Page 66 - GSTL_16 April 2020_Vol 35_Part 3

280 GST LAW TIMES [ Vol. 35
(c) Import under EPCG Scheme shall be subject to an export obli-
gation equivalent to 6 times of duty saved on capital goods, to
be fulfilled in 6 years reckoned from date of issue of Authori-
sation.
(d) Authorisation shall be valid for import for 18 months from the
date of issue of Authorisation. Revalidation of EPCG Authori-
sation shall not be permitted.”
10. 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. Towards that end, authorisations are issued to importers per-
mitting 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 fulfil 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 fulfil
export obligation as provided under the EPCG scheme. Thus, exemption from
payment of customs duty under the EPCG Scheme is not an exemption simplicit-
er, 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 un-
der Section 25 of the Customs Act, issued Notification No. 16/2015-Cus., dated
1st April, 2015 exempting the goods specified in the table 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 thereon under Section 3 of
the said Customs Tariff Act, when specifically claimed by the im-
porter.
12. The exemption under the said notification is available subject to the
conditions stipulated thereunder. Condition (i) thereof provides that the goods
imported should be covered by a valid authorisation issued under the Export
Promotion Capital Goods Scheme in terms of Chapter 5 of the Foreign Trade Pol-
icy permitting import of goods at zero customs duty.
13. Thus, on conjoint reading of the Chapter 5 of the Foreign Trade Pol-
icy 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 sim-
pliciter, 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 ordi-
narily 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
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