1993 (4) TMI 84 - HC - Customs

Issues Involved:
1. Constitutionality of the amendments to Notification No. 133/85-Customs and Notification No. 67/87-Customs.
2. Validity of the Assistant Collector of Customs' order dated 17th August 1987.
3. Scope of the Central Government's power under Section 25(1) of the Customs Act.
4. Judicial review of the Central Government's discretionary power under Section 25 of the Customs Act.
5. Legality of the cancellation of registration once granted under the Project Import (Registration of Contract) Regulations, 1965.

Issue-wise Detailed Analysis:

1. Constitutionality of the amendments to Notification No. 133/85-Customs and Notification No. 67/87-Customs:
The petitioners challenged the amendments made on 1st May 1986 and 1st March 1987, arguing that the exclusion of captive power plants from the definition of "power projects" was discriminatory and lacked a reasonable nexus with the object sought to be achieved. The Court held that the exclusion of captive power plants set up by units engaged in activities other than power generation from the exemption was discriminatory. The classification lacked a reasonable nexus with the object of the exemption, which was to reduce the cost of power generation. The Court found that the amendments were arbitrary and violated Article 14 of the Constitution, thereby quashing the notifications.

2. Validity of the Assistant Collector of Customs' order dated 17th August 1987:
The Assistant Collector of Customs rejected the petitioner's application for registration of the contract with Asea Stal and canceled the earlier registration with Gotaverken Energy System, on the grounds that the captive power plant was part of the export-oriented unit project and not an independent project. The Court held that the captive power plant should be considered an independent project and that the reasons for rejection were not germane. The order was quashed as it was based on erroneous grounds and lacked any rational nexus with the objective of the exemption.

3. Scope of the Central Government's power under Section 25(1) of the Customs Act:
The Court examined whether the Central Government could issue a notification excluding captive power plants from the exemption under Section 25(1) of the Customs Act. It was held that while the Central Government has the power to grant exemptions in public interest, it must do so reasonably. The exclusion of captive power plants was found to be unreasonable and without any justifiable object, thus the Central Government's action was not permissible.

4. Judicial review of the Central Government's discretionary power under Section 25 of the Customs Act:
The Court affirmed that while the Central Government's discretionary power under Section 25 is generally not subject to judicial review, it can be scrutinized if it violates constitutional provisions, such as Article 14. The Court held that executive actions resulting in discrimination or denial of equal protection of law can be judicially reviewed. The impugned notifications were found to be discriminatory and were struck down.

5. Legality of the cancellation of registration once granted under the Project Import (Registration of Contract) Regulations, 1965:
The Court held that the cancellation of registration granted under the Regulations was illegal as the Regulations did not provide for cancellation. The Assistant Collector's order canceling the registration was quashed as it was without authority and contrary to the Regulations.

Conclusion:
The Court quashed the amendments to Notification No. 133/85-Customs and Notification No. 67/87-Customs, as well as the order of the Assistant Collector of Customs dated 17th August 1987. The petitioners' application for registration of the contract with Asea Stal was directed to be reconsidered. The writ application was allowed with no order as to costs.

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