Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Home Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles News Highlights
Extracts
Home List
← Previous Next →

Tarajyot Polymers Ltd. Versus Union of India, The Commissioner of Customs (Appeals) , The Deputy Commissioner of Customs, DFIA

2017 (11) TMI 494 - MADRAS HIGH COURT

Duty Free Import Authorisation Scheme (DFIA) - Petitioner, a transferee of DFIA, purchased the scrips and utilised the same for discharging duty liability against various Bills of Entry under N/N. 40 of 2006 and 17 of 2009 dated 19.2.2009 - demand of additional duty along with interest from the date of clearance not be recovered from it on the materials imported under various bills of entry as per N/N. 40 of 2006 as amended by condition (iiia) of N/N. 17 of 2009 Customs along with penalty u/s 11 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d 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 b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 19.2.2009 only. - The amendment applied retrospectively would no doubt destroy the vested right of the petitioner and substantively so. - The Supreme Court has consistently upheld the position that any amendment should seek to correct an error that was contained in the original enactment. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ch of eight Writ Petitions have been filed at the instance of Transferees of Duty Free Import Authorization (in short, 'DFIA') praying for the issue of a Writ of declaration declaring section 93 of Finance Act 2009 ultra vires the Foreign Trade (Development) Act, 1992, the Foreign Trade Policy and relevant Hand Book of Procedure, the Customs Act, 1962, Notification No.40/2006 CUS dated 01.05.2006 and Articles 14, 19(1)(g), 21 and 265 of the Constitution of India. 2. The facts as relating .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ication No.40 of 2006 and 17 of 2009 dated 19.2.2009. Show cause notices were issued by the Additional Commissioner Of Customs dated 11.1.2011 calling upon the petitioner to show cause why additional duty along with interest from the date of clearance not be recovered from it on the materials imported under various bills of entry as per Notification 40 of 2006 as amended by condition (iiia) of Notification No.17 of 2009 Customs along with penalty under section 114-A of the Customs Act 1962. 3. T .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

iled 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he Customs, Central Excise and Service Tax Appellate Tribunal (CESTAT) at Chennai. Along with the appeal, an application has been filed praying for waiver of pre-deposit. As against the order of the Commissioner (Appeals) dated 14.2.2013, Writ Petitions in W.P.No. 8602, 8792 and 8793 of 2013 appear to have been filed seeking an identical prayer as that sought for in the affidavit filed in support of the present writ petitions that were dismissed on 9.4.2013 on the ground that the prayer was infr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n Trade (Development) Act, 1992, the Foreign Trade Police and relevant Hand Book of Procedure, the Customs Act, 1962 Notification No.40/2006 Cus dated 01.05.2006 as amended from time to time and Articles 14, 19(1)(g), 21 and 265 of the Constitution of India, learned counsel for the petitioner would, at the start of the hearing, restrict the challenge solely to the retrospective operation of Notification 17 of 2009 advancing arguments only on this aspect of the matter. This order thus, considers .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

indigenously could still avail of the benefit of the notification. 7. On 1.4.2007, an amendment was made to the Foreign Trade Policy requiring the transferees of DFIA 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 wa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 on the department to establish that the original exporter, i.e., the transferor of the scrip has, in fact, availed CENVAT credit. In the pre .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssment) Sales Tax 2006 (206) ELT 6 (SC) (iii) Jayam & Co. V. Assistant Comissioner 2016 SCC Online SC 909 (iv) Shabina Abraham V. Collector of Central Excise & Customs 2015 (322) ELT 372 11. Per contra, the respondent in its counter would mainly contend that the petitioner has suppressed the availment of CENVAT credit by BBI on the inputs used for the manufacture of the exported goods. With respect to the competence of Parliament to enact legislation with respect to fiscal obligation, th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. The Foreign Trade Policy for the period 2004 2009 extended a duty free import authorisation allowing duty free imports of inputs used in the manufacture of products for export. The scheme came into force from 01.05.2006. Para 4.4.7 of the scheme as it originally stood stipulated that CENVAT Credit Facility was available for the inputs either imported or procured 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 p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing 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 obliga .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ogether with interest at the rate of fifteen per cent per annum from the date of clearance of the said materials; (iiia)that in respect of imports made after the discharge of export obligation in full, if facility under rule 18 (rebate of duty paid on materials used in the manufacture of resultant product) or sub-rule (2) of rule 19 of the Central Excise Rules, 2002 or CENVAT Credit under CENVAT Credit Rules, 2004 has been availed, then the importer shall, at the time of clearance of the importe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

