The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the customs duty exemption is available on arms and ammunition imported by National Rifle Association of India for national/international championship.
The bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that when a National Sports Federation imports goods, it does not itself conduct all the championships and competitions directly. It will work through its constituent State and District bodies. There is nothing in the exemption notification which even remotely suggests that such use is not acceptable.Â
The appellant/assessee, National Rifle Association of India claims to be a federation of affiliated State Rifle Shooting Associations, All India Board, Union Territories, District Rifle Shooting Rifle Associations, Rifle Shooting Clubs and that it regulates and coordinates their activities including securing and supplying arms, ammunition, shooting equipment and other accessories for them.
Import of arms and ammunition required for rifle shooting is restricted and hence they can be imported only on a licence issued by the Director General of Foreign Trade5. They are also exempted from the whole of duty by Notification No. 164/94-Cus dated 13.7.1994 subject to some conditions. The appellant obtained the licences as required from DGFT and also availed the benefit of exemption notification.
For an earlier period in respect of the arms and ammunition imported between 1995 and 2005, Directorate General of Revenue Intelligence6 initiated an investigation and came to the conclusion that the exemption notification was available only if the importer itself used the arms and ammunition in the championships and competitions indicated in the notification and that the exemption would not be available if the importer sells arms and ammunition to the State Rifle Associations or District clubs to use in competitions and championships.
Accordingly, DRI issued an SCN dated 16.2.2009 demanding duty which proposals were confirmed by the Commissioner by an order dated 17.11.2009. On appeal, the Tribunal remanded the matter to the Commissioner who has yet to pass a de novo order.
The Commissioner recorded that the exemption notification was subject to actual user condition and since the appellant had not used the imported goods for national or international championship or competition to be held in India or abroad, but had sold them to the State Rifle Associations and to District clubs, the actual user condition was not fulfilled and, therefore, the imported goods were liable for confiscation under section 111(o).
The assessee contended that the notification exempts arms and ammunition for use in national and international competitions and championships and it does not stipulate that the importer itself should use them for this purpose. The appellant supplied them to the State Rifle Associations and District clubs who used them for the purpose.
The assessee argued that there are only two conditions in the notification- (a) that they are imported under a certificate issued by the Sports Authority of India; and (b) the certificate is produced before the Assistant Commissioner or Deputy Commissioner of Customs at the time of clearance of goods. Both these conditions have been met by the appellant.
The department contended that the appellant had violated the conditions of the Notification No. 146/94 by selling the imported arms and ammunition to the State Rifle Associations and District clubs instead of using them. The notification does not provide exemption to goods for sale but only to those goods which are meant for the specific use, evidently means that the importer must use them for the purpose. Since the appellant had violated the conditions of the exemption notification, they were liable for confiscation under section 111(o).
The tribunal while allowing the appeal of the National Rifle Association of India held that a plain reading of the notification nowhere shows that there is any “Actual User‟ condition. All that is stated is that the goods should be used for national or international championships or competitions. The notification does not say that the importer itself must use them for the purpose.
Case Details
Case Title: M/s National Rifle Association of India Versus Commissioner of Customs
Case No.: CUSTOMS APPEAL NO. 51422 OF 2014
Date: 03/01/2025
Counsel For Appellant: B.L. Narasimhan
Counsel For Respondent: Shashi Kant Sharma
