'Private personal property' Government amends a 35 year old notification
Lost among the budget notifications was a very important notification, which the Board as usual was not very keen on making public. This was not a part of the budget notifications and was so not circulated. Why this was not a part of the budget notifications is another mystery. Any way this notification No. 21/2006 is dated 1.3.2006 and brings in several important amendments to various notifications. We bring you the details.
As per notification No. 80/70-Customs, dated the 29th August 1970, articles imported for replacement of defective parts of imported articles are exempted from customs duty. However, as usual there is a string attached. “The defective articles must have been brought into India earlier from places outside India and are private personal properties of the importer.” What does private personal mean? Is this applicable only to individuals? The issue came up before the Tribunal nearly 20 years ago. In Quality Steel Tubes (), the Tribunal held that the exemption would be applicable only to importers being individuals, because of usage of the term ‘private personal property’ of the importer. But the Bombay High Court in the Echjay Industries case took a different view and the Tribunal in Kesoram Industries ().held that the benefit would be allowed to companies as well. The litigation continued merrily and finally Board realized that there was an issue and by that omnibus Customs circular No. 1/2005 dated 11..1.2005 clarified that the exemption should not be extended to import of warranty replacements by companies or commercial organizations. Incidentally the CBEC web site does not recognize this circular, for you don’t find it in their web site. And the Revenue Secretary is very keen that nobody should publish a notification or circular before the CBEC web site publishes it. If his wishes are to be followed that circular simply does not exist.
Now after more than a year of that undisclosed circular, Board seems to have realized that law cannot be changed through circulars – this country unfortunately has courts too which are not overawed by the might of the Board! So now they have amended the notification No. 80/70 to clearly stipulate, “the defective articles were brought into India earlier from places outside India by an importer who is an individual and the defective articles are his private personal properties; Shouldn’t they have done this in 2005 when they issued the circular? In may 2005, we had carried an incisive article on the subject by Joseph Prabhakar - Import of good as free replacement : Battle continues to be being fought on 'private personal property'.