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2020 ] PRINCE SPINTEX PVT. LTD. v. UNION OF INDIA 285
invoice in favour of the petitioner on 16-5-2017, the petitioner had reason to be-
lieve 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 addition-
al 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 sub-sections (1), (3) and (5) thereof, is re-
pugnant to the policy declared by the Central Government under Chapter 5 of
the Foreign Trade Policy 2015-2020.
32. In MRF Ltd., Kottayam v. Additional Commissioner (Assessment) Sales
Tax (supra), the Supreme Court was dealing with a case wherein MRF made a
huge 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. The
Court held that it was not open to or permissible for the State Government to
seek to deprive MRF of the benefit of exemption in respect of its substantial in-
vestment in expansion in respect of compound rubber when the State Govern-
ment had enjoyed the benefit from the investment made by MRF in the form of
industrial development in the State. The Court held that the impugned action on
the part of the State Government was highly unfair, unreasonable, arbitrary, and,
therefore, was violative of Article 14 of the Constitution of India.
33. In State of Jharkhand v. Tata Cummins Ltd. (supra), the Supreme
Court held that a tax is a payment for raising general revenue. It is a burden. It is
based on the principle of ability or capacity to pay. It is a manifestation of the
taxing power of the State. An exemption from payment of tax under an enact-
ment is an exemption from the tax liability. Therefore, every such exemption no-
tification has to be read strictly. However, when an assessee is promised with a
tax exemption for setting up an industry in the backward area as a term of the
industrial policy, we have to read the implementing notifications in the context
of the industrial policy. In such a case, the exemption notifications have to be
read liberally keeping in mind the objects envisaged by the industrial policy and
not in a strict sense as in the case of exemptions from tax liability under the tax-
ing statute.
34. In the facts of the present case, as discussed hereinabove, 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 ex-
empt 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 keep-
ing in mind the object envisaged by the policy and not 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 pow-
er-driven pumps was also available to the manufacturers since 1978. In Notifica-
tion No. 64/94-C.E., dated 1-3-1994 whereby exemption qua 389 earlier notifica-
tions was rescinded, the notification in respect of the part of power-driven
pumps was also included as rescinded. Thereafter, the same item was again ex-
empted by Notification No. 95/94-C.E. issued on 25-4-1994. In this manner, inso-
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