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Exemption from Customs Duty under Section 25(2) of the Customs Act, 1962
� Guidelines for consideration of requests in the matter
Circular No. 81 dated 12th December 2001
In supersession of this Department�s office
Memorandum F.No.467/41/99-Cus-V dated June 18 th , 1999 on the subject, the
guidelines as mentioned in the following paragraphs are being issued with
approval of the Hon�ble Finance Minister. They may be, with immediate effect,
taken into account at the time of consideration of any application for request
for exemption from Customs duty under Section 25(2) of the Customs Act, 1962.
2. The provisions of
Section 25(2) of the Customs Act for exemption from Customs duty are applicable
in respect of goods, which are of secret or strategic nature or are meant for
being used for charitable purposes.
3. For the purpose of
availment of exemption of Customs duty under the above-mentioned provisions of
the Customs Act, the following categories of goods would be treated to be of
secret or strategic nature:
(a) Imports of secret goods
by the Government with a view to meet security requirements of the country;
(b) Imports to meet
country�s defence need relating to requirements of armed forces. This would
also include goods meant for R&D units under the DRDO. It is made clear that
exemption under this category is not meant for imports, which are of routine or
frequent nature or are to meet the normal operational requirements of the armed
forces.
(c) Imports by Government
Organisations engaged in security operations like Special Protection Group (SPG)
and other Central Police Organisations; and State Policy Organisations, for
equipping their forces. It is clarified that security forces are expected to
make budgetary provisions for importing their equipments, and there should be no
need to seek ad-hoc exemption from payment of Customs duty in the routine
course. They should provide for payment of duty along with payment of price of
the goods. No exemption will be given to goods which are required to meet the
normal functional requirement of these organisations and which are in the nature
of routine imports. Exemption is also not available to items like spare parts,
which are required for repair and maintenance of equipments of these
organisations. Only in situations of exceptional nature, particularly, in view
of the security considerations, application for availment of ad-hoc exemption
under this category should be made. However, the applicant organisation should
clarify why, in respect of even these goods, budgetary allocation for duty could
not be made.
(d) Applications to be made
for availment of Customs duty in the category (c) above must be forwarded by an
officer not below the rank of concerned Joint Secretary to Government of India
in the concerned administrative Ministry.
(4) Exemption of duty on
goods meant for charitable purposes would be applicable in respect of import of
such goods by charitable institutions, which are to be used for charitable
purposes without any distinction in any manner on account of caste, creed,
religion, race or gender.
(5) The imports by
charitable institutions would be required to fulfill the following conditions to
be eligible for exemption under the category:
(a) The imports should
normally be received as donations or gifts from foreign countries from known
institutions and not from individuals.
(b) Either there should be no payment
involved for the imported goods or the payment should be made only out of the
amount received as donation within India.
(c) The applicant of
exemption under this category should also be an institution/ organisation
registered as a charitable organisation. The applicant should not be an
individual. Further, the institutions should have been providing charitable
service for not less than three years at the time of making application for
exemption, and it should be enjoying good reputation.
(d) The applicant
institution should not be such whose activities are purely or mainly religious
in nature such as propagation or promotion of a particular religion.
(e) For the availment of
exemption, it would be necessary that the institution is engaged in rendering
charitable service to the society at large, e.g, running hospitals, educational
institutions etc. Either service being so rendered by the institution should be
free of any payment by recipient of such service or the institution should be
running, on �no profit no loss� basis, and this fact should be reflected in
the annual account of the institution. The activity of institution should not be
commercial in nature.
(f) The charitable
nature of the institution, the fact of it rendering services on �free� or
�no loss no profit� basis, it having been in existence for not less than
three years and that it enjoys good reputation should be certified by any of the
following authorities:
(i) Jurisdictional
Commissioner of Central Excise/ Customs.
(ii) Jurisdictional
Commissioner of the State Government.
(iii) Concerned
Secretary of the State Government.
(iv) Concerned
Joint Secretary of the Central Government.
(g) Exemption under this category would
not be admissible on items, which are of general use and operational equipments
like construction materials, vehicles, air conditioners, refrigeration and
chilling equipments, curtains, furniture, audio video systems, computers and
accessories, office stationery, etc., since, they are generally not meant for
providing any specific/direct charitable service. The exclusion would also cover
items that are likely to serve more of a cultural purpose such as musical
instruments etc. Exemption will also not be allowed to items, which are in the
nature of spares required for maintenance and repair of existing equipment.
(h) The institution should
certify that the goods under import are for its own use and should furnish an
undertaking to the effect that they would fulfill the conditions prescribed for
availment of exemption.
(i) No preferential
treatment in the matter of granting exemption under this category would be given
to any government organisation. The element of Customs duty should invariability
form part of the cost of projects undertaken by the Government Organisations.
(j) Monitoring of Ad-hoc Exemption
Orders (AEO): The concerned Commissioner of Customs and Central Excise under
whose jurisdiction the registered office of the charitable organisation is
situated shall monitor the utilization of the items imported under the AEO by
the importing charitable organisation. For this purpose, the charitable
organisation availing the exemption shall also be required to intimate to the
jurisdictional Commissioner within one month of their receiving the AEO, details
of their address and the proposed site of utilization of the exempted items,
along with any other information that the Commissionerate may require for
verifying compliance of the conditions of the AEO. A report in this regard
should then be sent by the jurisdictional Commissioner to the Commissioner of
Customs of the port of clearance of the goods within 3 months of the import of
the goods. Since, the conditions of the AEO are binding on the importer in
perpetuity, any infringement of conditions of the AEO should be brought to the
notice of the Commissioner of Customs of the port of import for taking further
necessary action such as realization of Customs duty on the subject goods, penal
action for such violations, etc. the action as above taken by the Commissioner
of Customs of the port of import should be intimated to the Board.
(6) All ad-hoc exemptions
from duty to non-governmental organisation will be issued subject to the
conditions that the imported goods will not be put to any commercial use and
will not be sold, gifted or parted by the importer in any manner without the
prior permission of the Board. The imported goods will be kept available for
inspection by jurisdictional Customs or Central Excise Officers.
(7) Import of goods, which
are not covered in any of the categories mentioned in para-2, will not be
considered for grant of ad-hoc exemption under Section 25(2) of the Customs Act,
1962.
(8) Ministries/ Departments
may please bring these guidelines to the notice of all concerned, and direct
them to submit their requests for Customs duty exemption in accordance with the
afore-mentioned guidelines.
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