TMI Blog2003 (6) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 124/2000-Cus., dated 29-9-2000. The appellants are not disputing the factual position that Special Additional Duty on all Nepalese Imports into India, was exempted with effect from 29-9-2000 when Notification No. 124/2000 was issued. But they submit that the said Notification should be treated as clarificatory and hence having retrospective effect, inasmuch as under the Treaty of Trade and Agreement of Co-operation to control unauthorised trade between His Majesty s Government of Nepal and the Government of India, only Additional Excise Duty was leviable on goods imported from Nepal into India. 2. As per facts on record, the appellants were importing Tooth Paste products from Nepal through Land Customs Station, Raxaul and were clearing the same after paying Special Additional Duty of Customs @ 4% under protest with effect from 1-3-2000. The goods in question were exempted from Basic Customs Duty vide Notification No. 37/96-Cus., dated 23-7-96 and during the relevant period, there was no specific exemption from payment of Special Additional Duty (SAD in short). The exemption from SAD was granted only on issuance of Notification No. 124/2000, dated 29-9-2000 by way of amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on the representations made by the appellants seeking clarification on the leviability of SAD, that Notification No. 124/2000 was issued. He submits that treating the said Notification to be effective from the date of issuance of the same would be against the very terms of the Treaty of Trade between the two countries and would defeat the purpose of the same. In support of his submission that the said Notification should be considered as clarificatory and hence retrospective, he relied upon number of decisions and judgments of the Tribunal. 5. Shri T.K. Kar, learned SDR, for the Revenue appeared on behalf of Revenue and contended that the SAD, having been exempted vide Notification No. 124/2000 issued on 29-9-2000, was correctly levied in respect of the imports made prior to the said date and the refund claim of the appellant-company has been rightly rejected. He also submits that there is no justification for treating the Notification in question with retrospective effect. It is well-settled law that the fiscal statute has to be treated as prospective in nature unless the same clearly provides for retrospectivity or on reasonable ground, it can be concluded that the same is me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty do not, ipso facto, translate into import and export procedures within India until a corresponding notification in Customs is issued to bring the same into effect. We are of the view that it may be a lapse on the part of the Government of India not to issue the notification exempting the imports from SAD prior to 29-9-2000, but that lacuna cannot be filled by the judiciary and it is not our job to discuss as to what notifications the Government should have issued or not to further the cause of the Treaty between the two countries. 7. In the case of National Trading Limited v. Collector of Customs (Prev.) reported in 1990 (45) E.L.T. 626 (T), it was observed in para 23 - In order to bring implementation of any provision of this Treaty (or of any International Treaty or protocol for that matter) within the ambit of the Indian Customs Act, it was necessary that a notification was issued under Section 11(2)(r) of the Customs Act, 1962. As such, it is clear that without a corresponding notification in the Indian Customs Statute, the importer cannot claim the benefit of the Treaty automatically and the provisions of same cannot be enforced. 8. The appellants, in support of their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... independent levy from the Basic Customs Duty and the exemption from Basic Customs Duty does not mean that the imports are also exempted from the Special Additional Duty unless there is an exemption notification to that effect. Inasmuch as prior to 29-9-2000, there was no exemption from SAD and a reading of the earlier Notification would not even remotely suggest that the exemption from Basic Customs Duty also included the exemption from Special Additional Duty, the appellants contention that the subsequent Notification was only clarificatory, cannot be appreciated. We fail to understand as to what clarification the appellants are referring to. There was no ambiguity in the earlier Notification and there was no ambiguity in the subsequent Notification No. 124/2000. Both operated in separate fields one granted exemption from Basic Customs Duty and the other from the Special Additional Duty. There can be no question of any clarification of the earlier exemption granted. As such, we are of the view that the substantive benefit of law, extended by the Legislation, with effect from a particular date, would be applicable from that date only and cannot be made to act retrospectively on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification No. 157/76 was made explicit by amending the same subsequently. We are afraid that the ratio of the above decision