TMI Blog2024 (5) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... ral justice are also complied with. The said final finding thereafter is accepted by the Central Government by issuing the notification. The said issuance of the notification imposing safeguard duty is a legislative act. The courts will adopt a liberal attitude in upholding the delegation when taxing power is conferred. The impugned notification is a piece of a subordinate legislation, more particularly, when the said notification imposes the safeguard duty not in reference to a particular importer, exporter or a specific country. The final finding was arrived at by the second respondent on 16.7.2018. The interim order of injunction was passed by the Orissa High Court in W.P. The notification was issued by the Central Government imposing safeguard duty on 30.7.2018, during the subsistence of the order of interim injunction prohibiting the respondents from issuing the notification. The Supreme Court stayed the interim order of injunction passed by the Orissa High Court on 10.9.2018. The Apex Court in the case Mulraj v. Murti Raghunathji Maharaj,[ 1967 (3) TMI 111 - SUPREME COURT] , considered the effect of action taken subsequent to passing of an interim order in its disobedience an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the prohibitory order passed by the Orissa High Court and before the stay was granted by the Apex Court. The respondents, certainly, could not have assessed the same, as during the said period the notification could not have been issued. The respondents also suggest that the same should not be assessed. Therefore, the order of self-assessment, vide the impugned Bill of Entry No.7474159, dated 2.8.2018, to the extent it seeks to impose safeguard duty pursuant to the notification dated 30.7.2018, is illegal and arbitrary, inasmuch as it was issued during the subsistence of the order of injunction, and accordingly the same is quashed and set aside. - Hon'ble Mr.Sanjay V.Gangapurwala, Chief Justice And Hon'ble Mr. Justice D.Bharatha Chakravarthy For the Petitioner in W.P.No.20476/2018 : Mr.Sujit Ghosh along with Ms.Mannat Waraich for Mr.Arun Karthik Mohan and Amritha Satyajith For the Respondents in W.P.No.20476/2018 : Mr.Rabu Manohar, SCGPC for Respondents 1 and 2, Mr.AR.L.Sundaresan Additional Solicitor General assisted by Mr.V. Sundareswaran, SPC for respondents 3 and 4, Ms.Sunita Kumari, SCGSC for 5th respondent, Mr.C.Seethapathy for 6th respondent COMMON ORDER THE HON& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and component of safeguard duty forming a part of the IGST. (vii)In W.P. No. 4653 of 2020, the petitioner seeks issuance of a writ of certiorari to call for the records comprised in the impugned letter bearing File No.Smisc 92/2019- Gr.5A, dated 12.2.2020 issued by the first respondent therein and quash the same and the final assessment order dated 30.11.2018 referred therein, as being violative of the principles of natural justice and, therefore, arbitrary as also contrary to and without the authority of law. 3. The petitioners are challenging the final finding dated 16.7.2018 issued by the second respondent and the notification dated 30.7.2018 imposing the safeguard duty and the consequential Bills of Entries issued by the respondent authorities. 4. The petitioner company in W.P. No. 20476 of 2018 for setting up its 50 MV Solar Power Project in the State of Tamil Nadu imports solar cells and modules. The safeguard duty levied on the import of solar cells and modules is the moot challenge in these writ petitions. 5. Mr.Sujith Ghosh and Mr.Swarnam J.Rajagopalan, learned counsel for the petitioners, eruditely canvassed the submissions. The contour of the submissions is culled out a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recting the respondents herein to assess provisionally the safeguard duty in relation to the bill of entry and release the goods without insisting on payment of duty on executing a bond by the Authorised Officer of the company. (vi) For the period post 13.8.2018, the instructions issued by the first respondent directing the officers not to insist on payment of duty and clearance of goods provisionally on furnishing Letter of Undertaking or Bond is in violation of Article 265 of the Constitution of India. Reliance is placed on the decision of the Apex Court in the case of Harivansh Lal Mehra v. State of Maharashtra, (1971) 2 SCC 54 , wherein it has been emphasised that customs duty cannot be leviable on the basis of some administrative instructions. (vii) No action being taken on the basis of the contempt proceedings has no relation with the validity of the action, which is contemptuous. The Contempt of Courts Act, 1971 operates in a different sphere. (viii) As no fresh notification was issued, safeguard duty on the basis of the impugned notification, which is void ab initio and nonest, could not have been levied on the imports made even after the order was passed by the Apex Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) 6 SCC 651 ; (ii) Cholan Roadways Ltd v. G.Thirugnanasambandam, (2005) 3 SCC 241 ; and (iii) Syed Yakoob v. K.S.Radhakrishnan and others, AIR 1964 SC 477 . (xii) The conclusion of the second respondent that it would be in public interest to recommend imposition of safeguard duty is irrational for the following reasons: (a) Number of companies: Where the entire levy is at the behest of injury being suffered by two companies, the levy cannot be treated in public interest; (b) Demand: Where the said two companies solely meet 3.5% of the total demand, the levy cannot be said to be in public interest. (c) Production: Where the two companies account for 38% of the total production requirement, the levy cannot be said to be in public interest. (d) Demand Supply Gap: Where the installed capacity