2013 (7) TMI 758 - HC - Customs

Legality of recovery notices municipal corporation filed the petition to challenge the legality of recovery notices passed by adjudicatory authority - Held that - The petitioners were entitled to full waiver of customs duty and the additional duties on the imports made The notices seeking recovery of the unpaid duties on the petitioners are also set aside - the amendment order issued by the Government of India, the orders-in-original passed by the Adjudicating Authorities to be rendered ineffective - intervening developments in the circulars would not be of any consequence because these orders were also in challenge both the orders-in-original and the consequent duty demand required to be set aside. Government of India had powers u/s 25(2) to grant exemption in individual cases from payment of customs duties even after the import is made and duty collected - C/G if satisfied that it was necessary in the public interest so to do may pass a special order and exempt any goods from payment of duty - under circumstances of exceptional nature to be stated in the order the circular of the Ministry of Finance in this case was sufficiently clear petition decided in favour of assessee.

Summary

Issues:
Challenge to legality of recovery notices and orders-in-original regarding customs duty exemption for disaster management equipment import.

Detailed Analysis:

1. Challenge to Recovery Notices and Orders-in-Original:
The petition filed by the Ahmedabad Municipal Corporation and its Deputy Municipal Commissioner questions the legality of recovery notices dated 5-11-2007, 12-11-2007, and 3-12-2007, along with orders-in-original dated 14-6-2006, 16-6-2006, and 28-3-2007 passed by the Adjudicating Authority. The dispute arose due to discrepancies in the value of goods imported for disaster management under exemption orders issued by the Government of India.

2. Exemption Order Discrepancies and Duty Demand:
The State of Gujarat faced an earthquake, prompting the import of disaster management equipment by the Ahmedabad Municipal Corporation. Despite an exemption order granting relief from customs duty, the Deputy Commissioner of Customs demanded full duty payment due to discrepancies in the value of goods imported and the exemption order. The Adjudicating Authority confirmed the duty demand through orders-in-original, leading to the issuance of recovery notices.

3. Subsequent Exemption Order Amendment:
Subsequently, the Government of India issued an amendment to the original exemption order on 12-11-2007, correcting the value discrepancy and annexing details of the imported equipment. The petitioners sought intervention from the Customs Commissioner for duty exemption based on the amended order, but no response was received.

4. Legal Basis for Exemption Post-Import:
The petitioners argued that Section 25(2) of the Customs Act allows the Government to grant exemptions post-import, even refunding duties already paid. They cited relevant circulars and legal precedents supporting the Government's authority to issue exemption orders after importation.

5. Court's Decision and Reasoning:
The High Court held that the Government had the power under Section 25(2) to grant exemptions post-import, as evidenced by the subsequent amendment to the exemption order. The Court found that the amendment cured the initial defects, rendering the duty demands invalid. Consequently, the Court quashed the orders-in-original and recovery notices, allowing the petition in favor of the Ahmedabad Municipal Corporation.

6. Conclusion:
The judgment concluded that the orders-in-original confirming duty demands were set aside due to the subsequent amendment to the exemption order. The Court emphasized the special nature of the imports for disaster management and the Government's authority to grant exemptions post-import, leading to the dismissal of recovery notices and upholding the petitioners' entitlement to duty waiver.