TMI Blog2017 (1) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 with its condition of a limitation period was throughout on the statute book. That is the only provision enabling granting refund of any duty is undisputed. The notification granting exemption and under consideration in the case, enables claiming a refund of duty (SAD) but the power to grant it is in the substantive law. With greatest respect, if the exemption can only be claimed within the statutory provisions and not beyond the same, such conditional exemption including the stipulation as above has not been challenged. Only one condition therein cannot be declared ultra vires because the petitioners desire to brush it aside. The petitioners have accepted the position that if this exemption Notification had not been issued in exercise of the statutory power, no exemption could have been claimed at all. In these circumstances, merely because a condition is imposed to file a refund application and which is in the nature of a time-bar or limitation, that cannot be held to be onerous, excessive and therefore ultra vires Article 14 of the Constitution. If the exemption Notification grants an exemption in the manner noted by us, then, it could have been granted only in that mode ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms (SAD). This further Notification of 2008 amended Notification No.102/2007Cus, dated 14-9-2007, on the file of respondent Nos.3 and 4. 2. The petitioners, therefore, pray that this Notification be declared as null and void and ultra vires Article 14 of the Constitution of India. 3. As a consequence, by a writ of mandamus, the writ petitioners seek a a direction to respondent Nos.3 and 4 to consider their refund claim independent of condition (c) of para 2 of Notification No.102/2007Cus, dated 14-9-2007, as amended by Notification No.93/2008Cus, dated 1-8-2008. 4. The petitioners, therefore, submit that the refund application be directed to be taken on file and proceeded in accordance with law. This writ petition has been filed on 15-12-2015 in this Court. 5. Since we have heard both sides in great detail at the stage of admission, we grant rule. The respondents waive service. By consent, rule is made returnable forthwith. 6. We have to set out a few facts to appreciate the contention of the learned counsel appearing for the petitioners. The petitioners are a Company incorporated under the Companies Act, 1956. The respondents are the authorities u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply the goods to State Banks, spread over various States in India and then remove to individual sites the imported goods in accordance with the information given by State Bank of India. Thus, depending upon the availability of the sites, these machines are installed thereafter. It is in these circumstances that post-import the further events are not within the control of the present petitioners. 9. The petitioners highlight in the writ petition that the intention of such duties (SAD) is to counterbalance the sales tax/value added tax, etc., leviable on like goods sold in India. If such goods are produced indigenously, then, their sale has to attract all the above duties. Therefore, the exemption under Section 25(1) of the said Act from SAD is conditional upon subsequent sale. It is submitted that the petitioners are liable to pay all duties at the time of import of the goods. The petitioners, who are the importer of the goods, while issuing the invoice for sale of the goods, specifically indicate in the invoice that in respect of the goods covered therein, no credit of the additional duty of customs levied under sub-section (5) of Section 3 of the CTA shall be admissible. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot taken on record as being beyond the period of limitation stipulated in the Notification. The petitioners were forced to submit this application then to respondent No.3. In the light of the Notification and which till 2008 did not have any time limit, but inserted it thereafter, that the refund application has not been processed. This has deprived the petitioners of the benefit of the exemption Notification. 12. To the extent above, the Notification is challenged and impugned in the writ petition. 13. Mr. Patil, learned counsel appearing on behalf of the petitioners, would submit that if the refund application is to be filed within one year from the payment of SAD but the import is for subsequent sale and even exemption is on that term being satisfied, then, that period of one year cannot commence unless and until the goods are sold. Mr. Patil has taken us through the Notification dated 1492007 and its amendment vide the further Notification dated 1-8-2008. He would submit that the Central Government, on being satisfied that it is necessary in the public interest so to do, exempted the goods falling within the First Schedule to the Customs Tariff Act, 1975 when i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, is found to be discriminatory, unfair and ultra vires as above, the respondents cannot rely upon the same. Though the view taken by the High Court of Delhi has only persuasive value, yet, Mr. Patil would submit that the interpretation placed on the provisions of the Act and the exemption Notification by the High Court of Delhi is the only possible interpretation. 15. The interpretation is placed by invoking the doctrine that law does not compel a person to perform an impossible obligation or comply with an impossible condition. Mr. Patil has also brought to our notice the fact that a Special Leave Petition was filed by the Revenue to challenge the Judgment of the High Court of Delhi in Sony India's case (supra), but even that was dismissed. 16. It is in these circumstances that it is submitted by him that the refund application be directed to be processed. After conclusion of the hearing on the earlier occasion and before we were to commence dictation of Judgment, Mr. Patil sought to rely upon a Division Bench Judgment of this Court in the case of Weikfield Products Company (India) Pvt. Ltd. Vs. Union of India, reported in 1991 (51) E.L.T. 323 (Bom.). