Legal principle

A CBEC circular issued under Section 151A cannot amend, condition or whittle down an exemption notification issued under Section 25(1) of the Customs Act, 1962, nor dictate the manner in which a customs officer exercises quasi-judicial functions such as provisional assessment under Section 18.

Court decision

The Court held that the Circulars dated 6 October 2015 and 20 January 2016 are ultra vires Section 151A of the Customs Act and unsustainable in law, and quashed them; it set aside the proceedings consequent thereon, including the communication dated 22 January 2016 to J B Overseas requiring a bank guarantee of 100% of the duty differential; it held the SCN issued to J B Overseas invalid and unsustainable; and it directed that any SCN or application for provisional release be decided by customs officers in accordance with law, uninfluenced by the impugned circulars. The writ petitions were disposed of in favour of the petitioners with no orders as to costs.

Facts

The petitioner Association's members and M/s J B Overseas regularly imported assorted gold jewellery from Indonesia (supplier PT-Antam) under CTH 7113 19 10, claiming 'NIL' customs duty under Exemption Notification No. 46/2011-Cus issued under the India-ASEAN FTA on the strength of certificates of origin (COOs) issued by Indonesian authorities. CBEC's Circular dated 6 October 2015 declared that these imports did not satisfy the origin criteria, directed the Assessing Authority to disregard the Indonesian COOs, and required COOs with 'appealable orders' to be sent to the CBEC. A further CBEC Circular dated 20 January 2016 directed Assessing Officers to follow the earlier circular and make provisional assessments demanding a bank guarantee for 100% of the duty differential, pursuant to which the Assistant Commissioner's letter dated 22 January 2016 asked J B Overseas to furnish such a BG. Demand-cum-show cause notices (SCNs) were issued to importers, including J B Overseas, and the writ petitions challenged both circulars and the consequential letter and SCN.

Key provisions

• Section 151A, Customs Act, 1962 — Instructions to officers of customs