Page 50 - GSTL_16 April 2020_Vol 35_Part 3

264 GST LAW TIMES [ Vol. 35
IGST is payable on import of goods into India. Accordingly, Section 3 of the Cus-
toms Tariff Act was also amended with effect from 1-7-2017 and IGST became
payable under sub-section (7) of Section 3 of the Customs Tariff Act on import of
goods into India. Simultaneously, Notification No. 16/2015-Cus., dated 1-4-2015
also came to be amended with effect from 1-7-2017 by Notification No. 26/2017-
Cus., dated 29-6-2017, whereby in the opening paragraph 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 re-
spondent - 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 Notifi-
cation 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
petitioner before Notification No. 26/2017 came into force with effect from 1-7-
2017.
2.7 On 3-8-2017, the petitioner filed Bill of Entry No. 2714414, dated 3-8-
2017 to clear the goods for home consumption wherein it claimed exemption
from basic customs duty and IGST on the basis of the EPCG authorisation issued
to it by the DGFT. Though the fifth respondent - Deputy Commissioner of Cus-
toms allowed exemption from payment of basic customs duty on the basis of the
EPCG authorisation, he did not allow the petitioner to clear the goods without
payment of IGST of Rs. 2,38,83,203/- at the rate of 18% of the total value of Rs.
13,26,84,462/-.
2.8 It is the case of the petitioner that with effect from 1-7-2017, though
the additional duty of customs payable on import of goods under sub-sections
(1), (3) and (5) of Section 3 of the Customs Tariff Act have been replaced by IGST
payable under sub-section (7) of Section 3 of the Customs Tariff Act, the fifth re-
spondent did not allow the exemption of IGST to the EPCG authorisation holders
due to limited amendment in Notification No. 16/2015-Cus., dated 1-4-2015 by
Notification No. 26/2017.
2.9 As the petitioner was not allowed to clear the capital goods without
payment of IGST, it had no option but to pay Rs. 2,38,83,203/- as IGST and such
amount was reflected by it as IGST credit in its electronic credit ledger. It is the
case of the petitioner that it has not utilised any amount till date and it is shown
as receivable in its books of account. Thus, the petitioner had made payment of
IGST under protest to get its capital goods cleared for home consumption.
2.10 Subsequently, vide Notification No. 33/2015-20, dated 13-10-2017,
certain amendments were made in Chapter 5 of Foreign Trade Policy 2015-20,
whereby capital goods imported under the EPCG Scheme for physical exports
also came to be exempted from the whole of the Integrated Tax and Compensa-
tion Cess leviable thereon under sub-section (7) and sub-section (9) respectively
of Section 3 of the Customs Tariff Act. Pursuant to the amendment in the Foreign
Trade Policy 2015-20, the original Notification No. 16/2015-Cus. came to be
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