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CA Final · Integrated Business Solutions (Multidisciplinary Case Study with Strategic Management) · Indirect Tax Laws

Case: Sundaram Agro Ltd, a manufacturer in Chennai, imports machinery. The Central Government grants a general exemption by notification under section 25(1) of the Customs Act, 1962, subject to a condition that it is available only if the goods are used in a specified industry. Which statement is correct?

The Central Government may grant exemption from customs duty by notification when satisfied that it is in the public interest, and the exemption may be absolute or subject to conditions. Parliamentary approval for each notification is not required, so the conditional industry-specific exemption is valid.

  1. AExemption under section 25 can be granted only with the Parliament's approval each time
  2. BExemption can be granted by the Central Government only on public interest grounds and may be absolute or conditionalCorrect
  3. CExemption can never be conditional
  4. DExemption can be given only retrospectively and not prospectively

Explanation

Section 25(1) empowers the Central Government, if satisfied that it is necessary in the public interest, to exempt goods generally or absolutely, or subject to conditions, by notification. No Parliamentary approval is needed each time, and conditions are allowed.

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