2025 (5) TMI 417 - AT - Customs

Enhancement of Basic Customs Duty (BCD) rate of 30% on crude palm oil notified on 17.11.2017 but published in the Official Gazette on 20.11.2017 - Bills of Entry were filed on 16.11.2017 and entry inward granted on 18.11.2017 and 19.11.2017 - relevant date for determining the applicable customs duty rate under Section 15 of the Customs Act 1962 - HELD THAT - As the admitted fact is that the said Notification had been published in the Official Gazette on 20.11.2017 therefore even if the dates of entry inwards are taken to decide the rate of duty applicable the same are 18.11.2017 and 19.11.2017 which is prior to the publication of the said Notification in the Official Gazette. Considering the fact that the Notification No. 87/2017-Cus. dated 17.11.2017 was published in the Official Gazette on 20.11.2017 whereas the dates of entry inwards are prior to 20.11.2017 it is held that the enhanced rate of duty in terms of Notification No. 87/2017-Cus. dated 17.11.2017 is not applicable to the facts of this case. In these circumstances it is held that differential duty / enhanced duty cannot be demanded from the appellant. The appellant are liable to pay Basic Customs Duty on Crude Palm Oil at the rate of 15%. Conclusion - The enhanced rate of duty in terms of Notification No. 87/2017-Cus. dated 17.11.2017 is not applicable as it was published in the Official Gazette on 20.11.2017 which is after the dates of entry inward. The appellant is entitled to refund of the excess customs duty paid along with interest. Appeal allowed.

Summary

The core legal questions considered in this case are:

1. Whether the enhanced Basic Customs Duty (BCD) rate of 30% on crude palm oil, notified on 17.11.2017 but published in the Official Gazette on 20.11.2017, is applicable to import consignments whose Bills of Entry were filed on 16.11.2017 and entry inward granted on 18.11.2017 and 19.11.2017.

2. What is the relevant date for determining the applicable customs duty rate under Section 15 of the Customs Act, 1962 - the date of filing the Bill of Entry, the date of entry inward of the vessel, or the date of publication of the notification in the Official Gazette?

3. Whether the delay in granting entry inward by Customs Authorities, if any, should prejudice the appellant by attracting the enhanced duty rate.

4. The legal effect and interplay of Section 25(1) and Section 25(4) of the Customs Act, 1962, regarding the date from which a customs notification becomes effective.

5. Whether the appellant is entitled to refund of excess customs duty paid along with interest.

Issue-wise Detailed Analysis

Issue 1 & 2: Applicability of Enhanced Duty and Relevant Date for Determination of Duty Rate

The legal framework centers on Section 15 of the Customs Act, 1962, which prescribes the date for determination of the rate of duty and tariff valuation of imported goods. Section 15(1)(a) states that for goods entered for home consumption, the applicable rate is that in force on the date the Bill of Entry is presented. The proviso to Section 15(1) provides that if the Bill of Entry is presented before the date of entry inward of the vessel, the Bill of Entry shall be deemed to have been presented on the date of such entry inward or arrival.

In this case, the Bills of Entry were filed on 16.11.2017, the vessels arrived on 14.11.2017 and 15.11.2017, and the entry inward was granted on 18.11.2017 and 19.11.2017. The impugned notification increasing the BCD from 15% to 30% was dated 17.11.2017 but published in the Official Gazette only on 20.11.2017.

The Court analyzed whether the date of entry inward or the date of publication of the notification governs the applicable duty rate. It was held that the notification takes effect only from the date of its publication in the Official Gazette, as mandated by Section 25(1) of the Customs Act. Mere issuance of a notification without publication has no legal effect because the public cannot be deemed to have knowledge of it until publication.

The Court noted the conflict introduced by Section 25(4), which states that unless otherwise specified, every notification shall take effect from the date it is issued for publication, creating a contradiction with Section 25(1). The Court relied heavily on precedents, notably the Gujarat High Court decision in Ruchi Soya Industries Ltd. v. Union of India, which declared Section 25(4) arbitrary and contrary to Sections 25(1) and (2A), emphasizing that the notification's effective date is the date of publication in the Official Gazette.