would not be applicable to the facts of the present case, inasmuch as it cannot be said that implicit has been made explicit subsequently, on the simple reasoning that there was nothing implicit in the earlier notification, in view of the exemption available in respect of Basic Customs Duty only. 13. In the case of Johnson Johnson Ltd. v. CCE, Bombay reported in 1994 (71) E.L.T. 438 (T), the amending Notification including Miconazole Nitrate for the purposes of exemption, was held to be clarificatory and hence retrospective on the ground that the earlier Notification granting exemption to Miconazole has to be considered as granting benefit to Miconazole Nitrate also, inasmuch as the Miconazole is not capable of being used in its base form. As such, it was concluded that the exemption to Miconazole was exemption to Miconazole Nitrate even under the parent Notification and the subsequent amendment only made the scope of the earlier Notification clarificatory. The same cannot be held in the present situation in relation to the two Notifications in question. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1962 under delegated legislative power has been arrived at, no further satisfaction of the Central Govt. Ministry of Finance is thereafter is further required. Only the ministerial exercise, of issue of a notification under the provisions of Section 25 of the Customs Act, 1962 to implement the Treaty conditions would therefore remain. It was only a ministerial duty cast under Section 25 of the Customs Act to have issued notification effectuating the rates of duties on imports made from Nepal at the rates entered and agreed into as per the Treaty signed. The same been exercised in this case. In the present case SAD was imposed subsequent to the enactment of Notification No. 37/96, dated 23-7-96. The amendment 124/2000, dated 29-9-2000 which reads as follows :- Imports from Nepal - Amendment to Notification No. 37/96-Cus. In exercise of powers conferred by sub-section (4) of section 3A of the Customs Tariff Act, 1975 (51 of 1975) read with sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome to hold a view contrary to that held earlier by this Tribunal, I would consider referring this matter to a Larger Bench for a decision to resolve the matter of whether the amendment in such cases could be read retrospectively or not, before the other issues raised are determined. Sd/- (S.S. Sekhon) Member (T) DIFFERENCE OF OPINION Whether the appeal is required to be rejected as held by the Member (Judicial) or the matter needs to be referred to the Larger Bench as held by the Member (Technical). Sd/- (S.S. Sekhon) Member (T) Sd/- (Archana Wadhwa) Member (J) Dated 12-12-2002 18. [Order per : Jeet Ram Kait, Member (T)]. - This case has been referred to me as third Member for resolving the differences between Smt. Archana Wadhwa, Hon ble Member (J) and Shri S.S. Sekhon, Hon ble Member (T). 19. The points of difference referred to me as third Member are as under. Whether the appeal is required to be rejected as held by Member (Judicial) or the matter needs to be referred to the Larger Bench as held by Member (Technical). 20. The issue in the instant appeal relates to the refund claim filed by the appellants vide th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epal which is to the effect that all the goods manufactured in Nepal and imported into India would be exempted from the Customs duty and such goods would be liable only to Additional Duty of Customs equal to the Excise Duty for the time being leviable on similar products manufactured in India. They however contend that in terms of the provisions of the said Treaty, no SAD was leviable and the subsequent Notification issued on 29-9-2000 would be a clarificatory notification and would be effective retrospectively. It is their contention that the Treaty of Trade governing imports of Nepal to India, provided for levy of Additional Duty of Customs (popularly known as countervailing duty) and as such, the levy and collection of SAD under Section 3A of the Customs Tariff Act, 1975 was, ab initio, void and contrary to the provisions of Treaty and Trade between the two countries. They further contended that Notification No. 124/2000 only reiterated the correct legal position and the refund of duty paid by the appellants under protest, prior to coming into force of the said notification, is liable to be granted to them. 22. My ld. Sister, Ms. Archana Wadhwa, Hon ble Member (J) did not coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... national Treaty or protocol for that matter) within the ambit of the Indian Customs Act, it was necessary that a notification was issued under Section 11(2)(r) of the Customs Act, 1962 . As such, without a corresponding notification in the Indian Customs Statute, the importer could not claim the benefit of the Treaty automatically and the provisions of the same cannot be enforced. She also relied on the judgment rendered by the Tribunal in the case of Indye Chemicals, Ahmedabad v. CCE as reported in 1986 (25) E.L.T. 318 (T) = 1986 (7) ECR 45 wherein the CEGAT had held that the exemption notification could