PRINCE SPINTEX PVT LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) By this petition under article 226 of the Constitution of India, the petitioner has challenged Notification No.26/2017- Customs dated 29.6.2017 to the extent it amends Notification No.16/2015-Customs dated 1.4.2015. The petitioner further challenges Trade Notice No.11/2018 dated 30.6.2017 issued by the second respondent Director General of Foreign Trade to the extent it is stated therein under Chapter 5 that importers would need to pay integrated goods and services tax (IGST). The petitioner has also challenged the order-in-original dated 29.9.2018 with consequential relief and seeks refund of Rs.2,38,82,204/- (sic. Rs.2,38,83,203/-) with interest at the rate of 24% thereon.

(2.) The first petitioner (hereinafter referred to as "the petitioner") is engaged in the business of manufacturing of cotton yarn by way of spinning process. The finished goods are being supplied by the petitioner within India and are also exported outside India. In exercise of powers conferred under section 5 of the Foreign Trade (Development and Regulation) Act, 1992, the Central Government has notified Foreign Trade Policy 2015-20 vide notification No.1/2015-20 which came into effect from 1.4.2015. The Export Promotion Capital Goods (EPCG) Scheme is covered under Chapter 5 of the Foreign Trade Policy. Under paragraph 5.01 of the EPCG Scheme, import of capital goods for pre-production, production and post production is allowed at zero customs duty subject to specified conditions.

(3.) Mr. Mihir Joshi, Senior Advocate, learned counsel for the petitioner, submitted that there is no rationale for excluding sub-section (7) of section 3 of the Customs Tariff Act from the exemption granted under Notification No.16/2015-Cus vide Notification No.26/2017 when essentially in substance the levy is a levy of customs duty and is no different from levy of customs or additional duties of customs payable under section 3 of the Customs Tariff Act and hence, could not have been excluded on any rational parameters or justification. It was submitted that Notification No.26/2017, to the extent it restricts the EPCG authorisation holders from claiming exemption of IGST on capital goods is unfair and arbitrary. "