Introduction:
CESTAT, Kolkata in M/s. The Bank of Nova Scotia v. Commissioner of Customs (Admn. & Airport), [Final Order No. 77289-77292/2023 dated October 5, 2023] addressed the issue of whether a Circular could introduce new conditions for claiming customs duty exemptions that were not originally outlined in the exemption Notification. The case involved M/s. The Bank of Nova Scotia, acting as a ‘Nominated Agency’ under the Foreign Trade Policy, and raised critical questions about the validity of such additional requirements.
The Case at a Glance:
M/s. The Bank of Nova Scotia had imported precious metals like gold, silver, and platinum without paying customs duties under the ‘Export against supply by Nominated Agency’ scheme. These metals were subsequently supplied to various exporters for jewelry production intended for export.
An issue arose when the adjudicating authority demanded customs duty of significant amounts along with accrued interest, alleging non-compliance with a specific condition introduced via a Circular. The contention was that the Nominated Agency had to produce a Bank Realization Certificate (BRC) from exporters within a prescribed timeframe to qualify for the exemption.
Key Legal Argument:
The crux of the legal argument lay in whether a condition introduced through a Circular could be enforced when it was not an inherent part of the original exemption Notification. The Petitioner vehemently contended that the original Notification, i.e., Notification 57/2000 dated May 8, 2000, did not impose such a condition.
The Department, on the other hand, maintained that the condition was a prerequisite for availing of the benefits under the Notification, citing the Circular.
The Tribunal’s Verdict:
In its final order dated October 5, 2023, CESTAT Kolkata rendered a crucial judgment. It primarily made the following determinations:
- The failure to collect sale proceeds could indeed result in a demand for Customs duty that was initially waived for the nominated agency.
- Importantly, the Tribunal ruled that introducing a new requirement, which was not originally outlined in the Notification but introduced via the Circular (Circular 28/2009 dated March 31, 2009), was impermissible. Therefore, the demand for duty based on this new requirement was in violation of the notification’s terms.
Conclusion:
The ruling by CESTAT Kolkata carries immense significance for businesses and individuals seeking to claim exemptions or benefits under government notifications. It underscores that additional conditions cannot be imposed through Circulars when they are not inherent to the original Notification.
This judgment serves as a reminder of the importance of legal clarity and adherence to the terms and conditions set out in official government notifications. Businesses and individuals must closely scrutinize the conditions laid out in such notifications and be vigilant about any attempts to introduce new requirements through Circulars or other administrative directives.
In essence, this case reaffirms the principle that exemptions and benefits under government notifications must be granted and claimed in strict accordance with the conditions explicitly mentioned in the original texts of these notifications.
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