitioners. Raw sugar imported against advance authorization on the condition of reexport had no impact on domestic sugar price. Impounding export duty on such exports would not serve the purpose of controlling local sugar prices. Apparently since inadvertently the withdrawal of exemption also hit the exports of sugar against advance authorization, the Government of India on the representations made by the trade, quickly reintroduced the exemption limited to such class. Very clearly thus, the Government of India was correcting an inadvertent error or an unintentional withdrawal of the exemption. If that be so, the exemption notification dated 06.07.2016 must be viewed as clarificatory or curative in nature. Any other view would leave the said class of exporters uncovered for a period of about three weeks allowing the department to levy the export duty which is a wholly unintended consequence of the Government of India policy. 16. We have formed this opinion on the basis of precedence of the Supreme Court and this Court. In case of W.P.I.L. Ltd. v. Commr. of C. Ex., Meerut rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e State Government in the Finance Department which notification is issued to carry out the objectives and the policy decisions taken in the Industrial Policy itself. In this view of the matter, any notification issued by the Government Order in exercise of power under Section 7 of the Bihar Finance Act, if is found to be repugnant to the Industrial Policy declared in a government resolution, then the said notification must be held to be bad to that extent. In the case in hand, the notification issued by the State Government on 4-4-1994 has been examined by the High Court and has been found, rightly, to be contrary to the Industrial Incentive Policy, more particularly the Policy engrafted in Clause 10.4(i)(b). Consequently, the High Court was fully justified in striking down that part of the notification which is repugnant to sub-clause (b) of Clause 10.4(i) and we do not find any error committed by the High Court in striking down the said notification. We are not persuaded to accept the contention of Mr. Dwivedi that it would be open for the Government to issue a notification in exercise of power under Section 7 of the Bihar Finance Act, which may over-ride the incentive policy its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te between the parties. 16. In view of the consistent policy of the Government of exempting parts of power driven pumps utilized by the factory within the factory premises, it could not be said that while issuing Notification No.46/94 of March 1, 1994, the exemption in respect of said item which was operative was either withdrawn or revoked. The action was taken only with a view to rescinding several notifications and by issuing a composite notification. The policy remained as it was and in view of demand being made by the Department, a representation was made by the industries and on being satisfied, the Central Government issued a clarificatory Notification No.95/94 on April 25, 1994. It was not a new notification granting exemption for the first time in respect of parts of power driven pumps to be used in the factory for manufacture of pumps but clarified the position and made the position explicit which was implicit. 3.6 Reliance was also placed upon the decision of the Supreme Court in the case of Ralson (India) Ltd. v. Commissioner of Central Excise, Chandigarh-1, 2015 (319) ELT 234 (S.C.) (2015) 14 SCC 679, wherein the court held thus: 8. We may point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position and made the position explicit which was implicit. 17. For the foregoing reasons, in our opinion, the appeals deserve to be allowed and are allowed accordingly. Deposit, if any, made by the appellant in pursuance of the order passed by the authorities below will be refunded to it. In the facts and circumstances of the case, however, there shall be no order as to costs. 10. As we find that the compounded rubber was also rescinded by the same Notification dated 1-3-94 and reintroduced in the same manner vide another Notification issued on 28-3-1994, ratio of W.P.I.L. Ltd. Case shall squarely apply to the present case as well. As a result, only on this ground, these appeals are allowed and the demand raised against the appellants is quashed. 3.7 It was submitted that if Notification No.26/2017-Cus has to be read independently as imposing a restriction, the notification falls foul of promissory estoppel held out to the petitioner. It was submitted that representation is made in the Foreign Trade Policy that the petitioner is entitled to exemption; and the notification to operationalise such representation would be subject to promissory estoppel. It was subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption notification issued under Section 25 of the Customs Act. Even in respect of a notification under Section 25 of the Customs Act this Court has taken the view that the withdrawal even of such a notification must not be arbitrary or unreasonable (see Dai- Ichi Karkaria Ltd. v. Union of India, 2000 (4) SCC 57). 