The undersigned is directed to refer to the Circular No. 49/2003 dated 10th June 2003 containing guidelines for considering exemption from customs duty under Section 25(2) of the Customs Act, 1962 (ad hoc exemptions).

2. Para 3 of the said guidelines refers to imports of various categories on which requests for exemption from customs duty shall be considered. These are:

(a) Import of goods of secret or strategic nature by the Government in public interest.
(b) Imports to meet country’s defence needs, including the goods meant for DRDO for their R&D purposes.
(c) Imports made by Central Police Organizations, State Police Organizations, and Para-military forces, for import of equipments required for anti-subversion, anti-terrorism, and intelligence work. It is clarified that the police forces are expected to make budgetary provisions for payment of customs duty along with the cost of the equipment. There is no scope to hold the view that payment of Customs duty is a dispensable expenditure, and there should be no need to seek ad-hoc exemption from payment of Customs duty on goods meant for the normal functional requirements of these organizations. Only in situations of exceptional nature, where, in view of the security considerations, the import of equipment could not be foreseen, and it could not be possible to make provision in the budget for payment of Customs duty, application for ad-hoc exemption from customs duty should be made. Such requests should be forwarded by the Joint Secretary to Government of India in the concerned administrative Ministry, clarifying as to why they could not provide budgetary allocation for payment of Customs duty.

(d) Ad-hoc exemption from Customs duty will not be considered for import of goods made by Central/State Governments, autonomous bodies, Municipalities, and public sector undertakings as part of the schemes or projects implemented by them. However, goods meant for providing relief and rehabilitation, under unforeseen and exceptional circumstances such as flood, earthquake, epidemic, etc. will be considered on merits.

3. The aforesaid provision in the guidelines makes it abundantly clear that payment of Customs duty cannot be viewed as a dispensable expenditure, and there should be no need to seek ad-hoc exemption from payment of Customs duty on goods meant for the normal functional requirements of the Central Police Organizations, State Police Organizations, and Para-military forces. Similarly Ad-hoc exemption from Customs duty will not be considered for import of goods made by Central/State Governments, autonomous bodies, Municipalities, and public sector undertakings as part of the schemes or projects implemented by them.

4. In spite of the above-referred clear guidelines, a number of requests are received from Ministries, State Governments, Autonomous Bodies, Municipalities and Public Sector Undertakings for customs duty exemption on various items meant for normal functional requirement or for various projects implemented by them, even without specifying as to why they could not provide budgetary allocation for payment of Customs duty. As such, all concerned are requested not to forward requests for exemption in such cases and to make necessary budgetary provisions for payment of Customs duty along with the cost of the imported goods. It is once again reiterated that the requests for exemptions under Section 25(2) of the Customs Act 1962 would only be considered in terms of the guidelines issued vide CBEC Circular No. 49/2003 dated 10th June 2003 and cases as highlighted under para 3 above will not be considered.

F.No.463/13/2006-Cus.V

(S.P.RAO)
UNDER SECRETARY TO THE GOVERNMENT OF INDIA