are imported against an authorisation transferred by the Regional Authority, or (b)the imported materials are transferred with the permission of Regional Authority, then the importer shall pay an amount equal to the additional duty of customs leviable on the imported materials but for the exemption contained herein, then the imported materials may be cleared without furnishing a bond specified in this condition and the additional duty of customs so paid shall be eligible for availing CENVAT Cred .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ner of Customs as the case may be, then the imported materials may be cleared without furnishing a bond specified in condition (iiia); (2)in condition (iv), for the words, figures, letters and brackets Special Economic Zone as specified in the notification issued under Section 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) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

arge 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. Notification 17/2009 thus imposed an additional condition and one tha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

vant portions of which are extracted below: 9. It has been already noticed that by section 5 1 of the Finance Act, 1982, amendments made to rules 9 and 49 have been given retrospective effect from the date on which the Rules came into force, that is to say, from February 28, 1944 35. We may now deal with the challenge made to the retrospective operation of amendments of Rules 9 and 49 on another ground. In order to appreciate the ground of such challenge, we may once more refer to section 51 of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

after amendment. The Explanation does not however, provide for the penalties and confiscation of goods. It is the contention of the appellants that as the appellants had not complied with the requirements of the amended rules 9 and 49, they would be subjected to penalties and their goods would be confiscated under the amended rules 9 and 49 read with rule 173Q of the Rules with retrospective effect. It is, accordingly, submitted on behalf of the appellants that the amendment of these two rules .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 penalt .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

amendment. The rationale as aforesaid is applicable on all fours to the present case. 17. In a recent judgement in the case of Jayam & Co. Vs. Assistant commissioner and another (2016 SCC OnLine SC 909), a Division Bench of the Supreme Court examined the challenge to retrospective legislation quoting from its earlier pronouncements in various cases. The Bench notes that Legislature undoubtedly has the power to enact legislation retrospectively. The broad principles laid down by the Court in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

minatory or provides no procedural machinery for assessment and levy of tax or that is confiscatory, Courts will be justified in striking down the impugned statute as unconstitutional; (v) The other factors being period of retrspectivity and degree of unforseen or unforseeable financial burden imposed for the past period; (vi) Length of time is not by itself decisive to affect retrospectively." 18. Reference was also made to its earlier judgements in the cases of CIT(Central) New Delhi vs V .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ity otherwise than as regards matters of procedure. The general rule as stated by Halsbury in Vol.36 of the Laws of England (3rd Edn.) and reiterated in several decisions of this Court as well as English courts is that 'all statutes other than those which are merely declaratory or which relate only to matters of procedure or of evidence are prima facie propsective and retrospective operation should not be given to a statute so as to affect, alter or destroy an existing right or creat a new l .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

& 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 (2 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

owever, in view of section 19(20) inserted by way of amendment, he would now be entitled to ITC of ₹ 9.50. This is clearly a provision which is made for the first time to the detriment of the dealers. Such a provision, therefore, cannot have retrospective effect, more so, when vested right had accrued in favour of these dealers in respect of purchases and sales made between January 01, 2007 to August 19, 2010. Thus, while upholding the vires of sub-section (20) of section 19, we set aside .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. 33. This Court has, in a plethora of judgments, referred to the aforesaid principles. Suffice it to quote from one of such judgments of this Court in Commissioner of Sales Tax Commissioner, Uttar Pradesh v. Modi Sugar Mills, 1961 (2) SCR 189 at 198:- In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interprete .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

waran 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 interm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

could be withdrawn in 2003. Besides the Court in J.K. Cotton Spinning & Weaving Mills Ltd's case rejected the contention of the Union of India that Section 51 of 1982 Finance Act by which the amendments were made to Rules 9 and 49 overrode the provisions of Section 11A saying 'if the intention of the legislature was to nullify the effect of Section 11A,.., the legislature would have specifically provided for the same'. Similarly our decision in National Agricultural Cooperative M .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ce, had, by the expiry of the period provided become barred". In the present case Section 154(4)specifically and expressly allows amounts to be recovered within a period of thirty days from the day the Finance Bill, 2003 received the assent of the President. It cannot but be held therefore that the period of six months provided under Section 11A would not apply.' 23. The Supreme Court, in RC Tobacco's case has culled out the situation where retrospective operation of an amendment wo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Forum
what is new what is new
  ↓     bird's eye view     ↓  


|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version