38. The principle underlying legitimate expectation which is based on Article 14 and the rule of fairness has been re-stated by this Court in Bannari Amman Sugars Ltd. Vs. Commercial Tax Officer, 2005 (1) SCC 625. It was observed in paras 8 9: 8. A person may have a 'legitimate expectation' of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. The expectation may arise either from a representation or promise made by the authority, including an implied representation, or from consistent past practice. The doctrine of legitimate expectation has an important place in the developing law of judicial review. It is, however, not necessary to explore the doctrine in this case, it is enough merely to note that a legitimate expectation can provide a sufficient interest t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e investment in the State of Kerala under a promise held to it that it would be granted exemption from payment of sales tax for a period of seven years. It was granted the eligibility certificate. The exemption order had also been passed. It is not open to or permissible for the State Government to seek to deprive MRF of the benefit of tax exemption in respect of its substantial investment in expansion in respect of compound rubber when the State Government had enjoyed the benefit from the investment made by the MRF in the form of industrial development in the State, contribution to labour and employment and also a huge benefit to the State exchequer in the form of the State's share, i.e. 40% of the Central Excise duty paid on compound rubber of ₹ 177 crores within the State of Kerala. The impugned action on the part of the State Government is highly unfair, unreasonable, arbitrary and, therefore, the same is violative of Article 14 of the Constitution of India. The action of the State cannot be permitted to operate if it is arbitrary or unreasonable. This Court in E.P. Royappa v. State of Tamil Nadu, 1974 (4) SCC 3, observed that where an act is arbitrary, it is implicit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition (6) for the words and figure under section 3 , the words and figures and brackets under sub-sections (1), (3) and (5) of sub-section 3 came to be substituted; however, sub-sections (7) and (9) of section 3 were not included, which indicates that there was no intention to grant exemption from payment of IGST on import of capital goods. 4.1 It was submitted that to comply with the provisions of Notification No.26/2015-Cus dated 29.6.2017, the DGFT issued Trade Notice No.11/2018 dated 30.6.2017 which stipulated that Importers would need to pay IGST and take input tax credit under the GST rules. It was submitted that, therefore, when the petitioner filed Bill of Entry on 3.8.2017, exemption from payment of IGST was not granted. 4.2 Reference was made to Notification No.33/2015-2020 dated 13.10.2017 issued in exercise of powers conferred by section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read with paragraph 1.02 of the Foreign Trade Policy 2015-2020, as amended from time to time, the relevant portion whereof is extracted hereunder:- 2. Para 5.01 (a) is amended to read as under: 5.01 (a) EPCG Scheme allows import of capital goods for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itional duty leviable on it. The notification contained the clause that the notification shall remain in force till 30-9-1980. Simultaneously, another Notification No. 80-Cus. was issued by the Central Government exempting the above items from the whole of auxiliary duty as well. The appellants claim that on the basis of the promise and assurance contained in the two exemption notifications, they commenced negotiations with the manufacturer and suppliers of the above items for the purchase of these items from abroad. In the meantime, the Central Government issued another Notification No. 174Cus. dated 29-8-1980, with drawing the earlier Notification No. 79-Cus. dated 18-4-1980 and on the same date i.e. 29-8-1980, yet, another notification was issued levying auxiliary duty @ 12 1/2 per cent ad valorem. Barely ten days after the rescindment of the earlier notification, the Central Government issued another Notification No. 186-Cus. dated 9-9-1980 once again exempting wire rods and aluminium ingots from the whole of duty of customs. This notification was to remain operative till 31-3-1981 and it has remained in force right through. The grievance of the appellants is that the withdrawa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the appellants in the absence of any unequivocal promise by the Government not to act and review its policy even if the necessity warranted and the public interest so demanded. Thus, in the facts and circumstances of these cases, the appellants cannot invoke the doctrine of promissory estoppel to question the withdrawal notification issued under Section 25 of the Act. 4.6 It was submitted that under the EPCG Scheme no incentive is given to the petitioner which it can hold against the Government and that the notification granting exemption was issued in exercise of powers under section 25 of the Customs Act, therefore, the doctrine of promissory estoppel would not be attracted in the present case. 4.7 Reliance was also placed upon the decision of the Supreme Court in the case of Director General of Foreign Trade v. Kanak Exports and another, (2016) 2 SCC 226, wherein the court held thus:- 106. We may suitably refer to the judgment of this Court in Kasinka Trading v. Union of India, (1995) 1 SCC 274. In that case, the Government of India had issued Notification under Section 25(1) of the Customs Act, 1961 in public interest granting exemption from whole of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication in a like manner. The Court also examined the case of the appellant-petitioners that relying upon the Notification dated 15-3-1979, they had acted and the Government could not be permitted to go back on its assurance otherwise they would be put to huge loss. The Court dealt with this contention in the following words: 22. .. The courts have to balance the equities between the parties and indeed the courts would bind the Government by its promise to prevent manifest injustice or fraud . The Court also quoted with approval the following observations from Malhotra Sons v. Union of India, AIR 1976 J K 41: 22. .. 