not be considered to be having retrospective effect and any exemption provision which enlarges the scope of an earlier notification cannot be considered to be of clarificatory nature, unless there is a specific provision to the contrary. She also relied on another decision of the Tribunal rendered in the case of Shri Krishna Tiles and Potteries (Madras) Pvt. Ltd. reported in 1986 (25) E.L.T. 843 wherein in paras 4 and 5 of the judgment it was held that the normal rule is that any notification or amendment to any notification would come into effect on the date the notification is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 124/2000. The next judgment referred to by the ld. Advocate before her was in the case of CC v. Shaw Wallace Co. Ltd. as reported in 1990 (50) E.L.T. 143 (T). The facts of that case were that Notification No. 157/76-Cus. exempted furnace oil falling under Chapter 27 of the First Schedule of the Customs Tariff Act, 1975 and supplied ex-bond to coastal vessels as bunker, from so much of the additional duty leviable thereon under Section 3 of the Customs Tariff Act as was in the excess of Rs. 5.20 per kilo litre at 15 degrees of centigrade thermometer. The notification was amended by another notification No. 195/87-Cus. vide which the words - or retained on board the vessel at the time of its reversion from foreign run to coastal run and during its coastal run and were consumed during its coastal run - were inserted after the word bunker . It was held by the Tribunal that such a notification is a clarificatory notification by observing that what was implicit in the mother Notification No. 157/76 was made explicit by amending the same subsequently. She therefore observed that the ratio of the above decision would not be applicable to the facts of the present case, inasmuch as it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unction. However, when one wing of the Government of India has considered that it was necessary in public interest to enter into a Treaty with another sovereign State and provide for exemption from duties on the goods imported from that State, then the satisfaction required under Section 25(1) of the Customs Act, 1962 under delegated legislative power has been arrived at and no further satisfaction of the Central Govt. Ministry of Finance is thereafter further required. He also held that the amendment has been made to Notification No. 37/96-Cus., dated 26-3-96 by Notification No. 124/2000-Cus., dated 29-9-2000, which would indicate the same to be a belated response to effectuate the Treaty terms. He further held that if it was to be a new and simplicitor amendment to exempt or reduce the rates on certain specified imports, then an amendment would have been required and made to the Notification No. 18/2000-Cus., dated 1-3-2000 and not to Notification No. 37/96. Since it was a further amendment made to be not only to effectuate the Treaty obligations but it would also be clarificatory, thus effective retrospectively from the date of imposition of Special Additional Duty. He also hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vited my attention to Article V (which is also at page 22). For better understanding Article V is reproduced herein below : Notwithstanding the provisions of Article III and subject to such exceptions as may be made after consultation with His Majesty s Government of Nepal, the Government of India agree to promote the industrial development of Nepal through the grant on the basis of non-reciprocity of specially favourable treatment to imports into India of industrial products manufactured in Nepal in respect of customs duty and quantitative restrictions normally applicable to them. 24.1 Ld. Advocate also invited my attention to Sl. No. V of the Protocol to the Treaty of Trade, with reference to Article V of the Treaty of Trade (which is at page 27) wherein, it is mentioned that with reference to Article V (Replaced by the Letters of Exchange between His Majesty s Government of Nepal and Government of India at Kathmandu on December 3rd, 1996), the Government of India will provide access to the Indian market free of customs duty and the quantitative restrictions for all articles manufactured in Nepal. For better appreciation item No. V with reference to Article V is reproduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds specified in Column (2) of the Table falling within the First Schedule to the Customs Tariff Act, 1975 when imported into India from Nepal, from the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975, subject to the conditions, if any, specified in Column (3) of the notification. He therefore submitted that the basic customs duty was exempted on the goods imported by them. Further vide Notification No. 18/2000-Cus., dated 1-3-2000. Special Additional Duty of Customs at the rate of 4% ad valorem was imposed on any article which is imported into India vide Section 3A of the Customs Tariff Act, 1975. He further submitted that Government of India vide Notification No. 124/2000-Cus., dated 29-9-2000 which amended Notification No. 37/96-Cus., dated 23-7-96 substituted the words and figures