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2015 (11) TMI 138 - GUJARAT HIGH COURT

2015 (11) TMI 138 - GUJARAT HIGH COURT - 2015 (326) E.L.T. 664 (Guj.) - Demand of interest of differential duty - Finalization of Provisional assessment - maintainability of writ petition - Imports made prior to insertion of sub-section (3) of Section 18 of the Customs Act, 1962 - Held that:- it is the case of the petitioner that the adjudicating authority has not acted in accordance with the provisions of the Customs Act and in defiance of the law laid down by the jurisdictional High Court. On .....

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arrived at the conclusion that interest is recoverable under section 28 of the Act not less than nine times, the adjudicating authority seems to have wished away the question as regards applicability of the provisions of section 18(3) of the Act and the decisions interpreting the said provision on which reliance had been placed by the petitioner.

The revenue officers are bound by the decisions of the higher authorities and cannot refuse to follow the same on the ground that the same i .....

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ed for recovery of interest on differential customs duty as per the provisions of sub-section (3) of section 18 of the Act, and resort has been made to section 28 only for the purpose of recovery of such amount. Under the circumstances, unless it is held that the petitioner is liable to pay interest on the differential duty under section 18(3) of the Act, the question of making any recovery of such interest amount under section 28 of the Customs Act would not arise. The impugned order, which pro .....

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remedy available under law. However, having regard to the facts of the present case wherein the controversy involved stands concluded by a decision of the jurisdictional High Court in the case of Commissioner of Customs (Preventive) v. Goyal Traders (2011 (8) TMI 720 - Gujarat High Court ), which stands affirmed by the Supreme Court in the case of Jaswal Neco Ltd. v. Commissioner of Customs, Visakhapatnam (2015 (8) TMI 243 - SUPREME COURT), no fruitful purpose would be served by relegating the .....

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Harsha Devani ) 1. Rule. Mr. Y.N. Ravani, learned senior standing counsel waives service of notice of rule on behalf of the respondent. Having regard to the controversy involved in the present case, which lies in a very narrow compass, with the consent of the learned counsel for the respective parties, the matter was taken up for final hearing today. 2. The first petitioner, a company engaged in the refining of crude petroleum oil and the second petitioner, the Sr. General Manager of the first .....

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he said Warehousing Bills of Entry, the imported goods were deposited in the customs bonded warehousing located within the jurisdiction of the Commissioner of Customs and Central Excise, Rajkot, the second respondent herein. The goods were thereafter removed from the warehouse by filing ex-bond Bills of Entry for home consumption clearance. The ex-bonds Bills of Entry were subjected to provisional assessment under section 18(1) of the Customs Act, 1962 (hereinafter referred to as the Act ). The .....

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ional assessments, the Superintendent of Customs and Central Excise, Jamnagar by letters dated 5.1.2012 and 21.2.2012 called upon the petitioner to pay interest on such duty in terms of the provisions of section 18(3) of the Act. In response thereto, the first petitioner by its letter dated 18.6.2012, pointed out to the Superintendent of Customs and Excise that the provisional assessments had been made prior to 13.7.2006, when, for the first time a provision was introduced by way of sub-section .....

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consequent on finalisation of provisional assessment cannot apply to cases where the provisional assessment had been made prior to the introduction of such provision. 5. A show cause notice dated 11.12.2012 came to be issued by the second respondent to the petitioner under section 28 of the Act, proposing to hold the petitioner liable to pay interest amounting to ₹ 17,55,20,841/- under sub-section (3) of section 18 of the Act on the differential duty paid by the first petitioner consequent .....

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in the case of Commissioner of Customs (Preventive) v. Goyal Traders, (2014) 302 E.L.T. 529 (Guj.) , wherein the court had held that prior to introduction of sub-section (3) of section 18 of the Act, there was no liability to pay interest on the difference between finally assessed duty and provisionally assessed duty upon payment of which the assessee may have cleared the goods. It was only with effect from 13.7.2006 that such charging provision was introduced in the statute. Upon introduction t .....

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udicating authority in the impugned order observed that in the present case the demand of interest on differential duty is made under section 28 of the Customs Act and, accordingly, ignored the decision of this court and held that the petitioner was liable to pay interest of ₹ 17,55,20,841/- and imposed an equal amount of penalty under section 114A of the Act. Being aggrieved, the petitioners have filed the present petition. 7. Mr. J. C. Patel, learned counsel for the petitioner assailed t .....

