Page 70 - GSTL_16 April 2020_Vol 35_Part 3

284 GST LAW TIMES [ Vol. 35
29. On behalf of the petitioner, it has been contended that the respond-
ents are barred by the principle of estoppel from recovering any duty under Sec-
tion 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 accord-
ing 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 ex-
empt 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 Su-
preme Court in State of Bihar v. Suprabhat Steel Ltd. (supra), wherein, in the con-
text 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 in-
centives and benefits granted by the State Government in its own industrial in-
centive policy. But in exercise of such power, it would not be permissible for the
State Government to deny any benefit which is otherwise available to an indus-
trial unit under the incentive policy itself. The Court observed that the industrial
incentive policy is issued by the State Government after such policy is approved
by the Cabinet itself. The issuance of the notification under Section 7 of the Bihar
Finance Act is by the State Government in the Finance Department which notifi-
cation 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 Gov-
ernment in exercise of powers under Section 7 of the Bihar Finance Act, if is
found to be repugnant to the industrial policy declared in a Government resolu-
tion, then the said notification must be held to be bad to that extent. The Court
repelled the contention that it would be open for the Government to issue a noti-
fication in exercise of power under Section 7 of the Bihar Finance Act, which may
override the incentive policy itself. The Court was of the opinion that, the expres-
sion “such conditions and restrictions as it may impose” in sub-section (3) of Sec-
tion 7 of the Bihar Finance Act will not authorise the State Government to negate
the incentives and benefits which any industrial unit would be otherwise entitled
to under the general policy resolution itself.
31. Examining the facts of the present case in the light of the principles
enunciated in the above decision, as discussed hereinabove, Chapter 5 of the For-
eign Trade Policy, 2015-2020 makes provision for the EPCG Scheme, which is an
incentive scheme. The incentive given is that the importer holding a valid au-
thorisation for capital goods covered under the EPCG Scheme would be exempt-
ed from payment of customs duty and additional duty under Section 3 of the
Customs Tariff Act, and correspondingly, the importer would be obliged to fulfil
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-Cus., 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 Tar-
iff Act and the whole of the additional duty leviable under Section 3 of the Cus-
toms Tariff Act. Accordingly, when the authorisation under the EPCG Scheme
was issued in favour of the petitioner, and when the exporter issued commercial

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