2023 (1) TMI 113 - HC - Customs

Validity of Notification bearing no.54/2022-Customs dated 19.10.2022 i.e., Sl. No. 2(ii) and the communication dated 21.11.2022 issued by respondent no.2 - import of equipment for the purpose of its solar power project - benefit of the concessional rate of customs duty available to the petitioner, denied on account of a purported retrospective amendment to the Project Import Regulations, 1986 - balance of convenience - HELD THAT - The petitioner has set up a prima facie case. In case no interim protection is granted, the entire process of import is likely to get derailed. Although letters of credit have to be established in this particular case between March and April 2023, and in some other connected matters relating to group companies, have to be established in February-March 2023, the uncertainty as to whether or not the petitioner would be entitled to a concessional rate of duty would perhaps delay the execution of the project at hand. The balance of convenience, thus, is in favour of the petitioner because in case the petitioner was to fail in the instant writ petition, it would have to pay duty at the tariff rate and not at the concessional rate. Therefore, at the end of the day, this aspect of the matter has only a financial impact either way, qua which, a suitable direction can be issued. We are inclined to direct that no precipitate action be taken against the petitioner at the stage of import. This would, however, not create any equity in favour of the petitioner - List the matter on 26.04.2023.

Summary

Issues:
Challenge to denial of concessional rate of customs duty for importing equipment for a solar power project.

Analysis:
The petitioner challenged the denial of the concessional rate of customs duty for importing equipment for a solar power project based on a purported retrospective amendment to the Project Import Regulations, 1986. The petitioner argued that the sponsoring authority had recommended the benefit of a specific Customs Notification, which should apply to the project. The communication from the Government of India regarding the registration of the power project supported the petitioner's claim of being entitled to the concessional rate of duty. The petitioner contended that the registration of the solar power project before the effective date of the impugned notification should maintain the benefit of the concessional rate of customs duty.

The petitioner highlighted that they had taken steps under the earlier regime, including furnishing a continuity bond and a bank guarantee, which were still valid. On the other hand, the respondents argued that the petitioner did not meet the eligibility criteria for the concessional rate of duty. The respondents opposed granting any interim relief to the petitioner at this stage, emphasizing that no interim order should be passed in favor of the petitioner.

The Court considered the potential impact on the project execution if the petitioner did not receive interim protection. Noting the significance of establishing letters of credit for imported materials by specific deadlines, the Court found that the petitioner had established a prima facie case warranting interim protection. The Court balanced the equities and financial implications, ultimately directing that no precipitate action be taken against the petitioner during the import process, without creating any equity in favor of the petitioner.

In conclusion, the Court directed that the petitioner would pay the differential customs duty if they failed in the writ petition. The respondents were given notice to file a counter-affidavit, and the matter was listed for further hearing. The Court's decision aimed to prevent any disruption in the import process for the solar power project while maintaining the financial balance between the parties involved.