KTEX Non-Woven Pvt. Ltd. Vs Union of India (Gujarat High Court)
The Gujarat High Court in KTEX Non-Woven Pvt. Ltd. vs Union of India addressed a batch of petitions challenging the levy and collection of Integrated Goods and Services Tax (IGST) on imports of capital goods under the Export Promotion Capital Goods (EPCG) Scheme. The petitioners, engaged in the fabric business, sought to quash Notification No. 26/2017-Customs dated 29.06.2017, Trade Notice 11/2018 dated 30.06.2017, and to obtain refund of IGST paid on imports made under valid EPCG authorisations. They contended that such imposition of IGST was contrary to the Foreign Trade Policy (FTP) 2015–2020, particularly paragraph 1.05(b) of Chapter 1A, and that the levy was illegal.
The petitioners relied on the decision of the same court in Prince Spintex Pvt. Ltd. vs Union of India (SCA No. 20756 of 2018, decided on 03.02.2020), where an identical issue was decided. In that case, the court examined the FTP provisions and related customs notifications. Under the EPCG Scheme, as stated in Chapter 5 of FTP 2015–2020, importers are permitted to import capital goods at zero customs duty, subject to fulfilling an export obligation equivalent to six times the duty saved. To give effect to this, the Central Government issued Notification No. 16/2015-Customs dated 01.04.2015 exempting such imports from customs and additional duties.