The Court further examined reports from the Department of Publication confirming the notification's publication date as 20.11.2017, after the dates of entry inward. Therefore, even if the proviso to Section 15(1) is accepted, the enhanced duty notification was not in force on the date of entry inward.

Hence, the enhanced BCD rate of 30% could not be applied to the consignments whose Bills of Entry were filed and entry inward granted prior to the notification's publication.

Issue 3: Impact of Delay in Granting Entry Inward by Customs Authorities

The appellant contended that any delay in granting entry inward was due to administrative inaction by Customs Authorities and that the appellant should not be penalized for such delay. The onus to grant entry inward expeditiously lies with the Customs Authorities under Section 31 of the Customs Act, although no strict timeline is prescribed.

The Court referred to the judgment in Mafatlal Industries Ltd. v. Union of India, which held that entry inward should be granted expeditiously and ideally on the date of submission of the notice of readiness by the master of the vessel. In this case, the notice of readiness was submitted on 15.11.2017, but entry inward was granted only on 18.11.2017 and 19.11.2017, without any explanation for the delay.

The Court also noted that the Customs Authorities did not allege any discrepancy in the documents submitted by the appellant, and that the delay was attributable to the department itself. The Supreme Court precedents such as Priyanka Overseas Ltd. v. UOI and Northern Plastics Ltd. v. CC & CE were cited to emphasize that the department cannot take advantage of its own errors to impose higher duty liability on the importer.

Accordingly, the Court held that the duty rate should be determined based on the date of the notice of readiness and the date of Bills of Entry, not the delayed entry inward date.

Issue 4: Legal Effect of Section 25(1) and Section 25(4) of the Customs Act

Section 25(1) requires that a notification imposing or altering customs duty must be published in the Official Gazette to have legal effect. Section 25(4), inserted later, states that unless otherwise specified, a notification shall take effect from the date it is issued for publication, which conflicts with Section 25(1).

The Court relied on the authoritative decision of the Gujarat High Court in Ruchi Soya Industries Ltd. that struck down Section 25(4) as arbitrary and inconsistent with the statutory scheme. The Court reiterated that the effective date of a customs notification is the date of publication in the Official Gazette, not the date of issuance.

This interpretation aligns with the principle that knowledge of the notification by the public and stakeholders is essential for its enforceability.

Issue 5: Entitlement to Refund of Excess Customs Duty Paid

Since the enhanced duty notification was not in force on the relevant dates of import and entry inward, the appellant was only liable to pay the BCD at 15%. The appellant had paid the differential duty of 30% under protest to clear the goods.

The Court held that the appellant is entitled to refund of the excess customs duty paid along with interest. The Court directed the respondents to refund the entire excess amount paid, including IGST, within two months.

Significant Holdings

"A notification takes effect from the date and time it is electronically published in the Gazette and mere issuance of a notification, without its publication, holds no legal effect, as the intended audience cannot be deemed to have knowledge of it until such publication occurs."

"Section 25(4) of the Customs Act is declared as arbitrary and contrary to Section 25(1) and (2A) of the Customs Act, 1962."

"The department cannot take advantage of its own errors and subject the assessee to higher liability arising out of its own errors and actions."

"The date for determination of the rate of duty on imported goods entered for home consumption is the date on which the Bill of Entry is presented or, if presented before the entry inward of the vessel, the date of entry inward or arrival of the vessel, but the notification imposing or enhancing duty must have been published in the Official Gazette on or before that date to be effective."

"The enhanced rate of duty in terms of Notification No. 87/2017-Cus. dated 17.11.2017 is not applicable as it was published in the Official Gazette on 20.11.2017, which is after the dates of entry inward."

"The appellant is entitled to refund of the excess customs duty paid along with interest."

In conclusion, the Tribunal set aside the impugned order confirming the enhanced duty and held that the appellant is liable to pay BCD at the rate of 15% applicable prior to the notification's publication. The appeals were allowed with consequential relief as per law.