2026-VIL-766-GUJ-CU
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CUSTOMS High Court Cases

Customs – Validity of Retrospective application of Circular No. 9/2012 dated 23.03.2012 - Petitioner imported iron ore pellets classified under CTH 2601 which was exempted from Additional Customs duty under Notification dated 01.03.2006. Petitioner obtained clearance of nine consignments from April 2011 to February 2012 on nil duty basis. Subsequently, vide Circular No.9/2012 dated 23.03.2012, the Board clarified that ores and concentrates are two distinct products and that the exemption notification applies only to ores and not to concentrates – SCN issued demanding recovery of additional customs duty with retrospective effect from 06.04.2011 - Whether a clarificatory Circular which restricts the scope of an existing exemption and adopts the concept of manufacture under Central Excise Act into Customs Tariff can be applied retrospectively to recover duty from traders who had obtained clear assessments prior to its issuance - HELD - A clarificatory Circular which clarifies the scope of an existing exemption has the potential to be oppressive and not beneficial to the assessee. When a clarification by the Board restricts the scope of an exemption that was previously operative and traders had relied upon such exemption in obtaining goods cleared at nil duty on proper assessment by the Customs Authority, such clarification cannot be applied retrospectively - The principle established in Suchitra Components case is that a beneficial Circular is to be applied retrospectively but an oppressive Circular limiting the scope of exemption is to be applied prospectively. The Board has borrowed the concept of manufacture from Note 4 of Chapter 26 of Central Excise Act, 1944 and has attempted to apply it to the Customs Tariff Act, 1975, which operate in different spheres and are governed by separate statutes. The Circular cannot be applied retrospectively to impose financial liabilities on traders who had obtained proper clearances prior to its issuance - The show-cause notices demanding differential duty with retrospective effect are quashed and set aside - The writ petitions are partly allowed
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