Circular No. 81of 2001
12th December, 2001
Government of India
Ministry of Finance
Department of Revenue
Subject: Exemption from Customs Duty under Section 25(2) Of The Customs Act, 1962 – guidelines for consideration of requests in the matter
In supersession of this Department’s Office Memorandum F.No.467/41/99 dated June 18th, 1999 on the subject, the guidelines as mentioned in the following paragraphs are being issued with approval of the Hon’ble Finance Minister. They may be, with immediate effect, taken into account at the time of consideration of any application for request for exemption from Customs duty under Section 25(2) of the Customs Act, 1962.
2. The provisions of Section 25(2) of the Customs Act for exemption from Customs duty are applicable in respect of goods, which are of secret or strategic nature or are meant for being used for charitable purposes.Online GST Certification Course by TaxGuru & MSME- Click here to Join
3. For the purpose of availment of exemption of Customs duty under the above-mentioned provisions of the Customs Act, the following categories of goods would be treated to be of secret or strategic nature:
|(a)||Imports of secret goods by the Government with a view to meet security requirements of the country;|
|(b)||Imports to meet country’s defence needs relating to requirements of armed forces. This would also include goods meant for R&D units under the DRDO. It is made clear that exemption under this category is not meant for imports which are of routine or frequent nature or are to meet the normal operational requirements of the armed forces.|
Imports by Government Organisations engaged in security operations like Special Protection Group (SPG) and other Central Police Organisations; and State Police Organisations, for equipping their forces. It is clarified that security forces are expected to make budgetary provisions for importing their equipments, and there should be no need to seek ad-hoc exemption from payment of Customs duty in the routine course. They should provide for payment of duty along with payment of price of the goods. No exemption will be given to goods which are required to meet the normal functional requirement of these organizations and which are in the nature of routine imports. Exemption is also not available to items like spare parts, which are required for repair and maintenance of equipments of these organizations. Only in situations of exceptional nature, particularly, in view of the security considerations, application for availment of ad-hoc exemption under this category should be made. However, the applicant organisation should clarify why, in respect of even these goods, budgetary allocation for duty could not be made.
Applications to be made for availment of Customs duty in the category (c) above, must be forwarded by an officer not below the rank of concerned Joint Secretary to Government of India in the concerned administrative Ministry.
4.Exemption of duty on goods meant for charitable purposes would be applicable in respect of import of such goods by charitable institutions, which are to be used for charitable purposes without any distinction in any manner on account of caste, creed, religion, race or gender.
5. The imports by charitable institutions would be required to fulfill the following conditions to be eligible for exemption under the category:
|(a)||The imports should normally be received as donations or gifts from foreign countries from known institutions and not from individuals.|
|(b)||Either there should be no payment involved for the imported goods or the payment should be made only out of the amount received as donation within India.|
The applicant of exemption under this category should also be an institution/organisation registered as a charitable organisation. The applicant should not be an individual. Further, the institutions should have been providing charitable service for not less than three years at the time of making application for exemption, and it should be enjoying good reputation.
|(d)||The applicant institution should not be such whose activities are purely or mainly religious in nature such as propagation or promotion of a particular religion|
|(e)||For the availment of exemption, it would be necessary that the institution is engaged in rendering charitable service to the society at large, e.g, running hospitals, educational institutions etc., Either service being so rendered by the institution should be free or any payment by recipient of such service or the institution should be running, on ‘no profit no loss’ basis, and this fact should be reflected in the annual account of the institution. The activity of institution should not be commercial in nature.|
|(f)||The charitable nature of the institution, the fact of it is rendering services on ‘free’ or ‘no loss no profit’ basis, it’s having been in existence for not less than three years and that it enjoys good reputation should be certified by any of the following authorities:|
|(i)||Jurisdictional Commissioner of Central Excise/Customs|
|(ii)||Jurisdictional Commissioner of the State Government|
|(iii)||Concerned Secretary of the State Government|
|(iv)||Concerned Joint Secretary of the Central Government.|
|(g)||Exemption under this category would not be admissible on items, which are of general use and operational equipments like construction materials, vehicles, air conditioners, refrigeration and chilling equipments, curtains, furniture, audio video systems, computers and accessories, office stationery, etc., since, they are generally not meant for providing any specific/direct charitable service. The exclusion would also cover items that are likely to serve more of a cultural purpose such as musical instruments etc. Exemption will also not be allowed to items, which are in the nature of spares required for maintenance and repair of existing equipment.|
|(h)||The institution should certify that the goods under import are for its own use and should furnish an undertaking to the effect that they would fulfil the conditions prescribed for availment of exemption.|
|(i)||No preferential treatment in the matter of granting exemption under this category would be given to any government organisation. The element of Customs duty should invariably form part of the cost of projects undertaken by the Government Organisations.|
|(j)||Monitoring of Ad-hoc Exemption Orders (AEO): The concerned Commissioner of Customs and Central Excise under whose jurisdiction the registered office of the charitable organisation is situated shall monitor the utilization of the items imported under the AEO by the importing charitable organisation. For this purpose, the charitable organisation availing the exemption shall also be required to intimate to the jurisdictional Commissioner within one month of their receiving the AEO, details of their address and the proposed site of utilization of the exempted items, along with any other information that the Commissionerate may require for verifying compliance of the conditions of the AEO. A report in this regard should then be sent by the jurisdictional Commissioner to the Commissioner of Customs of the port of clearance of the goods within 3 months of the import of the goods. Since, the conditions of the AEO are binding on the importer in perpetuity, any infringement of conditions of the AEO should be brought to the notice of the Commissioner of Customs of the port of import for taking further necessary action such as realization of Customs duty on the subject goods, penal action for such violations, etc. the action as above taken by the Commissioner of Customs of the port of import should be intimated to the Board.|
6. All ad-hoc exemptions from duty to non-governmental organisation will be issued subject to the conditions that the imported goods will not be put to any commercial use and will not be sold, gifted or parted by the importer in any manner without the prior permission of the Board. The imported goods will be kept available for inspection by jurisdictional Customs or Central Excise Officers.
7. Import of goods which are not covered in any of the categories mentioned in para-2 will not be considered for grant of ad-hoc exemption under Section 25(2) of the Customs Act, 1962.
8. Ministries/Departments may please bring these guidelines to the notice of all concerned, and direct them to submit their requests for Customs duty exemption in accordance with the afore-mentioned guidelines.