16. .,. The courts will only bind the Government by its promises to prevent manifest injustice or fraud and will not make the Government a slave of its policy for all times to come when the Government acts in its governmental, public or sovereign capacity. 108. The above decision in Kasinka Trading case. (1995) 1 SCC 274, was followed by this Court in Shrijee Sales Corpn. v. Union of India, (1997) 3 SCC 398, where also the same notifications were considered. In that case also, the appellant-petitioners had alleged that they would not have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year commencing on or after 01.04.2018. In other words, any expenditure incurred after 01.04.2017 would no longer be eligible for deduction under the said section. The fact that the parliament had the competence to enact the said provision has nowhere been disputed before us. It is not even the stand of the petitioner that the parliament which granted the deduction could not have withdrawn it. In plain terms, a deduction is in the nature of waiver to a limited extent from payment of tax. In absence of such a deduction, the assessee incurring such expenditure would have to account for the full amount to tax. In order to encourage donations for or direct expenditure in certain approved projects or schemes meant for promoting social and economic welfare or the uplift of the public, the said provision was introduced by the legislature. If at a later point of time, the Union legislature in its wisdom was of the opinion that such benefit should no longer be granted, it is always open for the parliament to withdraw the deduction by framing necessary legislation. This provision in the strict sense of the term is to have prospective effect. It may have effect on projects and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the history of the times and may assume every state of facts which can be conceived existing at the time of legislation. 8. Another rule of equal importance is that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc. . The court must always remember that legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex, that many problems are singular and contingent, that laws are not abstract propositions and do not relate to abstract units and are not to be measured by abstract symmetry that exact wisdom and nice adoption of remedy are not always possible and that judgment is largely a prophecy based on meagre and uninterpreted experience . Every legislation particularly in economic matters is essentially empiric and it is based on experimentation or what one may call trial and error method and therefore it cannot provide for all possible situations or anticipate all possible abuses. There, may be crudities and inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itable to hold the public authority to its promise, assurance or representation. It was observed that an exemption notification does not make the items which are subject to levy of customs duty as not leviable. It only suspends the levy and collection of customs duty wholly or partly as the case may be. Under section 25 of the Customs Act, if the Government had the power to grant exemption it also had the power to withdraw the same. 11. In case of Kothari Industrial Corporation (supra), the court held that the Government had the power to determine what should be the policy for grant or refusal of concessional power to different units. In case of Kanak Exports (supra), the court observed that an incentive scheme promulgated by the Government is in the nature of concession or incentive which is a privilege of the Government and it is for the Government to take such a decision as to grant or not. 12. As noted, Section 35AC recognizes the deduction in case of expenditure by an assessee by way of payment to the approved institutions carrying out eligible project or the scheme or payment made directly on such eligible project or scheme. As per Explanation clause (b), eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods specified in Table-1 annexed thereto from: (i) The whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 and (ii) The whole of the additional duty leviable under section 3 of the Customs Tariff Act, when specifically imported by the importer. 5.3 It was pointed out that the exemption under the notification is subject to the conditions enumerated thereunder. It was submitted that the additional customs duty is levied under section 3 of the Customs Tariff Act and, therefore, import of goods is permitted at zero customs duty under the said notification. 5.4 Reference was made to paragraph 6 of Notification No.16/2015-Cus which reads thus: 6. that if the importer does not claim exemption from the additional duty leviable under section 3 of the Customs Tariff Act, 1975, the additional duty so paid by him shall not be taken for computation of the net duty saved for the purpose of fixation of export obligation provided the Cenvat credit of additional duty paid has not been taken; 5.5 It was submitted that IGST is also an additional duty of customs and the exemption from duty under section 3 of the Customs T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he objective of the scheme and reads thus: The objective of the EPCG Scheme is to facilitate import of capital goods for producing quality goods and services to enhance India s export competitiveness. 