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point out that a stand has been adopted therein that the decision of this court in the case of Commissioner of Customs (Preventive) v. Goyal Traders (supra) has not been accepted on merits by the department and that in the light of the instructions issued by the Board, the adjudicating authority cannot follow the decision of this court. The attention of the court was invited to the decision of the Supreme Court in the case of Union of India v. Kamlakshi Finance Corporation Ltd., 1991 (55) E.L.T. .....

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ired that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not acceptable to the department - in itself an objectionable phrase - and is the subject-matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in .....

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ions, the following propositions emerge: (1) It is immaterial that in a previous litigation the particular petitioner before the Court was or was not a party, but if law on a particular point has been laid down by the High Court, it must be followed by all authorities and tribunals in the State : (2) The law laid down by the High Court must be followed by all authorities and subordinate tribunals when it has been declared by the highest Court in the State and they cannot ignore it either in init .....

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w taken by this court is that once the attention of the authority is pointedly drawn to the legal position, if the authority disregards that position, the same would amount to wilful disregard of the law laid down by the High Court and would amount to civil contempt as defined in section 2(b) of the Contempt of Courts Act, 1971. 7.2 It was also pointed out that the Supreme Court in the case of Jaswal Neco Ltd. v. Commissioner of Customs, Visakhapatnam, 2015 (322) E.L.T. 561 (S.C.), has affirmed .....

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referred to the same. It was submitted that the main issue has been totally bypassed and the entire order has been passed as if the proceedings had been undertaken under section 28 of the Act. It was, accordingly, urged that the petition deserves to be allowed by setting aside the impugned order. 8. Opposing the petition, Mr. Y. N. Ravani, learned senior standing counsel for the respondent raised a preliminary objection as to the very maintainability of the petition on the ground that the order .....

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well be submitted before the Tribunal and merely because the petitioner may be called upon to make pre-deposit in the appeal preferred before the Tribunal, is no reason for this court to permit the petitioner to bypass the statutory remedy. It was submitted that on facts no special case has been made out so as to justify invocation of the writ jurisdiction of this court in respect of an order passed by the adjudicating authority. 8.1 On the merits of the case it was submitted that it is the cas .....

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that if the view taken by the authority is an erroneous view, the same does not entitle the petitioner to bypass the alternative remedy and to directly approach this court. Reliance was placed upon the decision of the Supreme Court in the case of Shyam Kishore and others v. Municipal Corporation of Delhi, (1993) 1 SCC 22, for the proposition that adequate remedy can be read in the statute, the plea of resort to writ remedy under Articles 226 and 227 must be discouraged. It was, accordingly, urg .....

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has been raised to the very maintainability of this petition, it would be necessary to firstly deal with the same. It is a well settled legal proposition that where an alternative remedy is available, the High Court would ordinarily not exercise powers under Article 226 of the Constitution of India. However, it is equally true that there is no absolute proposition of law that where an alternative remedy is available, the High Court would refuse to exercise powers under Article 226 of the Consti .....

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a rule of law. Undoubtedly, it is within the discretion of the High Court to grant relief under Article 226 despite the existence of an alternative remedy. However, the High Court must not interfere if there is an adequate efficacious alternative remedy available to the petitioner and he has approached the High Court without availing the same unless he has made out an exceptional case warranting such interference or there exist sufficient grounds to invoke the extraordinary jurisdiction under Ar .....

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rt held thus: In the next place it must be borne in mind that there is no rule, with regard to certiorari as there is with mandamus, that it will lie only where there is no other equally effective remedy. It is well established that, provided the requisite grounds exist, certiorari will lie although a right of appeal has been conferred by statute, (Halsbury's Laws of England, 3rd Edn., Vol. 11, p. 130 and the cases cited there). The fact that the aggrieved party has another and adequate reme .....

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enience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies. 12. In the present case, it is the case of the petitioner that the adjudicating authority has not acted in accordance with the provisions of the Customs Act and in defiance of the law laid down by the jurisdictional High Court. On the facts as emerging from the record, and for the reasons that follo .....

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oms Act, as well as for recovery of such amount under section 28 of the Act. However, in the impugned order, the adjudicating authority, before whom various decisions of the Tribunal as well as of this court had been pointed out in support of the contention that the provisions of section 18(3) of the Act would not apply in the present case as the same related to a period prior to insertion of sub-section (3) of section 18 of the Act, has totally sidestepped the issue, ignored the decision of the .....

