Case Law Details
ACME Heergarh Powertech Private Limited Vs Central Board of Indirect Taxes And Customs & Anr. (Delhi High Court)
Conclusion: The statutory scheme underlying the Manufacture and Other Operations in Warehouse Regulations, 2019 (MOOWR) could not be construed as seeking to exclude solar power generation in terms of permissions granted under Section 65 of the Customs Act, 1962.
Held: The writ petitions was filed challenging the validity of instructions dated July 9, 2022, issued by the Central Board of Indirect Taxes and Customs in exercise of powers conferred by Section 151A of the Customs Act, 1962. The instructions pertaining to the warehousing of imported capital goods used in the generation of solar power and the asserted inapplicability of the Manufacture and Other Operations in Warehouse (No. 2) Regulations, 2019 were framed in the backdrop of Section 65 of the Customs Act, 1962. Assessee-company had challenged various Show Cause Notices that came to be issued in purported implementation of the Instruction and which call upon them to explain why the license for warehousing as granted in terms of the MOOWR Regulations was not cancelled. Assessee contended that the instruction was contrary to Section 151A. The Instruction compels and commands the Customs authorities to cancel all licenses pertaining to solar generation units, thus impeding the statutory discretion that otherwise stands conferred upon them. Assessee had also assailed the Instruction on the Anvil of the Proviso to Section 151A, with it being urged that the Board stand statutorily injuncted from framing an order, instruction, or direction that would compel an officer of Customs to make a particular assessment or one that may interfere with the discretion that otherwise stands entrusted in it. The customs authorities stood deprived of the right to examine or adjudge the validity of the licenses held by assessee, and the instructions urge them to take emergent steps to cancel all existing licenses. It contended that the instruction was in essence a direction to the customs officials to not only refrain from granting any fresh licenses but to also review existing licenses. Thus depriving assessee of the opportunity to explain why their licenses granted under the MOOWR Regulations were valid. Assessee contended that the act of grant of the MOOWR license was a judicial function performed by an officer of customs. A fortiori, the cancellation of a license would also be liable to be viewed as a judicial act since, prior to the taking of that decision, the officer of customs would be bound to carry out an inquiry and investigation in consonance with the principles of natural justice. The grant of a license under the MOOWR Regulations must be held to be a judicial act. The solar power developers were abusing the MOOWR Regulations by continuing to house the imported capital goods and not clearing them for home consumption, consequently escaping the liability of 12% GST as well as 18% of the import GST in addition to BCD. Department of Revenue to prevent solar power producers from misusing the provisions of the MOOWR Regulations came to issue the impugned instruction on July 9, 2022. It was held that the entire plank of the argument against solar power generation being permissible under Section 65 was based on the inequitable impact that such activity was likely to have on domestic industry and local generators. That, however, could not constitute a legitimate basis for the Court to reconstruct a statutory provision. The respondents essentially bid us to introduce a condition of ineligibility in the garb of statutory interpretation. It would be wholly incorrect for us to recreate or reassemble Section 65 so as to exclude a particular category of activity based upon the experience of its working or its perceived negative impact on domestic industry. While and hypothetically, it might be open for the respondents to adopt appropriate remedial measures if they be of the opinion that solar power generation by virtue of permissions granted under Section 65 was negatively impacting local generators or distorts the “level playing field”, this Court would clearly not be justified in deploying principles of purposive interpretation to correct that projected and asserted anomaly.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
A. PREFACE
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