Delhi High Court Grants Interim Protection Against Retrospective Denial Of Concessional Rate Of Customs Duty To Solar Units

The Delhi High Court has granted interim protection against the retrospective denial of the vested right of the benefit of concessional rate of duty under project import regulations granted to solar power developers.

The Division Bench of Justice Rajiv Shakdher and Justice Tara Vitasta Ganju have directed the customs authorities to refrain from taking any precipitative steps at the time of import of goods pursuant to the registration of contracts under the Project Import Regulations, 1986.

The petitioner/assessee is in the business of setting up solar power projects in various states across India. The Petitioner applied for the benefits of a concessional rate of duty under Chapter 98 of Schedule I of the Customs Tariff Act, 1985 read with Project Import Regulations, 1986. The respondent granted the benefit of a concessional rate of duty by means of registration of contract under the said Regulations at the port of import.

Subsequently, by Notification 54/2022-Customs dated 19.10.2022 solar power projects were removed from Sl. No. 2 and 3 of the Table of Sponsoring Authorities appended to the Project Import Regulations with effect from 20.10.2022.

The Assistant Commissioner of Customs issued a Letter dated 21.11.2022 by which the registration of contracts at the port of import was rendered infructuous by retrospective application of the notification.

The Petitioner contended that the actions of the respondent have illegally and arbitrarily infringed upon the vested right of the petitioner with retrospective effect, which is in complete derogation of settled principles of law.

The petitioner argued that it is trite in law that delegated legislation cannot have retrospective effect unless a power to make retrospective delegated legislation is specifically conferred by the Parliament on the delegatee.

The petitioner contended that unlike Section 164 of the CGST Act, Section 157 of the Customs Act does not contemplate the power to make retrospective delegated legislation. The amendment is prospective in nature since it specifically states that it will come into force on 20.10.2022. Therefore, there cannot be a retrospective application of the Notification as sought to be done by the Respondent.

The court held that the petitioner has set up a prima facie case and if no interim protection is granted, the entire process of import will get derailed. There ought to be certain with regards to the entitlement of concessional duty benefits and there are no inadvertent delays in the execution of the project.

The court held that the balance of convenience lies in favor of the Petitioner, in as much as the issue only has financial implications for which suitable directions could be issued and the petitioner has already secured the interest of the Revenue by means of the Continuity Bond and Bank Guarantee.

The court without creating any equity in favor of the Petitioner directed the respondents that no precipitative steps can be taken against the Petitioner at the time of import.

Case Title: ReNew Hans Urja Pvt. Ltd. vs. Central Board of Indirect Taxes and Customs

Citation: 2022 LiveLaw (Del) 1206

Date: 15.12.2022

Counsel For Petitioner: Advocates Sujit Ghosh, Mannat Waraich, Shubh Dixit, Ananya Goswami

Counsel For Respondent: Advocates Satish Kumar, Nidhi Raman, Charu Modi

Click Here To Read The Order