1975 (6) TMI 16 - HC - Customs

Summary

Issues involved: Challenge to orders passed by Respondents u/s 25 of the Customs Act regarding duty exemption on imported chemicals as per Notification dated 1st March 1968.

Summary:
The Petitioners challenged the Orders passed by Respondents u/s 25 of the Customs Act related to the import of certain chemicals without receiving the benefit of duty exemption as per a Notification dated 1st March 1968. The issue revolved around the interpretation of the said Notification which exempted chemicals for insecticides, pesticides, and fungicides from customs duty under specific conditions. The Petitioners, engaged in manufacturing these products, imported raw materials for disinfectant fluids, claiming them to be entitled to the duty exemption under the Notification.

The Notification required compliance with conditions including producing certificates from relevant authorities and executing bonds specified by the Assistant Collector of Customs. The Petitioners fulfilled these conditions, as confirmed by a Public Notice issued later. However, Customs authorities levied duty on the imported chemicals, arguing they were not used for agricultural purposes as required for the exemption. The Court held that once mandatory conditions were met, Customs authorities had no jurisdiction to question the certificates provided, unless obtained fraudulently or mistakenly.

The Court found that the Customs authorities erred in not granting the exemption despite the Petitioners' compliance with all conditions. The Respondents' argument that the chemicals should be used as 'chemical intermediates' for insecticides, pesticides, and fungicides was rejected, emphasizing the binding nature of the certificates issued by relevant authorities. The Court set aside the Orders and directed the refund of the Customs duty to the Petitioners, emphasizing the lack of jurisdiction of the Customs authorities to deny the exemption when conditions were met.

In an alternative contention, the Petitioners argued that the chemicals could also fall under another exemption Notification as drugs or medicines, which the Court did not delve into due to the primary issue resolution. The Respondents' argument that the Petitioners should have sought revision under Section 131 of the Customs Act was dismissed, as the Court found the Petitioners entitled to approach the Court directly given the lack of jurisdiction displayed by the Customs authorities in denying the exemption. The Court allowed the Petition, set aside the Orders, and directed the refund of the Customs duty along with costs to the Petitioners.