of the domestic industry is 373 MW and the demand is 10618 MW, such yawning gap of 10245 MV (demand being 8.46 times the domestic capacity) would per force be met by imports and thus the levy cannot be said to be in public interest. (xiii) Objections were raised before the second respondent and specific instances were pointed out, where in the past, when the demand manufacturing capacity gap was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it/Loss , Inventory have all shown an upward and positive trend and, hence, the finding in relation to serious injury or threat thereof appears to be outrageous and illogical. (xix) The possible surge in imports was long foreseen and it cannot be said to be a result of unforeseen developments, unlike what has been held by the second respondent. (xx) The levy of safeguard duty is against the principles under Article XIX of the GATT because India can impose safeguard duty only if increased imports are due to (i) unforeseen developments; and (ii) effect of obligations incurred including tariff concessions. The DGTR has failed to establish the presence of any unforeseen development for the following reasons: (a) As per DGTR, India's withdrawal of Domestic Current requirement (DCR) pursuant to challenge by USA resulted in substantial increase in imports of the PUC, which could not have been foreseen. DGTR's analysis is incorrect because India's withdrawal of DCRS (14 Dec 2017 pursuant to mutual agreement between India and USA to demonstrate compliance with WTO Appellate Body's report on 16 Sep 2016 against India) is subsequent to the period of investigation 2014-15 to 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount for 38% of the total domestic production in the DTA. The support of ISMA rendered through the resolution of its Managing Committee qualifies the two applicant units meeting the requirements of major share of Indian industry. (iv) The surge in imports was unforeseen. In 2015, India committed to the Paris Agreement on climate change for reduction of CO2 emissions by 33-35% from 2005 levels, to address global warming. In line with this commitment, India established a target of achieving 100 GW of Solar power generation by the year 2022. This commitment pushed up the demand for Solar power generation projects in India. Similarly, the huge increase in the demand for the PUC in India in a short period of time which has in part fuelled the surge in imports was also unforeseen. The surge in imports at consistently falling landed price changed the competitive relationship between imports and domestic production, to the disadvantage of the latter. This has hampered the DI s ability to compete and make and sell the PUC. The total domestic sales, the domestic demand, the imports, the domestic sales by the applicants/DI; and domestic sales by other Indian producers were all considered and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is imported into India in such increased quantities and under such conditions so as to cause or threatening to cause serious injury to domestic industry, then, it may, by notification in the Official Gazette, impose a safeguard duty on that article: Provided that no such duty shall be imposed on an article originating from a developing country so long as the share of imports of that article from that country does not exceed three per cent or where the article is originating from more than one developing countries, then, so long as the aggregate of the imports from developing Countries each with less than three per cent. import share taken together does not exceed nine per cent of the total imports of that article into India: Provided further that the Central Government may, by notification in the Official Gazette, exempt such quantity of any article as it may specify in the notification, when imported from any country or territory into India, from payment of the whole or part of the safeguard duty leviable thereon. (2)The Central Government may, pending the determination under sub-section (1), impose a provisional safeguard duty under this sub-section on the basis of a preliminar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, assessment, non-levy, short levy, refunds, interest, appeals, offences and penalties shall, as far as may be, apply to the duty chargeable under this section as they apply in relation to duties leviable under that Act. (5) The Central Government may, by notification in the Official Gazette, make rules for the purposes of this section, and without prejudice to the generality of the foregoing, such rules may provide for the manner in which articles liable for safeguard duty may be identified and for the manner in which the causes of serious injury or causes of threat of serious injury in relation to such articles may be determined and for the assessment and collection of such safeguard duty. (6) For the purposes of this section,- (a) developing country means a country notified by the Central Government in the Official Gazette for the purposes of this section; (b) domestic industry means the producers - (i) as a whole of the like article or a directly competitive article in India; or (ii)whose collective output of the like article or a directly competitive article in India constitutes a major share of the total production of the said article in India; (c) serious injury means an in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as power to impose the safeguard duty in the manner and circumstances laid down under the Act of 1975 and the Rules of 1997. 