TMI Blog2017 (11) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... indigenously against the DFIA. While this is so, an amendment was brought in vide Finance No.2, Finance Act (2) dated 19.08.2009 as per which DFIAs issued between the period 01.05.2006 to 31.03.2007 attracted payment of additional customs duty/excise duty with effect from 01.05.2006 if the additional condition set out in the proviso was not complied with. The condition imposed vide the amending Notification is incapable of satisfaction retrospectively. The petitioner, by virtue of the burden imposed under the amendment is required to have furnished the details relating to availment of duty by the transferor of the scrip at the original instance. Apart from being practically unworkable, the amendment imposes a condition that nullifies a right that vested in the petitioner and creates a burden that the petitioner would be incapable of discharging. While the satisfaction of the condition post date of Notification is mandatory and, accepted to be so by the petitioner we agree that the retrospective application of the same is liable to be interfered with. In our view, condition (iii)(a) imposed in Notification 17 of 2009 must be read to have been enacted from and with effect from 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he time of clearance of the goods, the fact that CENVAT credit had been availed of by the original licence holders, Virgo Polymers (I) Pvt. Ltd, Big Bags India Pvt. Ltd., (BBI) Bangalore and others. Since there had been no declaration as called for in terms of clause (iii) of Notification 17 of 2009, additional Duty had not been levied. Upon notice, BBI had confirmed the position that CENVAT credit had indeed been availed of by them in respect of inputs procured indigenously and used for the manufacture of the goods exported. The show cause notice alleged that this fact was within the knowledge of the assessee since additional duty had been remitted in respect of earlier clearances under the DFIA scheme. 4. Despite objections to the show cause notice, orders-in-original were passed on 25.4.2011, 20.4.2011 and 25.4.2011 confirming the demand of additional duty along with interest alleging mis-declaration and suppression of the availment of CENVAT credit. Penalty was also imposed. Appeals were filed before the first appellate authority, the Commissioner of Customs (Appeals) who, vide his order dated 14.3.2013, dismissed the same for non compliance since the conditional interim ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to remit additional duty of customs and avail CENVAT credit thereupon in cases where CENVAT credit had been availed on inputs. This policy was not immediately given effect to and clearances were being effected in terms of Notification 40 of 2006 dated 1.5.2006. 8. It was only on 19.2.2009 that amending Notification No.17 of 2009 was issued inserting the offending proviso to clause iii(a) and amending the notification such that a licence holder availing CENVAT credit and importing goods after the discharge of export obligation was required to execute a bond undertaking to utilise the inputs for manufacture of dutiable goods within a period of six months. If the import was made by a transferee of the DFIA, additional duty was liable to be paid at the time of clearance unless a bond was executed at the time of clearance. 9. The thrust of the argument of Mr. Saravanan, learned counsel appearing for the petitioners is to the effect that the petitioner is not the original exporter and for this reason enforcing the condition retrospectively is unworkable in the case of the petitioner. Thus in the case of an assessee like the petitioner who is a transferee of the scrip, the onus is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The text of the Amendment Notification reads thus: Duty Free Import Authorisation Amendment to Notification No.40/2006-Cus. In exercise of the powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), the Central Government being satisfied that is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) Number 40/2006-Customs, dated the 1st May 2006 (Vide G.S.R. 260(E), dated the 1st May, 2006) namely:- In the said notification,- (1) for condition number (iii) the following conditions shall be substituted, namely :- (iii)that in respect of imports made before the discharge of export obligation in full, the importer at the time of clearance of the imported materials executes a bond with such surety or security and in such form and for such sum as may be specified by the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be, binding himself to pay on demand an amount equal to the duty leviable, but for the exemption contained herein, on the imported materials in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 76A of the Customs Act, 1962 (52 of 1962) the following words, figures and brackets shall be substituted, namely:- a Special Economic Zone notified under Section 4 of the Special Economic Zones Act, 2005 (28 of 2005) . (3)for condition number (v), the following condition shall be substituted, namely:- (v)that the export obligation as specified in the said authorisation (both in value and quantity terms) is discharged within the period specified in the said authorisation or within such extended period as may be granted by the Regional Authority by exporting resultant products, manufactured in India which are specified in the said authorisation: Provided that an Advance Intermediate authorisation holder shall discharge export obligation by supplying the resultant products to the exporter in terms of paragraph 4.1.3(ii) of the Foreign Trade Policy. (4)In the Explanation, after clause (iv), the following clause shall be inserted, namely:- (v)dutiable goods means excisable goods which are not exempt from central excise duty and which are not chargeable to nil rate of central excise duty. (Notification NO.17/2009-Cus., dated 19.02.2009) 14. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfiscation of goods but we do not think that in view of such non-mention in the Explanation excluding imposition of penalties for acts or omissions before amendment. such penalties can be imposed or goods can be confiscated by virtue of the amended provision of Rules 9 and 49. It will be against all principles of legal jurisprudence to impose a penalty on a person or to confiscate his goods for an act or omission which was lawful at the time when such act was performed or omission made, but subsequently made unlawful by virtue of any provision of law. The contention made on behalf of the appellants is founded on the assumption that under the Explanation to section 5 1, the penalties can be imposed and goods can be confiscated with retrospective effect. In the circumstances, the challenge to the amendments of Rules 9 and 49, founded on the provision of the Explanation to section 51 of the Finance Act, 1982, is without any substance and is rejected. 16. The Bench thus concludes that the levy of penalty would be unconstitutional in regard to an act or an omission that was lawful at the time of its performance or commission but rendered unlawful by virtue of a retrospective amendm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective and retrospective operation should not be given to a statute so as to affect, alter or destroy an existing right or creat a new liability or obligation unless that effect cannot be avoided without doing violence to the language of the enactment. If the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only.' 19. Applied to the present case, the amendment applied retrospectively would no doubt destroy the vested right of the petitioner and substantively so. 20. After an extensive discussion, the Bench, in the judgment in the case of Jayam Co (supra) concluded against the retrospective operation of the statute in the following terms: When we keep in mind the aforesaid parameters laid down by this court in testing validity of retrospective operation of fiscal laws, we find that the amendment in question fails to meet these tests. The High Court has primarily gone by the fact that there was no unforeseen or unforeseeable financial burden imposed for the past period. That is not correct. Moreover, as can be seen, sub-section (20) of section 19 is altogether new provision introduced for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Mr. Saravanan were sought to be distinguished by Mr.Sundareswaran by reference to the decisions of the Supreme Court in R C Tobacco (supra) as follows: 'In J.K. Cotton Spinning Weaving Mills Ltd. vs. Union of India (1987) Supp. SCC 350 relied upon by the petitioners, by virtue of the retrospective amendment of Rules 9 and 49 of the Central Excise Rules in 1982, commodities obtained at an intermediate stage of manufacture in a continuous process were deemed to have been 'removed' within the meaning of Rule 9(1) thereby making such intermediate products dutiable under the Act with effect from the commencement of the Act i.e. 1944. In this context the Court held that the amended Rules 9 and 49 would take effect subject to Section 11A. The decision is distinguishable. The circumstances in which the Court held that the demands for duty could only be limited to six months prior to the amendment was unquestionably different from those present in the case before us. What we have to consider here is whether the benefit granted in 1999 could be withdrawn in 2003. Besides the Court in J.K. Cotton Spinning Weaving Mills Ltd's case rejected the contention of the Union ..... X X X X Extracts X X X X X X X X Extracts X X X X
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