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2009 (8) TMI 76 - HC - CustomsExemption notification no. 159/96 - various machines/equipments which are imported for use in the manufacture of Gems and Jewellery - steel pots which were imported by the petitioners and in respect of which the customs exemption notification is being denied to them Held that - When there be two Acts, may be both Special Acts what has first to be examined is the field that they cover. Duty is payable pursuant to the Customs Act. The Import and Export Control Act regulates the import or export of goods. In so far levy of customs duty is concerned, the Customs Act is the Special Act. The issue whether any goods can be imported or exported has nothing to do with the assessment of customs duty. - The Exim Policy cannot have the effect of reading down the Notification issued under the provisions conferred under Section 25 of the Customs Act. The denial, therefore, of the benefit to the petitioners herein would be without jurisdiction and consequently this petition will have to be allowed. Benefit of exemption notification allowed.
Issues:
- Denial of benefits of exemption Notification No.159/86 dated 1st March, 1986 to a partnership firm manufacturing Gems and Jewellery. - Interpretation of the Customs Act in relation to the power to exempt goods from duty. - Conflict between the Customs Act and the Import and Export Control Act regarding exemption of goods. - Whether the Exim Policy can override a Notification issued under Section 25 of the Customs Act. Analysis: 1. The petitioners, a partnership firm manufacturing Gems and Jewellery, challenged the denial of benefits under Notification No.159/86. The notification granted exemptions to imported machines/equipments for use in manufacturing Gems and Jewellery for export. The issue revolved around the classification of "steel pots" under the notification. 2. The respondents argued that the amendment to the EXIM POLICY distinguished between various types of pots, excluding some from the benefit of the Customs Notification. They contended that the classification followed the Harmonized System of Nomenclature (HSN), and the exclusion of certain pots was justified. However, the court found this argument illogical as the Customs Act governed the exemption of goods, not the EXIM POLICY. 3. The court analyzed the Customs Act, particularly Sections 12 and 25, which outlined the power to levy customs duties and grant exemptions. It emphasized that duty payment and exemption were governed by the Customs Act. The court highlighted that the Notification under consideration was issued under Section 25 of the Customs Act, and its terms should prevail over conflicting interpretations from the EXIM POLICY. 4. Regarding the conflict between the Customs Act and the Import and Export Control Act, the court clarified that the Customs Act was the special act governing customs duty assessment. The Import and Export Control Act regulated the import and export of goods but did not confer the power to impose or exempt duties. Therefore, the court concluded that the denial of benefits to the petitioners based on the EXIM POLICY was without jurisdiction. 5. Ultimately, the court allowed the petition, ruling in favor of the petitioners. It directed the return of the Bank Guarantee furnished during the proceedings. The judgment highlighted the importance of adhering to the provisions of the Customs Act in matters of duty exemption and emphasized that conflicting interpretations from other regulations should not undermine the clear terms of customs notifications issued under the Customs Act.
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