TMI Blog2019 (1) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... ceed and have to be allowed for the imports into India were made on or after 11th February, 2016, i.e., the date on which the Notification has been published in the Official Gazette. Notification is not being given retrospective effect to make it effective to imports made from a date prior to publication in the Official Gazette. Notification was effective from the date when it was published in the Official Gazette and accordingly would apply to imports made on or after 11th February, 2016. Notification No.38/2015-2020 dated 5th February, 2016 published in the Official Gazette on 11th February, 2016 was in force on the date of import of goods by the petitioners as the import was post publication in the Official Gazette on 11th February, 2016. We would not be giving retrospective effect to Notification No.38/2015-2020, when we hold that it would apply to all import on or after 11th February, 2016 - The argument that the respondents have given retrospective effect to the Notification No.38/2015-2020, which can be only prospective, falters and is rejected. Notification No.38/2015-2020 even if it was published in the Official Gazette on 11th February, 2016 had specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... import and trading of various items including mild steel varieties like Hot Rolled Coils, Cold Rolled Coils, Hot Rolled Steel Plates, Pre Painted Steel Coils etc. 2. Mild Steel Items fall under Chapter-72 of the Indian Trade Clarification (Harmonized System) ( ITC-HS , for short)-2012, Schedule-I of the Foreign Trade Policy, 2015-20. These items were freely importable. 3. On 5th February, 2016, Notification No.38/2015-2020 ( Notification No. 38/2105-2020 , for short) was issued by the Ministry of Commerce and Industry, Government of India, Directorate General of Foreign Trade by way of trade notice fixing Minimum Import Price ( MIP , for short) as per the annexure by amending Import Policy Conditions against Codes under Chapter-72 of the ITC (HS)-2012, Schedule-I. Notification No. 38/20152020 (dated 5th February, 2016) was subsequently published vide SO No. 391(E) in the Gazette of India on 11th February, 2016. Notification as published in the Official Gazette reads:- Ministry of Commerce and Industry (Department of Commerce) (DIRECTORATE GENERAL OF FOREIGN TRADE) Notification New Delhi, the 5th February, 2016 No. 38/2015-2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from MIP condition subject to paragraph 1.05 (b) of the Foreign Trade Policy, 2015-2020. As per the petitioners, the date of notification should read as 11th February, 2016, i.e. the date on which the Notification No.38/2015-2020 was published in the Official Gazette and not 5th February, 2016, i.e., the date on which the trade notice was published. In support of the said contention, it is submitted that the respondents could not have imposed duties and restrictions retrospectively by way of subordinate legislation. Further, the Directorate General of Foreign Trade ( DGFT , for short) is not authorized to issue any notification, as this power under the FT Act vests exclusively with the Central Government. 5. The petitioners proclaim that they had entered into contracts with exporters from China and South Korea prior to 5th February, 2016. These contracts for import of different items were as per the prevailing international rates. They have relied upon the data of London Metal Exchange ( LME ) for the same. For the purpose of record, we have extracted details of the contracts entered into by the petitioners for import of mild steel items in the table below:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Foreign Trade Policy, 2015-2020, paragraphs 2.17 and 9.11 of Handbook of Procedure, 2015-2020. By Trade Notice No.17/2016 dated 10th February, 2016, the respondents had point-wise clarified six queries raised by the importers, including the requirement of registration of the irrevocable LoC with the jurisdictional regional authority against computerized receipt within fifteen days of imposition of restriction/regulation. However, by another Trade Notice No. 03/2016 dated 11th April, 2016 timeline for importers to register irrevocable LoCs with jurisdictional regional authority was extended till 30th April, 2016. However, it is not disputed that Notification No.38/2015-2020 though dated 5th February, 2016 and put up on the web-site on 5th February, 2016 was published in the Official Gazette on 11th February, 2016. 7. Sub-sections (1) and (2) of Section 3 of the FT Act read as under:- 3. Powers to make provisions relating to imports and exports. - (1) The Central Government may, by Order published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. (2) The Central Government ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislation is published or made, it has to be publicised as was emphasized by the Supreme Court in B.K. Srinivasan and Others versus State of Karnataka and Others, (1987) 1 SCC 658 in the following words:- 15. There can be no doubt about the proposition that where a law, whether parliamentary or subordinate, demands compliance, those that are governed must be notified directly and reliably of the law and all changes and additions made to it by various processes. Whether law is viewed from the standpoint of the conscientious good man seeking to abide by the law or from the standpoint of Justice Holmes s unconscientious bad man seeking to avoid the law, law must be known, that is to say, it must be so made that it can be known. We know that delegated or subordinate legislation is all pervasive and that there is hardly any field of activity where governance by delegated or subordinate legislative powers is not as important if not more important, than governance by parliamentary legislation. But unlike parliamentary legislation which is publicly made, delegated or subordinate legislation is often made unobtrusively in the chambers of a Minister, a Secretary to the Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer and Another, AIR 1982 Ker 156 in which Sukumaran J. had highlighted the modes of publication after referring to the jurisprudence on the said subject and earlier decisions of the Supreme Court including decision in the case of Harla versus State of Rajasthan, AIR 1951 SC 467. 