9. Para 5.01 of Chapter 5 which is relevant for the present purpose reads thus:- 5.01 EPCG Scheme. (a) EPCG Scheme allows import of capital goods for preproduction, production and post production at Zero customs duty. Alternatively, the Authorisation holder may also procure Capital Goods from indigenous sources in accordance with provision of paragraph 5.07 of FTP. Capital goods for the purpose of the EPCG Scheme shall include: (i) Capital Goods as defined in Chapter 9 including in CKD/SKD condition thereof; (ii) Computer software systems; (iii) Spares, moulds, dies, jigs, fixtures, tools refractories for initial lining and spare refractories; and (iv) catalysts for initial charge plus one subsequent charge. (b) Import of capital goods for Project Imports notified by Central Board of Excise and Customs is also permitted under EPCG Scheme. (c) Import under EPCG Scheme shall be subject to an export obligation equivalent to 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rade Policy and Notification No.16/2015-Cus dated 1st April, 2015, it is evident that though the notification is a statutory notification issued in exercise of powers under section 25 of the Customs Act, it is not an exemption notification simpliciter, but an exemption notification issued to give effect to the EPCG Scheme floated under the Foreign Trade Policy which is an incentive scheme. Thus, in the opinion of this court, Notification No.16/2015-Cus dated 1st April, 2015 and the amending notifications cannot be equated with statutory notifications ordinarily issued under section 25 of the Customs Act, granting exemption from payment of customs duty. 14. Considering the nature of the EPCG Scheme, it is evident that it is an incentive scheme whereby a promise has been held out that the importer would be charged zero customs duty on the goods imported by it, provided it exports goods equivalent to six times the duty saved on capital goods. The petitioner applied for and was issued an authorisation on 31.3.2017, and hence, was not required to pay any customs duty as well as additional duty of customs on such import in view of Notification 16/2015 dated 1st April, 2015. Commercia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case may be. (9) Any article which is imported into India shall, in addition, be liable to the goods and services tax compensation cess at such rate, as is leviable under section 8 of the Goods and Services Tax (Compensation to States) Cess, 2017 on a like article on its supply in India, on the value of the imported article as determined under sub-section (10) or sub-section (10A) as the case may be. 19. Vide Notification No.26/2017-Customs dated 29th June, 2017 issued in exercise of powers under section 25 of the Customs Act, vide serial No.82, Notification 16/2015-Customs dated 1st April 2015 came to be amended with effect from 1.7.2017, which to the extent the same is relevant for the present purpose, reads thus: In the said notification; (a) In the opening paragraph, in clause (ii) for the words and figure under section 3 the words and figures and brackets under sub-sections (1), (3) and (5) of section 3 shall be substituted; (b) In paragraph 2,- (i) in condition (6), for the words and figure under section 3 , the words and figures and brackets under sub-sections (1), (3) and (5) of section 3 shall be substituted. 20. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zero customs duty. Thus, by virtue of the above notification, the words Capital goods imported under EPCG scheme for physical exports are also exempt from whole of the Integrated Tax and Compensation Cess leviable under sub-section (7) and subsection (9) respectively, of section 3 of the Customs Act, 1975 as may be provided in the notification issued under Department of Revenue. came to be inserted in para 5.01. 25. Correspondingly, vide Notification No.79/2017-Customs, dated 13th October, 2017, Notification No.16/2015-Cus dated 1st April, 2015, came to be amended, whereby, in the opening paragraph, after clause (ii), the following came to be inserted: (iii) the whole of integrated tax and the goods and services tax compensation cess leviable thereon under sub-section (7) and sub-section (9) of section 3 of the Customs Tariff Act.: Provided that the exemption from integrated tax and the goods and services tax compensation cess shall be available up to the 31st March, 2018. 26. Thus, with effect from 13th October, 2017, import of capital goods covered by a valid authorisation under the EPCG Scheme was exempted from payment of integrated tax under sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsation cess on the import of capital goods by the petitioner under the authorisation issued to it under the EPCG Scheme. 29. On behalf of the petitioner, it has been contended that the respondents are barred by the principle of estoppel from recovering any duty under section 3 of the Customs Tariff Act in view of the promise held out to it under the EPCG Scheme that it would be liable to pay zero customs duty; whereas according to the respondents, the power to grant exemption from payment of duty flows from the provisions of section 25(1) of the Customs Act. The power to exempt includes the power to modify or withdraw the same. Such an exemption by its very nature is susceptible to being revoked or modified or subjected to other conditions. 