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.