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and to curb such tendency and prevent revenue leakage. That is how this Act and its provisions have been interpreted by the Hon'ble Supreme Court of India in the case of Commissioner of Customs (Preventive) Vs. M. Ambalal Co., reported in (2011) 2 SCC 74. Some of the paragraphs of this judgment are extremely relevant for our purpose. They read as under : 10. The Customs Act, 1962 is an Act to consolidate and amend the law relating to Customs. The object of the Act is to regulate the import and export of goods, into and from the shores of India, or otherwise, and determine the customs duty payable. It also attempts to fill the lacunae of the previous customs legislations viz. the Sea Customs Act and the Land Customs Act. It also aims to counter the difficulties that have emerged over the years due to the changing economic and financial conditions; amongst them it proposes to tackle the increasing problems of smuggling both in and out of the country. The Act aims to sternly and expeditiously deal with smuggled goods, and curb the dents on the revenue thus caused. In order to deal with the menace of smuggling, the authorities are enabled to detect, con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty and on which duty has not been paid. The term duty is defined in Section 2(15) to mean a duty of customs, leviable under the Act. The term import is defined with its grammatical variations and cognate expressions to mean bringing into India from a place outside India. Imported goods mean any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption. The definition of the term importer in Section 2(26) is also relevant. The earlier definitions in Section 2, Clauses (23) and (25) are not relevant for our purpose. Proper officer , in relation to any functions to be performed under this Act means the officer of customs who is assigned those functions by the Board {Section 2(34)}. The words tariff value are defined in Section 2(40). The word value is defined in Section 2, Clause 41. 19. Chapters II and III of the said Act contain provisions about the classes of officers of customs, appointment of customs ports, airports, etc.. Chapter IV enlists the prohibitions on importation and exportation of goods. Chapter IVA enables detection of illegally imported goods and prevention of the disposal there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 20 which has been substituted by Act 32 of 1994 deals with re-importation of goods. Then Section 21 provides for dealing with goods derelict, wreck, etc., as imported goods. Section 22 provides for abatement of duty on damaged or deteriorated goods. Section 23 deals with remission of duty on lost, destroyed or abandoned goods. Section 24 confers power to make rules for denaturing or mutilation of goods. Then comes Section 25 which reads thus: 25. Power to Grant Exemption from Duty. (1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon. (2) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case, exempt from payment of duty, for reasons to be stated in such order, any goods, of strategic or secret nature, or for charitable purpose, on which duty is levia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thstanding anything contained in any judgment, decree or order of any Court, tribunal or other authority, no suit or other proceedings in respect of such mineral oils shall be maintained or continued in any Court, tribunal or other authority. (8) Notwithstanding the exemption provided under sub-section (7), no refund of duties of customs paid in respect of the mineral oils specified therein shall be made. A bare perusal of sub-section (1) of Section 25 would show that the power to grant exemption from the duty is to be exercised in public interest. It is to be exercised by issuing a Notification in the Official Gazette. That must clearly indicate that goods may be exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the Notification. The goods of any specified description can be exempt from the whole or any part of duty of customs leviable thereon. Then comes sub-section (2), which has been substituted by Act 32 of 2003, which enables the Central Government and on being satisfied that it is necessary for the public interest so to do, issue a special order exempting from payment of duty, under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from, or paid by, him and the incidence of such duty and interest, if any, paid on such duty had not been passed on by him to any other person : Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section and the same shall be dealt with in accordance with the provisions of sub-section (2): Provided further that the limitation of one year or six months, as the case may be, shall not apply where any duty and interest, if any, paid on such duty has been paid under protest. Provided also that in the case of goods which are exempt from payment Of duty by a special order issued under sub-section (2) of section 25, the limitation of one year or six months, as the case may be, shall be computed from the date of issue of such order. Explanation I : For the purposes of this sub-section , the date of payment of duty and interest, if any, paid on such duty , in relation to a person, other than the importer, shall be construed as the date of purchase of goods by such person. Explanation II : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be after the issue of the notification, and, if it is not sitting, within seven days of its reassembly, and the Central Government shall seek the approval of Parliament to the notification by a resolution moved within a period of fifteen days beginning with the day on which the notification is so laid before the House of the People and if Parliament makes any modification in the notification or directs that the notification should cease to have effect, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be, but without prejudice to the validity of anything previously done thereunder. (5) For the removal of doubts, it