in the said notification from the whole of duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 to the words, figure and letter from the whole of the duty of customs leviable thereon under the First Schedule to the said Customs Tariff Act and Special Additional Duty of Customs leviable under Section 3A of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said judgment. Similar argument as in the present case of no notification exempting the tax under the Act was pressed into service by the Deputy Advocate General appearing for the State. The Division Bench ruled that the absence of formal notification are in our opinion in the facts of these cases was, no more than ministerial act which remain to be performed, cannot be made basis to regulate the promise made to milk purchasers . Ld. Advocate therefore submitted that the Division Bench of the Hon ble High Court of Karnataka after noticing all the aspects has ruled that the doctrine of promissory estoppel represented a principle of equity evolved by the Courts to prevent injustice. He submitted that this judgment of the Hon ble High Court of Karnataka supports the view taken by them. Ld. Advocate also invited my attention to the judgment rendered by the Apex Court in the matter of Union of India Others v. Godfrey Philips India Others as reported in 1985 (22) E.L.T. 306 (S.C.) wherein it has been held that promissory estoppel would be applicable against clarification issued by the Central Government or the CBEC where representation made to revenue authorities by manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in its application only to defence but it can also found a cause of action. The decision of this Court in Motilal Sugar Mills case (supra) contains an exhaustive discussion of the doctrine of promissory estoppel and we find ourselves wholly in agreement with the various parameters of this doctrine outlined in that decision. 10. More importantly, it is necessary to point out that the decision in Motilal Sugar Mills case (supra) marks a significant development in the law relating to the doctrine of promissory estoppel. The principal question debated in that case was as to whether and if so, to what extent, is the doctrine of promissory estoppel applicable against the Government. It was contended on behalf of the State of Uttar Pradesh that the plea of promissory estoppel is not available against the exercise of executive functions of the State, for the State cannot bind itself, so as to fetter its future executive action. This contention was sought to be supported by relying on the observations of Rowlatt J. in an early decision in Rederiaktiebolaget Amphitrite v. The King, (1921) 3 K.B. 510. But this Court observed in Motilal Sugar Mills case (supra) that what Rowlatt J. said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed his position. The doctrine of promissory estoppel was in such a case applicable against the Government and it could not be defeated by invoking the defence of executive necessity. This Court in Motilal Sugar Mills case (supra) also negatived the argument that if the Government were held bound by every representation made by it regarding its intention, the result would be that the Government would be bound by a contractual obligation even though no formal contract in the manner required by Article 299 of the Constitution was executed. It was held by this Court that a party who has, acted in reliance on a promise or representation made by the Government, altered his position, is entitled to enforce the promise or the representation against the Government, even though the promise or representation is not in the form of a formal contract as required by Article 299 and that Article does not militate against the applicability of the doctrine of promissory estoppel against the Government. 11. The resultant position was summarised by this Court in Motilal Sugar Mills case (supra) in the following words : The law may therefore now be taken to be settled as a result of this decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... private individuals to carry out representations of facts and promises made by them, relying on which other persons have altered their position to their prejudice. If our nascent democracy is to thrive different standards or conduct for the people and the public bodies cannot ordinarily be permitted. A public body is, in our judgment, not exempt from liability to carry out its obligation arising out of representations made by it relying upon which a citizen has altered his position to his prejudice. The Court refused to make a distinction between a private individual and a public body so far as the doctrine of promissory estoppel is concerned. 