Court grants refund of duty to petitioner-company, retroactively applying 0% customs duty under EPCG Scheme.

The court ruled in favor of the petitioner-company, allowing their claim for a refund of the 10% duty paid and directing the authorities to grant the benefit of 0% duty of customs under the EPCG Scheme retroactively from April 1, 1999. The court emphasized that the substitution of provisions in the notifications indicated the government's intent to apply the 0% duty from the policy's introduction date, aligning with established legal principles. The impugned order rejecting the petitioner's claim was quashed, and the petitioner was granted relief within two months.

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Issues Involved:
1. Entitlement to 0% duty of customs under the EPCG Scheme.
2. Validity of the notification date for the 0% duty of customs.
3. Interpretation of "substitution" in legislative context.

Issue-wise Detailed Analysis:

1. Entitlement to 0% duty of customs under the EPCG Scheme:
The petitioner-company imported textile machinery and sought the benefit of the Export Promotion Capital Goods (EPCG) Scheme, which initially provided a duty of customs at 10% ad valorem. The government later introduced a 0% duty of customs scheme effective from April 1, 1999. The petitioner applied for the 0% duty benefit, but the respondent authorities granted only the 10% EPCG licence. The petitioner cleared the consignments under protest and sought a refund of the 10% duty paid.

2. Validity of the notification date for the 0% duty of customs:
The central issue was whether the benefit of the 0% duty of customs could be applied retrospectively from April 1, 1999, given that the official notification was published on November 4, 1999. The respondents argued that the exemption could only take effect from the date of publication in the Official Gazette, as per Section 25 of the Customs Act, 1962.

3. Interpretation of "substitution" in legislative context:
The petitioner relied on the principle that "substitution" of a provision implies the repeal of the earlier provision and its replacement by the new one, effective from the date of the new policy's introduction. This interpretation was supported by the Supreme Court's rulings in *Government of India & Ors. v. Indian Tobacco Association* and *Zile Singh v. State of Haryana & Ors.*.

Judgment Analysis:

Entitlement to 0% Duty:
The court noted that the petitioner-company imported the textile machinery in August 1999, during the period when the 0% duty of customs scheme was in effect as per the government policy starting April 1, 1999. However, the official notification was published later on November 4, 1999.

Notification Validity:
The court examined the relevant notifications: Notification No. 29/97-Cus., Notification No. 31/99-Cus., and Notification No. 122/99-Cus. It found that the term "bio-tech and engineering sectors" was introduced in March 1999 and later substituted to include "textile and chemical sectors" in November 1999. The court interpreted that the substitution indicated the government's intent to apply the 0% duty from the policy's introduction date.

Substitution Interpretation:
The court referred to the established legal principles regarding "substitution" from the *Zile Singh* and *Indian Tobacco Association* cases. It concluded that the substitution of "bio-tech, engineering, textile, and chemical sectors" in the notifications was intended to be effective from April 1, 1999, aligning with the government's policy.

Final Judgment:
The court quashed the impugned order dated July 30, 2003, rejecting the petitioner's claim for a refund of the 10% duty paid. It directed the respondents to grant the benefit of 0% duty of customs under the EPCG Scheme to the petitioner-company within two months.

Conclusion:
The writ application was allowed, and the petitioner was entitled to the 0% duty of customs benefit retroactively from April 1, 1999, based on the interpretation of "substitution" in legislative amendments. The court's decision emphasized the intent and policy of the government over the technicality of the notification date.

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