(Per : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. This petition is filed by the Ahmedabad Municipal Corporation and its Deputy Municipal Commissioner calling in question legality of recovery notices dated 05.11.2007, 12.11.2007 and 03.12.2007. They have also challenged orders in original dated 14.06.2006, 16.06.2006 and 28.03.2007 passed by the Adjudicating Authority.
2. Facts may be noted in brief:
2.1 The State of Gujarat experienced devastating earthquake on 26.01.2001. The impact of the earthquake was felt by the entire State as well as in the neighbouring areas. City of Ahmedabad also faced its fair share of brunt of the earthquake. Several buildings collapsed leading to loss of human lives and property. To meet with such natural calamity in future, Ahmedabad Municipal Corporation imported certain goods useful for disaster management which were donated by the Government of Netherland and another agency called CORDAID. Such equipments were imported under six different bills of entries. The goods arrived between January 2003 to August 2004. Considering the special nature of goods and the purpose for which the same were imported, Government of India, vide its order dated 22.03.2004, granted exemption to the petitioners from payment of customs duty and additional as well as special additional duties of customs on import of such goods total valued at 5,96,211 Euros. In the order, it was stated that such exemption was being granted for the rescue equipments as per annexure attached with the order. However, no such list of equipments was annexed with the said order. The total value of the goods, which the petitioners imported under above noted six bills of entries, came to 6,40,169.80 Euros whereas we may recall that the exemption order issued by the Government of India on 22.03.2004 had granted exemption for the equipments valued at 5,96,211 Euros.
2.2 The Deputy Commissioner of Customs, Air Cargo Complex, Ahmedabad, on account of two reasons mainly that the exemption order dated 22.03.2004 did not carry the list of equipments permitted to be imported under exemption and the value of goods indicated in the exemption order did not tally with the total value of goods imported by the petitioners, demanded full customs duty and additional duties related to import of such goods. For such purpose, he issued a show cause notice to the petitioners. The petitioners replied to the show cause notice and opposed any such levy. The petitioners, however, could not produce any order of the Government of India carrying full list of the import items nor could have the exemption order duly rectified to remove the anomaly in the value. In view of this, Deputy Commissioner, Customs, passed an order on 16.06.2006 confirming the demand of differential duty of Rs. 5,38,021/- from the petitioners. This confirmation order pertained to three bills of entries under which the goods were imported. In such order, he noted the contentions of the petitioners that the petitioners have been in correspondence with the Government of India for granting exemption for the revised value of goods which ultimately were imported alongwith relevant documents with regard to the shipment. He, however, concluded that despite sufficient time being granted, no such document was produced before him. He concluded that there was difference in the FOB value between the goods imported and the exemption order. He was, therefore, of the opinion that such equipments/goods were not covered by the exemption order issued by the Ministry of Finance.
2.3 With respect to the goods imported under one bill of entry, the Deputy Commissioner ICD/CSF, passed an order on 14.06.2006 and for similar reasons confirmed the differential duty demand of Rs. 82,07,397/-. We may note that with respect to remaining two bills of entries so far no order has been passed by the Customs Authorities.
2.4 It emerges that the petitioners had challenged the order passed by the Deputy Commissioner on 14.06.2006 before the Appellate Commissioner. Such appeal, however, came to be dismissed by an order dated 28.03.2007 only on the ground of delay. It is not in dispute that against such appellate order, the petitioners did not prefer any further appeal and it is equally undisputed that the petitioners had not challenged the Deputy Commissioner's order dated 16.06.2006 before any appellate forum.
2.5 While these proceedings were going on, the petitioners were still in touch with the Government of India requesting for issuing fresh order of exemption or for amendment of the original order so that the discrepancies be removed. On 12.11.2007, the Government of India issued an order amending the previous exemption order dated 22.03.2004. In such amendment, the Government of India substituted the figure of 5,96,211 Euros in the original order by the figure of 6,40,169.80 Euros. Alongwith such order, details of the imported equipments were also annexed. Armed with such exemption order, the petitioners approached the Customs Commissioner under communication dated 29.03.2008 issued by their lawyers. In such communication, it was pointed out that the Government of India had amended the previous exemption order dated 22.03.2004. In view of such amendments, the petitioners requested the Commissioner of Customs, Ahmedabad to intervene in the matter and direct the officials of the Customs Department not to press for recovery against the Ahmedabad Municipal Corporation. It appears that in the meantime, in view of the two orders in original confirming duty demand, the Customs Authority had also issued recovery notices on 05.11.2007, 12.11.2007 and 03.02.2007.
2.6 Since in response to such communication dated 29.03.2008, the petitioners did not receive any reply from the Commissioner of Customs, the present petition came to be filed for the reliefs noted hereinabove.
3. On the basis of such materials, counsel for the petitioners submitted that the authorities ought to have dropped the duty demand. The Ahmedabad Municipal Corporation had imported disaster management equipments which were donated to it by the foreign agencies. Considering the special nature of the imports, Government of India in exercise of powers under Section 25(2) of the Customs Act, 1962 (for short 'the Act') had granted exemption from payment of customs duty and the additional duty thereon. Merely because there were some minor discrepancies in the value of the goods mentioned in the exemption order and the total value of imported goods, such exemption could not have been denied to the petitioners. He further submitted that even such defect was cured by subsequent order amending the original exemption dated 22.03.2004. He further pointed out that the defect of non-disclosure of details of imported goods was also corrected by the Government of India in the later order dated 12.11.2007.