12. There can therefore be no doubt that the doctrine of promissory estoppel is applicable against the Government in the exercise of its governmental, public or executive functions and the doctrine of executive necessity or freedom of future executive action cannot be invoked to defeat the applicability of the doctrine of promissory estoppel. We must concede that the subsequent decision of this Court in Jeet Ram v. State of Haryana, (1980) 3 S.C.R. 689 takes a slightly different view and holds that the doctrine of promissory estoppel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it can be shown by the Government or public authority that having regard to the facts as they have transpired, it would be inequitable to hold the Government or public authority to the promise or representation made by it, the Court would not raise an equity in favour of the person to whom the promise or representation is made and enforce the promise or representation against the Government or public authority. The doctrine of promissory estoppel would be displaced in such a case, because on the facts, equity would not require that the Government or public authority should be held bound by the promise or representation made by it. This aspect has been dealt with fully in Motilal Sugar Mills case (supra) and we find ourselves wholly in agreement with that has been said in that decision on this point. 25. Ld. Advocate therefore submitted that since the Government of India had made the promise to the Government of Nepal and the industries at large in Nepal, the doctrine of promissory estoppel would be in full force and therefore they are entitled for the refund. He also invited my attention to similar treaties exchanged between Government of India and Government of Bhutan and vari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between His Majesty s Government of Nepal and Government of India at Kathmandu on December 3rd, 1996), the Government of India will provide access to the Indian Market free of Customs duty and the quantitative restrictions for all articles manufactured in Nepal. Here it is worth mentioning that both Articles IV and V of the Treaty of Trade mentioned about the exemption of the Basic Customs Duty only and there was no mention of Special Additional Duty of Customs (SAD) in the treaty. Thus the plea of ld. Advocate that it was a promise made by the Government of India to His Majesty s Government of Nepal and through His Majesty s Government of Nepal to the industry at large situated in Nepal to exempt all customs duty including Special Additional Duty, is not acceptable inasmuch as the treaty was only an agreement between the Government of India and His Majesty s Government of Nepal to exempt Basic Customs Duty only and that agreement was only an understanding between the two sovereign countries only and it cannot be held as a promise, as was contended by ld. Advocate Shri B.V. Kumar, to the industry at large. Ld. Advocate also invited my attention to para 4 of the Protocol to Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of India v. Yokogawa Bluestar Ltd. as reported in 2001 (129) E.L.T. 598 (Kar.) wherein para 7 it has been held that merely because there was a delay in issuing the notification that by itself does not give right to the respondent to seek differential duty from the petitioner in the case on hand. He therefore argued that the authorities in the above circumstances have acted against the said policy of the Union of India in demanding the differential duty particularly when they themselves have acted on the policy by issuing a notification under the Act. 28. I am not able to accept the plea of the ld. Advocate that there was any promise by the Government to the appellant. At best there was understanding between the two sovereign Governments. Further the judgment rendered by the Division Bench of Hon ble High Court of Judicature of Karnataka at Bangalore had come to the conclusion that there was a promise by the Government because in the case of Nestle India Ltd. v. State of Punjab which was relied by the Hon ble High Court of Karnataka reported in 1999 (13) PHT 132 (P H) the Chief Minister had announced the abolition of the purchase tax on the milk products in the public meeting. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment of India and His Majesty s Government of Nepal and that too for exempting only the Basic Customs Duty and not the Special Additional Duty of Customs (SAD). 30. I am of the considered opinion that there was no promise even to the Government of Nepal that the Special Additional Duty of Customs would be exempted and that too from a particular date. The industry at large, especially the appellant M/s. Colgate Palmolive (India) Ltd. cannot claim that any promise was ever made to them by the Government of India. Therefore promissory estoppel from collecting additional duty of customs would not be applicable in their cases. The Apex Court judgment rendered in the case of Union of India Others v. Godfrey Philips India Ltd. Others reported in 1985 (22) E.L.T. 306 (S.C.) would not be applicable inasmuch as there was neither any public speeches made by the Prime Minister, the Finance Minister of India nor there was any directions even to the field formations either by the Central Government or by the Central Board of Excise and Customs in the light of representations, if any. 31. I am therefore in agreement with the findings of the ld. Sister Mrs. Archana Wadhwa that both No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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