30. In this regard, reference may be made to the decision of the Supreme Court in State of Bihar v. Suprabhat Steel Ltd. (supra), wherein, in the context of issuance of notification by the State Government in exercise of powers under section 7 of the Bihar Finance Act, the Supreme Court held that it is true that issuance of such notifications entitles the industrial units to avail of the incentives and benefits granted by the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under the EPCG Scheme in terms of Chapter 5 of the Foreign Trade Policy, from the whole of the customs duty leviable under the First Schedule to the Customs Tariff Act and the whole of the additional duty leviable under section 3 of the Customs Tariff Act. Accordingly, when the authorisation under the EPCG Scheme was issued in favour of the petitioner, and when the exporter issued commercial invoice in favour of the petitioner on 16.5.2017, the petitioner had reason to believe that it would not be required to discharge any liability in respect of customs duty leviable under the First Schedule to the Customs Tariff Act or any additional duty under section 3 of the said Act, inasmuch as, a promise was held out to the petitioner that it will not be liable to pay any additional duty under section 3 of the Customs Tariff Act on the import of such capital goods subject to fulfilling the export obligation. Thus, Notification No.26/2015- Cus dated 29th June, 2017, to the extent it limited the exemption from payment of additional duty under section 3 of the Customs Tariff Act to subsections (1), (3) and (5) thereof, is repugnant to the policy declared by the Central Government under Chapt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the strict sense as in the case of a general exemption under section 25 of the Customs Act. 35. In W.P.I.L. Ltd. v. Commissioner of Central Excise, Meerut. UP., (supra), the Supreme Court was dealing with a case where exemption in respect of power-driven pumps was also available to the manufacturers since 1978. In Notification No. 64/94-CE dated 1.3.1994 whereby exemption qua 389 earlier notifications was rescinded, the notification in respect of the part of power-driven pumps was also included as rescinded. Thereafter, the same item was again exempted by Notification No. 95/94-CE issued on 25.4.1994. In this manner, insofar as parts of power-driven pumps are concerned, there was no exemption in respect thereof for the period from 1.3.1994 to 24.4.1994. The assessee in that case took the same plea by arguing that since the decision of the exemption vide Notification dated 1.3.1994 was an inadvertent error and the Government realising this mistake had reintroduced the exemption it will be treated as only corrective and clarificatory in nature. This contention was accepted by the court in the aforesaid judgment holding that even during the period from 1.3.1994 to 24.4.1994 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequence of the Government of India policy. The court formed such opinion on the basis of the precedents of the Supreme Court in WPIL Ltd. v. CCE, (supra) and Ralson (India) Ltd. v. CCE. The court accordingly, allowed the writ petition and declared that the notification dated 6.7.2016 with all its terms and conditions would apply for the period 16.6.2016 to 6.7.2016 also and granted consequential relief. 38. In the facts of the present case, import of capital goods under a valid authorisation under the EPCG Scheme was wholly exempt from payment of any additional duty under section 3 of the Customs Tariff Act. The intention of the Central Government while framing the EPCG Scheme was to permit export at zero customs duty. Accordingly, by Notification No.16/2015-Cus dated 1st April, 2015, goods covered by a valid authorisation issued under the EPCG Scheme in terms of Chapter 5 of the Foreign Trade Policy were inter alia exempted from the whole of the additional duty leviable under section 3 of the Customs Tariff Act. However, when the GST regime came into force, while section 3 of the Customs Tariff Act came to be amended by inserting sub-sections (7) and (9) providing for lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to refund of the additional duty paid by it under sub-sections (7) and (9) of section 3 of the Customs Tariff Act. 39. Insofar as the decision of the Supreme Court in Kasinka Trading v. Union of India, (supra) is concerned, the grievance of the appellants was that the withdrawal of the exemption notification on 29.8.1980 was not at all justified and support for this argument was sought from the fact that within ten days of the withdrawal notification, the Government had itself once again issued a notification on 9.9.1980, reviving the exemption of customs duty. The learned counsel had submitted that during the period of ten days, the importers whose goods arrived in India were made liable to pay both the customs duty as well as the auxiliary duty, while those whose goods arrived either after 9.9.1980 or before 29.8.1980 were not required to pay the same. The Supreme Court observed that in the absence of any material placed before the High Court or even in the appeal to establish that the notification dated 29.8.1980 was issued for any oblique or extraneous consideration and was not in public interest , it was not possible to find fault with that notification for the reas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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