11. The Supreme Court in Union of India Anr. versus Ganesh Das Bhojraj, (2000) 9 SCC 461 , decided the reference to resolve conflict of ratios in Pankaj Jain Agencies versus Union of India and others, 1994 (5) SCC 198 and CCE versus New Tobacco Company, (1998) 8 SCC 282 on the question whether publication in the Official Gazette also mandates notification being made known and available to the public. We are not concerned with the said controversy in the present case for the issue raised in the present writ petitions is not whether publication in the Official Gazette was sufficient or the notification should have been made available to the public. The issue in the present cases is somewhat different. The contention of the petitioners is that the Notification No.38/2015-2020 though made public on 5th February,2016 was published in the Official Gazette only on 11th February, 2016, and theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication in the Official Gazette should also be the date in paragraph 2 which relates to LoCs. 16. Decision of the Supreme Court in Union of India and Others versus Asian Food Industries, (2006) 13 SCC 542 is illustrative and makes an interesting reading for it had decided two appeals, one preferred against the decision of the Delhi High Court in the case of M/s Agri Trade India Services (P) Ltd. and the other against the decision of the High Court of Gujarat in the case of M/s Asian Food Industries with contradictory final results. Decision of the Delhi High Court was set aside but decision of the Gujarat High Court was upheld though subject matter of litigation was a legal effect of the decision taken by the Central Government to ban export of pulses on 22nd June,2006, which decision was widely reported in print and electronic media, albeit the notification issued banning export of pulses for a period of six months in exercise of power under Section 5 of the FT Act was published in the Official Gazette on 27th June,2006. By another Notification on 4th July, 2006 published under Section 5 of the FT Act the Central Government had permitted export of pulses against irrevocable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from India and for matters connected therewith or incidental thereto. Former statute was the substantive enactment dealing with levy, incidence of charge and payment of customs duty. For the FT Act, the Central Government was empowered to publish their order vide notification in the Official Gazette for development and regulation of foreign trade and make provisions for prohibiting, restricting or otherwise regulating in all cases or specified classes of cases and subject to such exceptions as may be made by or under order of export and import of goods. Where an order has been made under sub-section (2) to Section 3 vide sub-section (3) to Section 3 of the FT Act, it would be deemed to be applicable to import and export of which has been prohibited under Section 11 of the Customs Act. All provisions of the Customs Act would have effect accordingly. On analysis of Section 11 of the Customs Act and the Notification dated 27th June, 2006 in exercise of power under Section 3 of the FT Act and published in the manner provided under Section 5 of the FT Act it was held that export of pulses was permissible till 27th June, 2006 and not thereafter. For deciding the date of export, Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006 i.e. after the Notification dated 22nd June, 2006 had been published in the Official Gazette. However, in the case of Asian Food Industries, the appeal preferred by the Revenue was dismissed with costs as the export had taken place in terms of Sections 16, 50 and 51 of the Customs Act before publication of the Gazette Notification on 27th June, 2006. Exemption granted on the basis of the date of issue or opening of the LoCs could be different and such exemption could be restricted to the LoCs opened prior to 22nd June,2006. 19. We would now refer to decision of the Supreme Court in Mangalore Refinery and Petrochemicals Limited versus Commissioner of Customs, Mangalore, (2016) 14 SCC 709, which had examined the expression import in the Customs Act after making a reference to sub-sections 22, 23 and 25 of Section 2 of the Customs Act which defines goods , import , imported goods , Section 12 dealing with dutiable goods, Section 13 dealing with duty on pilfered goods, Section 23 dealing with remission of duty on lost, destroyed and abandoned goods, Section 47 dealing with clearance of goods for home consumption and Rules 2(1)(f) and 4(1) of the Customs Valuation (Deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal is incorrect in law. The Tribunal has lost sight of the following first principles when it arrived at the aforesaid conclusion. First, it has lost sight of the fact that a levy in the context of import duty can only be on imported goods, that is, on goods brought into India from a place outside of India. Till that is done, there is no charge to tax. This Court in Garden Silk Mills Ltd. v. Union of India [Garden Silk Mills