1977 (8) TMI 65 - HC - Customs

Customs duty on silicon rectifiers for flash guns set aside; duty refund ordered under circular directive

The High Court set aside the customs orders imposing excise duty on imported silicon rectifiers for electronic flash guns, ruling in favor of the ... Import - Countervailing duty Issues:Impugning legality of customs orders, interpretation of excise duty applicability, application of circular directives, compliance with circular instructions, binding nature of circulars on revenue authorities, entitlement to duty-free clearance, judicial review under Article 226.Analysis:The petitioner challenged the legality of two customs orders regarding the applicability of excise duty on imported silicon rectifiers used in manufacturing electronic flash guns. The Department of Central Excise and Customs imposed duty on the rectifiers based on potential alternative uses mentioned in the manufacturer's literature. The petitioner contended that the rectifiers were exempt from duty as per a circular from the Central Board of Excise and Customs. Despite the petitioner's arguments, the duty was upheld, leading to a refund application and subsequent rejections by the authorities. The Assistant Collector of Customs and the Appellate Collector's orders were criticized for lack of proper consideration of the petitioner's contentions, resulting in a revision application to the Government of India. The revisional authority's interpretation of the circular directive was also questioned for misdirection.The circular directive issued by the Central Board of Excise and Customs provided for provisional duty-free clearance of electronic components capable of multiple uses, with subsequent verification of actual use. The authorities failed to correctly apply the circular's provisions to the petitioner's case, leading to an erroneous imposition of duty. The High Court emphasized the binding nature of such circulars on revenue authorities, even if they exceed statutory language. The court highlighted that the petitioner, as a small-scale manufacturer of electronic flash guns, was entitled to provisional duty-free clearance under the circular, subject to later verification of actual use.The court found the decisions of the authorities to be perverse and impermissible under the law, as no reasonable person would have arrived at such conclusions. The court invoked its powers under Article 226 of the Constitution of India to set aside the orders and directed the refund of the duty amount to the petitioner. It was noted that the delay in verification of actual use served no purpose and amounted to a penalty on the revenue authority for wrongfully collecting duty and withholding the amount for an extended period. The court ordered the respondents to pay the costs of the petition to the petitioner as per the rules, emphasizing the importance of proper application of circular directives in customs matters.