Summary
The Court upheld a prospective restriction of a customs concession to specified double-width printing machinery. Protection of indigenous production was a relevant fiscal-policy consideration, and the High Court had wrongly reassessed the merits and sufficiency of that rationale. Public-interest exemptions remain judicially reviewable for legality, relevant reasons and bona fides, but courts do not choose the better economic policy. The Union’s appeal was allowed without costs.
Issues
- Whether narrowing the printing-machinery concession was a valid exercise of the exemption power.
- Whether the High Court could reject the indigenous-manufacturing rationale by assessing its sufficiency and technical merits.
- Whether reliance on the earlier concession through an irrevocable letter of credit prevented its prospective amendment.
Provisions considered
- Section 25(1), Customs Act, 1962The power to grant or modify customs exemptions must serve public interest and remains reviewable for legality, relevant reasons and bona fides. The Court upheld the prospective machinery classification because the indigenous-production consideration was germane to that fiscal power. (¶¶ 2, 3, 16, 17, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30)
- Section 21, General Clauses Act, 1897The power to issue notifications includes amendment, variation or rescission in the like manner and subject to the like conditions. The Court sustained exercise of the exemption power to narrow the earlier concession prospectively, rather than treating its original grant as immutable. (¶¶ 10, 20, 22, 23, 28, 29, 30)
Held
- Customs exemptions and their withdrawal must be grounded in public interest. They are not immune from judicial scrutiny: the court may examine legality, bona fides and whether the reasons are germane rather than irrelevant. That review does not extend to substituting the court’s assessment of the wisdom, technical merits or sufficiency of reasons for a fiscal policy. (¶¶ 20, 21, 22, 27, 28, 29)
- The High Court had undertaken a merits review when it rejected the indigenous angle because domestic machinery did not match the imported machine’s production capacity and technology. Availability of similar equipment and the possible adverse impact of an import concession on domestic producers were relevant considerations. No mala fides or oblique purpose had been pleaded or urged, and the exercise complied with the statutory power. (¶¶ 16, 17, 19, 27, 28, 29)
- A tax concession does not create an immutable right to its continuation. The assessee’s reliance on the earlier notification, including the irrevocable letter of credit, did not defeat the prospective amendment upheld here. Authorities involving retrospective divestment of exemption benefits were distinguished; the judgment did not authorise retrospective withdrawal in this case. (¶¶ 2, 15, 16, 22, 23, 24, 25, 26, 29)
- The High Court judgment invalidating the amended notification and extending the earlier concession to the assessee’s machine was set aside. The Union’s appeal was allowed without an order as to costs. (¶¶ 4, 5, 6, 7, 30)
Result
Union’s appeal allowed; High Court judgment set aside and the challenged prospective restriction of the customs concession upheld. No order as to costs.