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was made only under section 28 of the Act and that there was no question of recovery of interest under section 18(3) of the Act, thereby proceeding on a basis not contemplated in the show cause notice. The adjudicating authority, in almost every paragraph of the reasoning assigned by it, has reiterated the conclusion that interest is recoverable under section 28 of the Act. It appears that by reiterating that it has arrived at the conclusion that interest is recoverable under section 28 of the A .....

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ce may be made to the decision of the Supreme Court in Commissioner of Customs v. Virgo Steels, (2002) 4 SCC 316, wherein the court has held thus: 8. We will next consider the requirement of Section 28 of the Act and the applicability of the principle of waiver to the said requirement of that section. While so doing, it is to be noted that our discussion of Section 28 of the Act is with reference to the section as it stood at the relevant time and not with reference to the existing Section 28 of .....

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ing perused the said judgment carefully, we are of the opinion that this Court used the expression condition precedent with reference to issuance of notice under Section 28 and not with reference to the jurisdiction of the proper officer under that section. While the absence of notice may invalidate the procedure adopted by the proper officer under the Act, it will not take away the jurisdiction of the officer to initiate action for the purpose of recovery of duty escaped. This is because of the .....

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sment in regard to duty payable while sub-section (4) of Section 17 makes a provision to empower the proper officer to reassess the imported goods for duty if it is found that the assessment made at the time of importation was based on incorrect or false information. Section 142 of the Act found in Chapter XVIII provides for actual recovery of sums due to the Government. A cumulative reading of these provisions found in the Act clearly shows that the jurisdiction of a proper officer to initiate .....

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not denude that officer of his jurisdiction to initiate action for recovery of escaped duty but it may make such proceedings initiated by that officer voidable. Thus, section 28 of the Customs Act only provides for the procedural aspect for recovery of duty and is not a substantive provision for levy of duty under the Act. The show cause notice also, accordingly, reveals that the interest on the differential amount is sought to be recovered under section 18(3) of the Act and that the provisions .....

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he affidavit-in-reply a stand is taken in paragraph 5 thereof that the decision of the High Court in the case of M/s. Goyal Traders (supra) has not been accepted by the department on merits as the amount involved in that case was below the threshold limit of ₹ 25 lakhs. Therefore, in the light of CBEC s instructions dated 20.10.2010 and 17.8.2011, the Department has not preferred to challenge the same before the apex court and it has been decided that the same will not be considered as a p .....

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in reply, the deponent of the affidavit-in-reply actually has had the temerity to say that the decision in the case of M/s. Goyal Traders (supra) does not have any precedent value. 16. At this juncture, it may be apposite to refer to the decision of the Supreme Court in the case of Union of India v. Kamlakshi Finance Corporation Ltd., (supra), wherein it has been held thus: 6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fades in passing the impugned order .....

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he High Court has, in our view, rightly criticised this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellate Collector is .....

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n objectionable phrase - and is the subject-matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws. 7. The impression or anxiety of the Assistant Collector that, if he accepted the assessee's contention, the department would lose revenue and would also have no remedy to have the matter rectifi .....

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r of Central Excise, when he comes across any order passed by an authority subordinate to him, if not satisfied with its legality or propriety, may direct such authority to apply to the Collector (Appeals) for the determination of such points arising out of the decision or order as may be specified by the Collector of Central Excise in his order and there is a further right of appeal to the department. The position now, therefore, is that, if any order passed by an Assistant Collector or Collect .....

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ions on its correctness. He has to follow the order of the higher appellate authority. This may instantly cause some prejudice to the Revenue but the remedy is also in the hands of the same officer. He has only to bring the matter to the notice of the Board or the Collector so as to enable appropriate proceedings being taken under S. 35-E (1) or (2) to keep the interests of the department alive. If the officer's view is the correct one, it will no doubt be finally upheld and the Revenue will .....

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he decision of the higher authority, including the High Court. However, it is not open for the adjudicating authority or any other authority to ignore a binding decision of the court on the ground that the department has not accepted the same. Adverting to the facts of the present case, while in the impugned order, the adjudicating authority has not stated that the order of this court would not be applicable to the facts of the present case or that the said decision is not binding upon it, the a .....

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