This Tax Alert summarizes a recent judgement of the Delhi High Court (HC)[1] dealing with the validity of the Instruction[2] insofar as it mandates review of existing licences given for setting up solar power generation units under Manufacture and other Operations in Warehouse Regulations, 2019 (MOOWR) and taking follow-up action.
HC observed that:
- The power to issue instructions
or circulars under section 151A of the Customs Act, 1962 are only confined
to the broad directives concerning the working of the Act.
- Proviso to section 151A
proscribes issuance of orders, instructions or directions, which may
require an officer of Customs to make a particular assessment or to
dispose of a particular case in a particular manner.
- The Board cannot issue
directives that curb the discretionary powers of the Principal
Commissioner of Customs or Commissioner of Customs (Appeal) in his
appellate role.
- The instruction impinges the
licensing authorities’ discretion to independently determine the
suspension or cancellation of licenses. The instruction clearly exceeds
the Board's advisory and clarificatory role entrusted by virtue of section
151A.
- The scope of section 61 and 65
of the Customs Act cannot be restricted or limited to a particular genre
of goods or type of manufacturing activity.
- The construction of a statute
cannot be guided or influenced by the subsequent experience of the
executive or of discerned inequitable results.
Accordingly, HC quashed the impugned Instruction insofar it mandates review of
existing licenses and taking follow up action.
Comments
- The ruling is likely to provide
relief to the existing license holders under MOOWR who are engaged in the
generation of solar power.
- Earlier CBIC had amended
Project Imports Regulations to exclude solar power plants from the list of
eligible projects. (Notification No. 54/2022 - Customs dated 19 October
2022 and 7/2023-Customs dated 1 February 2023).
It would be interesting to analyse whether businesses involved in solar power generation can obtain new licenses under MOOWR since the Court has not quashed the entire Instruction but only to the extent it mandated review of existing licenses and taking follow up actions
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