4. Counsel submitted that powers under Section 25(2) of the Act can be exercised even after the import of goods and the duty, if any, recovered would also be refundable. In this respect, counsel relied on a circular dated 12.05.1997 issued by the Government of India, Ministry of Finance, in which relying on the opinion of the Attorney General of India on the scope of Section 25(2) of the Act, it was clarified that :
“If the requirements of Section 25(2) are satisfied, I am of the view that an exemption can be passed under Section 25(2) even after the goods have been imported, exemption can also be granted even after the duty has been paid in which even the duty paid has to be refunded.”
5. Counsel relied on the following decisions of learned Single Judge of two High Courts taking a view that under Section 25(2) of the Act, the Government of India has the power to issue necessary exemption orders even after import of the goods:
(i) In case of Indian Leaf Tobacco Development Co. Ltd. and I.T.C. Ltd. Vs. U.O.I. And Ors. reported in 1984 (16) E.L.T. 234 (Madras)
(ii) In case of Hari Vishnu Pophale and ors. Vs. Union of India and ors. reported in ILR 1981 Delhi 514
6. On the other hand, Ms. Yajnik appearing for the Department opposed the petition. Relying on the orders in original passed by the Adjudicating Authority and the affidavit-in-reply filed by the respondents, she submitted that till the orders in original were passed, the petitioners could not produce proper exemption orders. The petitioners' challenge to such orders failed. In one case, the appeal was filed but was dismissed and in another case no such appeal was filed at all. In that view of the matter, it was submitted that petitioners are not entitled to any relief.
7. Having thus heard learned counsel for the parties and having perused the material on record, following undisputed facts emerge:
1. The petitioner-A.M.C. imported goods donated to it by foreign agencies which goods were meant for disaster management. A.M.C. was prompted to procure such goods in view of devastating earthquake which affected the whole city of Ahmedabad on 26.01.2001.
2. Looking to the special nature of imports, Government of India granted exemption under Section 25(2) of the Act from payment of entire customs duties and additional duties on the goods. Such order dated 22.04.2004, however, though stated, did not carry a list of details regarding the goods under import. In such order, the value of goods under import showed 5,96,211 Euros whereas the actual value of goods imported came to 6,40,169.80 Euros.
3. The Customs Authorities demanded the duty on goods on the premise that there was discrepancy in the value indicated in the exemption order and the actual imports and further that the detail containing list of the imports was not available. In absence of such details, two orders in original dated 14.06.206 and 16.06.2006 came to be passed confirming the duty demand.
4. Subsequently, the Government of India issued an amendment to the earlier exemption which order came to be passed on 12.11.2007. Both the defects were cured. The figure of 5,96,211 Euros was substituted by 6,40,196.80 Euros and the list of the discrepancy of the imported equipment was also annexed. When alongwith such order, the petitioners approached the Commissioner of Customs and requested for exemption of duties, no response was received.
8. We are of the opinion that the demands raised by the respondents cannot be sustained. We say so for the following reasons:
It is not in dispute that the Government of India had powers under Section 25(2) of the Customs Act to grant exemption in individual cases from payment of customs duties even after the import is made and duty collected. Section 25(2) of the Act reads as under:
“ If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case, exempt from the payment of duty, under circumstances of an exceptional nature to be stated in such order, any goods on which duty is leviable.”
Under such provision, therefore, Central Government, if satisfied that it is 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 fact, that such order could be passed even after the imports, is not seriously disputed before us. In any case, the circular of the Ministry of Finance dated 12.05.1997 is sufficiently clear. Exemption order was passed initially on 22.03.2004. In such order the discrepancies and defects stood cured by the subsequent order of amendment dated 12.11.2007. In that view of the matter, the petitioners were entitled to full waiver of customs duty and the additional duties on the imports made. It is of course true that by the time, such subsequent order dated 12.11.2007 came to be passed, the orders in original were already passed and the duty demand confirmed. However, insofar as the present petition is concerned, such intervening developments would not be of any consequence because these orders are also in challenge before us. Equally the fact that in one of the cases, the petitioner did not prefer an appeal and in another case such appeal came to be dismissed also would be of no consequence. This is so because such orders are directly in challenge before us. We are examining the legality of such orders in view of the change in circumstances and developments which took place after the orders were passed. In view of the amendment order issued by the Government of India on 12.11.2007, the orders in original passed by the Adjudicating Authorities, in our view, are rendered ineffective.
9. Culmination of the discussion above would lead to an inescapable conclusion that both the orders in original and the consequent duty demand are required to be set aside. We may record that it is not the case of the respondents that after the Government of India issued its amendment order dated 12.11.2007 there was any further discrepancy still remaining which was required to be examined. Considering therefore the fact that the imports are made by a local authority and that the exemption was granted by the Government of India looking to special nature of imports of goods meant for disaster management, we do not find it necessary to place the issue back before the original Adjudicating Authority for verifying further details.
10. In the result, orders in original dated 14.06.2006 and 16.06.2006 are quashed. Resultantly, appellate order dated 28.03.2007 does not survive. The notices dated 05.11.2007, 12.11.2007 and 03.12.2007 seeking recovery of the unpaid duties on the petitioners are also set aside. Petition is allowed. Rule is made absolute. No costs.
[AKIL KURESHI, J.]
JYOTI
[HARSHA DEVANI, J.]