The Central government has tightened the norms for grant of ad hoc exemptions from Customs duty under Section 25(2) of the Customs Act, 1962. The earlier guidelines issued in June 1999 have been now superceded by the new guidelines issued by the Central Board of Excise and Customs (CBEC) on December 12.
The secret goods imported by the government will get exemption only for meeting security requirements of the country. Imports of a routine or frequent nature to meet operational requirements of armed forces will not get ad hoc exemption.
Security outfits such as the Special Protection group (SPG) and other Central or state police organisations are expected to make budgetary provisions for duty payment along with price of the goods and not seek exemption. No exemption will be granted for normal functioning or for repair and maintenance of the equipments. Only exceptional requirements, particularly in view of security considerations, will be considered and that too only if a satisfactory explanation is given as to why budgetary allocation could not be used.
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For imports by charitable institutions, the earlier stipulation, that no payment should be involved, has been relaxed. Ad hoc exemptions may be considered if payments are made from funds received as donations. As earlier, the activity of the institutions should not be commercial in nature and no individual can claim ad hoc exemption but now it is clarified that the institution should have been rendering services to society at large such as running hospitals, educational institutions etc, at least for a period of three years on "no fee" or "no profit, no loss" basis. Besides, the institutions enjoy good reputation and that their activities are not purely religious in nature should be certified by a commissioner of Central Excise/ Customs/ state government or by a secretary of the state government or a joint secretary of the Central government.
The CBEC circular no 81 makes it clear that items of general use and operational equipments such as construction materials, vehicles, air conditioners, chilling equipments, office equipments, stationery, musical instruments or spares for repairs and maintenance etc will not be considered for ad hoc exemptions. The jurisdictional commissioners of Central Excise/ Customs have now been asked to monitor the end-use of the items and continued eligibility of the charitable institutions.
Apparently, the idea behind these instructions on charitable institutions is to discourage pestering by newly-founded charitable institutions and others asking for exemption for items that are not generally meant for providing any direct or specific service. The welcome features of the guidelines are to exclude institutions engaged mainly in propagation or promotion of any religion and to ask for certification and stricter monitoring by the Central Excise/ Customs authorities.
The strongly-worded instructions regarding the procedure to meet the requirements of the armed forces, SPG and the Central and state police were issued just a day prior to the terrorist attacks on the Parliament.
Considering the greater awareness of the grim situation facing the country after the attacks, the finance minister may not only have to accede to demands for enhanced allocations for security purposes but also be less rigid about how the genuine requirements of the armed forces and other security forces are met. In any case, nobody would like procedures to come in the way of security.