The Gujarat High Court has allowed the Refund of Integrated Goods and Services Tax ( IGST ) paid on the Import of Goods under Export Promotion Capital Goods (EPCG) Scheme.
In the case of M/s Prince Spintex Pvt. Ltd. vs. Union of India, the High Court of Gujarat granted the exemption under Notification No. 16/2015-cus dated April 1, 2015, for the purpose of implementing the incentive scheme for import of goods under Export Promotion Capital Goods (EPCG) Scheme.
The petitioner named M/s Prince Spintex Pvt. Ltd. was engaged in the business of manufacturing of cotton yarn through the spinning process, after processing the finished goods are supplied to India as well as exported outside India. As per the Export Promotion Capital Goods (EPCG) Scheme import of capital goods for pre-production, production and post-production are allowed at zero customs duty subject to a specified condition. The petitioner as per the Export Promotion Capital Goods (EPCG) Scheme entered into a contract with the M/s Itema, Italy. However, the machine for which the contact was made is taxable @5%, which is the basic tax rate under the Customs Tariff Act. The petitioner was authorized and on the basis of this, he claimed the exemption of Integrated Goods and Service Tax (IGST) on which the exemption was not granted.
The issue raised in this case was whether the petitioner is liable for the exemption or not?
The division bench comprising of Justice Harsha Devani and Justice Sangeeta K. Vishen granted the petitioner exemption under Notification No. 16/2015-cus dated April 1, 2015, for the purpose of implementing the incentive scheme for import of goods under Export Promotion Capital Goods (EPCG) Scheme.
The Court also held that the petitioner is entitled to refund of the amount, which was paid by the petitioner under Integrated Goods and Service Tax (IGST) with the interest at the statutory rates. Hereby, the bench quashed and set aside the impugned order.
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