is hereby declared that any notification issued under clause (f) of the first proviso to sub-section (2), including any such notification approved or modified under sub-section (4), may be rescinded by the Central Government at any time by notification in the Official Gazette. The various sub-section s of Section 27 have to be read together and harmoniously with other sections of the Act so as to make a consistent whole of the enactment and the power to deal with refund application or clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e vessel or the aircraft by which the goods have been shipped for importation into India is expected to arrive within thirty days from the date of such presentation. (4) The importer while presenting a bill of entry shall at the foot thereof make and subscribe to a declaration as to the truth of the contents of such bill of entry and shall, in support of such declaration, produce to the proper officer the invoice, if any, relating to the imported goods. (5) If the proper officer is satisfied that the interests of revenue are not prejudicially affected and that there was no fraudulent intention, he may permit substitution of a bill of entry for home consumption for a bill of entry for warehousing or vice versa. 21. Section 46 falls in Chapter VII, titled as Clearance of imported goods and export goods. The importer shall make entry thereof by presenting electronically to the proper officer a bill of entry for home consumption or warehousing in the prescribed form. 22. We find, on a harmonious reading of all provisions and right up to Chapter XIV that reliance by Mr. Jetly on the same is wellplaced. It is clear from a reading of these provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Act not to reject the respondent's application for refund on the ground that it is time barred and to dispose it of on merits. 6. In this appeal we are not concerned either with the maintainability of the writ petition or its merits. The only contention raised and which we are considering is whether the direction given by the High Court that the Customs Authorities shall not reject the refund application on the ground that it is time barred , is valid in law. With respect we think that it is not. 9. Section 27 of the Customs Act provides for claims for refund of duty. The section has been substituted by a new section by Central Act 40 of 1991 (with effect from September 20, 1991). The amended Section 27 severely curtails the right to refund but for the purpose of this appeal, it is not necessary to refer to that aspect. Suffice it to say that sub-section s (1) and (2) of Section 27 (both before and after amendment) provide for filing an application for amendment within a period of six months of the payment of duty except in a case where it has been paid under protest. What is relevant herein is sub-section (4) of unamended Section 27 and sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vil court. No such delegation or conferment can ever be conceived. We are, therefore, of the opinion that the direction contained in clause (3) of the impugned order is unsustainable in law. When we expressed this view during the hearing Mr. Hidayatullah requested that in such a case the matter be remitted to the High Court and the High Court be left free to dispose of the writ petition according to law. 23. Now we proceed to reproduce the two Notifications: {Notification No.102/2007Cus., dated 14-9-2007} Exemption from special CVD to all goods imported for subsequent sale when VAT/Sales Tax Paid by importer. In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the goods falling within the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) when imported into India for subsequent sale, from the whole of the additional duty of customs leviable thereon under sub-section (5) of section 3 of the said Customs Tariff Act (hereinafter referred to as the said additional duty). 2. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing conditions are fulfilled: (a) the importer of the said goods shall pay all duties, including the said additional duty of customs leviable thereon, as applicable, at the time of importation of the goods; (b) the importer, while issuing the invoice for sale of the said goods, shall specifically indicate in the invoice that in respect of the goods covered therein, no credit of the additional duty of customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 shall be admissible; (c) the importer shall file a claim for refund of the said additional duty of customs paid on the imported goods with the jurisdictional customs officer before the expiry of one year from the date of payment of the said additional duty of customs; (d) the importer shall pay on sale of the said goods, appropriate sales tax or value added tax, as the case may be; (e) the importer shall, inter alia, provide copies of the following documents along with the refund claim: (i) document evidencing payment of the said additional duty; (ii) invoices of sale of the imported goods in respect of which refund of the said additional duty is clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Schedules. Section 3 enables levy of additional duty equal to excise duty, sales tax, local taxes and other charges. That Section reads thus: 3. Levy of additional duty equal to excise duty.( 1) Any article which is imported into India shall, in addition, be liable to a duty (hereafter in this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article: Explanation .- In this sub-section , the expression the excise duty for the time being leviable on a like article if produced or manufactured in India means the excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India or, if a like article is not so produced or manufactured, which would be leviable on the class or description of articles to which the imported article belongs and where such duty is leviable at different rates, the highest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfied that it is necessary in the public interest to levy on any imported article an additional duty as would counterbalance the excise duty leviable on any raw materials, components and ingredients of the same nature, then, it should proceed to act in terms of these sub-section s and levy an additional duty. Sub-section (5) enables counterbalancing by the above Act of sales tax, value added tax, local tax or any other charges. 