16. The thrust is on the existence of the relevant material, situation and the conditions for imposition of the safeguard duty. 17. The main thrust in issuance of the notification imposing the safeguard duty is protection of the domestic industry. The same, it appears, to be was the paramount consideration in issuance of the impugned notification. The protection of the domestic industry is certainly a circumstance to be considered while imposing the safeguard duty. As referred to in Section 8B(1) of the Act of 1975, if the Central Government upon enquiry comes to the conclusion that there is a serious injury to the domestic industry and/or threat of serious injury exists, then it may impose the safeguard duty. 18. A serious injury has been defined under Section 8B(6)(c). Serious injury means an injury causing significant overall impairment in the position of a domestic industry. 19. A threat of serious injury as contemplated under Section 8B(6)(d) of the Act of 1975 means a clear and imminent danger of serious injury. 20. The import of solar cells and modules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as required under Section 8B of the Act of 1975 and Rule 12 of the Rules of 1997, it appears, the authority has considered the surfeit of import and the same was unforeseen. It had considered that in 2015, India committed to the Paris Agreement on climate change for reduction of CO2 emissions by 33-35% from 2005 levels, to address global warming. India established a target of achieving 100 GW of Solar power generation by the year 2022. The said commitment pushed up the demand for Solar power generation projects in India. Similarly, the huge increase in the demand for the PUC in India in a short period of time has in part fuelled the surge in imports. The same was also unforeseen. The imports of the PUC were taking place at very low prices. There was a sudden and appreciable drop in the landed value of the imported PUC. The immediate impact of this has been that the domestic industry faced a drop in sales realization of their products. The surge in imports at consistently falling landed price changed the competitive relationship between imports and domestic production, to the disadvantage of the domestic industry. This hampered the domestic industry's ability to compete and mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng at the final finding, it is evident that all the pleas raised by the stakeholders were considered and opportunity was given to all the stakeholders to represent their stand. The principles of natural justice are also complied with. The said final finding thereafter is accepted by the Central Government by issuing the notification. The said issuance of the notification imposing safeguard duty is a legislative act. The courts will adopt a liberal attitude in upholding the delegation when taxing power is conferred. The impugned notification is a piece of a subordinate legislation, more particularly, when the said notification imposes the safeguard duty not in reference to a particular importer, exporter or a specific country. 30. The said legislation imposing safeguard duty is open to the scrutiny of the court. It can be declared invalid particularly on the grounds that the legislation is in (a) violation of the Constitution of India; (b) violation of the enabling Act; (c) contrary to the other statutory provisions or that it is so arbitrary that it cannot be said to be in conformity with the statute or Article 14 of the Constitution. In the case on hand, the impugned notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequences thereof. The wrong perpetrated by the respondent contemnors in utter disregard of the order of the High Court should not be permitted to hold good. 37. In DDA v. Skipper Construction Co. (P) Ltd., (1996) 4 SCC 622 , the Apex Court after making reference to many of the earlier judgments held that those who defy a prohibition ought not to be able to claim that the fruits of their defiance are good, and not tainted by the illegality that produced them. 38. In the case of Shree Chamundi Mopeds Ltd v. Church of South India Trust Association, (1992) 3 SCC 1 , the Apex Court observed that the stay of operation of an order only means that the order which has been stayed would not be operative from the date of the passing of the stay order and it does not mean that the said order has been wiped out from existence. 39. In the case of Ravi S.Naik v. Union of India, 1994 Supp (2) SCC 641 , the High Court had stayed the operation of the order of disqualification passed by the Speaker. The Apex Court held that the effect of the stay of the order of disqualification was that with effect from 14.12.1990, the declaration that Bandekar and Chopdekar were disqualified from being members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not have been issued. The respondents also suggest that the same should not be assessed. Therefore, the order of self-assessment, vide the impugned Bill of Entry No.7474159, dated 2.8.2018, to the extent it seeks to impose safeguard duty pursuant to the notification dated 30.7.2018, is illegal and arbitrary, inasmuch as it was issued during the subsistence of the order of injunction, and accordingly the same is quashed and set aside. 45. For the foregoing reasons, we pass the following order: (a) W.P.Nos.20477 of 2018 and 29498 of 2019 challenging the final finding dated 16.7.2018 are dismissed; (b) W.P.Nos.20476 of 2018 and 29502 of 2019 challenging the notification dated 30.7.2018 are disposed of holding that the notification will be operative from 10.9.2018, i.e., from the date the stay order was passed by the Apex Court; (c) W.P. No. 20478 of 2018 challenging the Bill of Entry dated 2.8.2018 passed during the subsistence of the interim order passed by the Orissa High Court is set aside and the writ petition is allowed; (d) W.P. No. 29504 of 2019 challenging the Bill of Entry dated 6.8.2019 is dismissed, as the same was issued when the notification is in vogue; and (e) W.P. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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