Ltd. v. Union of India, (1999) 8 SCC 744] , stated that this takes place, as follows: (SCC p. 752, paras 17-18) 17. It was further submitted that in Apar (P) Ltd. [ Union of India v. Apar (P) Ltd., (1999) 6 SCC 117 ] this Court was concerned with Sections 14 and 15 but here we have to construe the word imported occurring in Section 12 and this can only mean that the moment goods have entered the territorial waters the import is complete. We do not agree with the submission. This Court in its opinion in Sea Customs Act, 1878, S. 20(2), In re [Sea Customs Act, 1878, S. 20(2), In re, AIR 1963 SC 1760 : (1964) 3 SCR 787] SCR at p. 823 observed as follows: (AIR p. 1776, para 26) 26. Truly speaking, the imposition of an import duty, by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olds that the import of goods into India would commence from the date the goods cross into the territorial waters but continued till the duty was paid when the goods become part of the mass of goods within the country. The taxable event was reached when the goods reach the customs barriers and bill of entry of home consumption was filed. In the facts of Mangalore Refinery and Petrochemicals Limited (Supra), it was observed that no import duty was leviable when the goods shipped were lost, pilfered or destroyed before the import i.e. before the goods were out of customs and came into the hands of the importer. The quantity of goods stated in the bill of lading would reflect the quantity of goods in the purchase transaction between the parties and not the quantity of goods at the time and place of import . 21. The aforesaid ratio in both M/s Asian Food Industries and M/s Mangalore Refinery and Petrochemicals Limited (supra) is apt and would apply to the present writ petitions. Notification No.38/2015-2020 dated 5th February, 2016 published in the Official Gazette on 11th February, 2016 was in force on the date of import of goods by the petitioners as the import was post ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015-2020, which reads as under:- In case an export or import that is permitted freely under FTP is subsequently subjected to any restriction or regulation, such export or import will ordinarily be permitted, notwithstanding such restriction or regulation, unless otherwise stipulated. This is subject to the condition that the shipment of export or import is made within the original validity period of any irrevocable commercial letter of credit, established before the date of imposition of such restriction and it shall be restricted to the balance value and quantity available and time period of such irrevocable letter of credit. For operationalising such irrevocable letter of credit, the applicant shall have to register the Letter of Credit with jurisdictional Regional Authority (RA) against computerized receipt, within 15 days of the imposition of any such restriction or regulation. 24. Foreign Trade Policy, 2015-2020 is in the form of delegated or subordinate legislation. Object and purpose of the Foreign Trade Policy was examined in Asian Food Industries (supra). A careful reading of paragraph 1.05(b) shows that the clause states that where import or export was freely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein, i.e., the condition for registration. Conditions regarding opening of LOCs before 5th February, 2016 would over-ride and prevail over paragraph 1.05(b) of the Foreign Trade Policy 2015-2020, as provided and stated in the clause itself. Expression unless otherwise stipulated in paragraph 1.05(b) would apply as paragraph 2 of the Notification No.38/2015-2020 stipulates to the contrary. The factual position in the present writ petitions is identical in facts in the case of M/s Agri Trade India Services (P) Ltd. decided by the Supreme Court in M/s Asian Food Industries (supra), in favour of the Revenue. 26. In light of the aforesaid discussion, our conclusions are as under:- (i) That Notification No.38/2015-2020 dated 5th February, 2016 would be effective and applicable to imports made on or after 11th February, 2016, i.e., the date on which it was published in the Official Gazette. It would not apply to any imports as made on 10 th February or before. (ii) In terms of paragraph 2 of the Notification No.38/2015-2020 dated 5th February, 2016 effective from date of publication in the Official Gazette on 11th February, 2016, an exemption has been granted for impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s apparent that the Notification was issued by the Central Government, for the Notification states that Central Government hereby amends the import policy. The decision taken to amend and issue the Notification was of the Central Government. 29. Referring to the constitutional provisions, the Supreme Court in Delhi International Airport Limited versus International Lease Finance Corporation and Others, (2015) 8 SCC 446 had referred to Articles 77 and 163 of the Constitution and held that in respect of former Article, the Constitution stipulates that whenever executive action is taken by way of an order or instrument it shall be expressed to be taken in the name of the President in whom the executive power of the Union is vested. Under subsection (3) to Article 77, the President is to make Rules for more convenient transaction of business and allocation of same amongst Ministers. The Article does not provide for delegation of any power. Under the Government of India (Transaction of Business) Rules, 1961, the Government business is divided amongst Ministers and specific functions are allocated to different Ministries. We would not dilate further on Article 77 except notice tha ..... 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