27. By sub-section (6) of Section 3 it is clarified that the provisions of the said Act and the Rules and Regulations made thereunder, including those relating to drawbacks, refunds and exemption from duties shall, so far as may be, apply to the duty chargeable under this section as they apply in relation to the duties leviable under that Act. 28. Therefore, though this Act enables the levy of the additional duty equal to excise duty, sales tax, etc., eventually it is an Act to consolidate and amend the law relating to customs duty. The duties which are levied have then to be specified and for effective and proper recovery. Even when there is any claim made for drawback, refund and exemption, it is the substantive law, namely, the Customs Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Maharashtra, (1975) 35 STC 571 and other decisions are authority on the question that in matters which deal with substantive rights, such as imposition of penalties and other provisions that adversely affect statutory rights, the parent enactment must clearly impose such obligations; subordinate legislation or rules cannot prevail or be made, in such cases. The imposition of a period of limitation for the first time, without statutory amendment, through a notification, therefore could not prevail. 32. On a perusal of these observations, it is apparent that the intent of the additional duties is to counterbalance the local taxes or other charges leviable on a like article. Then comes the aspect of exemption in relation to which the Hon'ble High Court observes that the intent is to allow a refund of the special additional customs duty because the importer has suffered the incidence of SADC on import. That was meant to counterbalance the sales tax/VAT leviable on a like article in India. These very articles have been sold and the importer then has to bear the burden even of the sales tax/VAT on sale of these goods. 33. It is submitted that the Hon'ble High Court of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that behalf is to be made within a specified period, then, that cannot be said to be excessive and arbitrary, far from being unfair, unjust and unreasonable. It cannot be termed illegal as well for the simple reason that sub-section (1) of Section 27 of the Customs Act, 1962, which enables claiming of refund by making an application itself speaks of one year outer limit. That is never challenged, including in the present proceedings. That the period of one year commences from the payment of the duty. If that is how Section 27 is worded and every duty is included in its ambit and scope, then, an application seeking refund of the same has to abide by it, including the bar of limitation contained therein. That is how consistent with that provision even the special exemption Notification carries the same stipulation or condition. We do not see how insistence on complying with it can be said to be imposing a unreasonable, unfair and unjust restriction. Once the nature of the right is considered, then, all the more we are unable to agree with Mr. Patil. There is no vested, much less absolute right in the petitioners to seek refund. Even a refund must be within the framewor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be declared ultra vires because the petitioners desire to brush it aside. The petitioners have accepted the position that if this exemption Notification had not been issued in exercise of the statutory power, no exemption could have been claimed at all. In these circumstances, merely because a condition is imposed to file a refund application and which is in the nature of a time-bar or limitation, that cannot be held to be onerous, excessive and therefore ultra vires Article 14 of the Constitution. 35. We are of the view that it is entirely for the Central Government to take a decision with regard to exemption, the conditions to be imposed therein and whether those conditions ought to be fulfilled within a time limit. These are matters best left to the Central Government. The Central Government having exercised the powers in terms of the statutory provisions, then, that must govern the whole field. Just as exemption flows from the power to exempt, equally the refund flows from the power to grant such refund and makes it admissible. Both powers flow from the statute, namely, the Customs Act, 1962. It is that statute and the other one which envisages levy, imposition and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39. Mr. Patil, appearing before us, draws support from all the Judgments cited and essentially on the reasoning that refund in the present case could be claimed only after the subsequent sale of the imported goods. If they had not been sold, the refund could not have been claimed at all. If the exemption Notification grants an exemption in the manner noted by us, then, it could have been granted only in that mode and not another. In the present case, the exemption Notification states that the importer shall file a claim for refund on the additional duty of customs paid on the imported goods before the expiry of one year from the date of payment of additional duty of customs. The exemption is granted from the payment of this additional duty. That can be availed of provided the goods are imported into India for subsequent sale. However, all the conditions envisage first payment, second a stipulation that when such goods are sold, invoice must indicate that no credit for this additional duty of customs shall be admissible. Thirdly, if at all a refund claim is to be laid, it must be filed within one year from the date of payment. Only in these circumstances and if the goods are sold, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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