TMI Blog2019 (9) TMI 1374X X X X Extracts X X X X X X X X Extracts X X X X ..... as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon. But, Section 25(4) has been amended and the pre-amended and post-amended clauses are tabulated hereunder - As per pre-amended Act of Section 25(4), every notification issued under sub-section (1) or sub-section (2A) is deemed to have come into force on the date of issue of notification by the Central Government for publication in the official gazette. Clause (b) of the pre-amended Act further says that notification shall also be published and offered for sale on the date of its issue by the Directorate of Publicity and Public Relations of the Board, New Delhi. Clause (b) of Section 25(4) of pre-amended Act is totally omitted and the notification is deemed to have come into force on the date of its issue by the Central Government for publication in the official gazette remained intact. Therefore, the pre-amended provisions of Sub-sections (1), (2A) and (4) are not reconciling with one another, but on account of deletion of Clause (b) of sub-section (4) of Section 25, a friction was created and both Sections 25(1), (2A) and 25(4) are not recon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioners are entitled to claim refund of the amount paid in excess of 30% of the original rate of customs duty as on the date of presentation of ex bond bills of entry for clearance of import goods for human consumption. Therefore, the respondents are liable to repay the excess amount which they collected from the petitioners beyond 30% of customs duty. Section 25(4) of the Customs Act is declared as arbitrary and contrary to Section 25(1) and (2A) of the Customs Act, 1962 and that the respondents are liable to repay the amount collected from the petitioners for clearance of import goods for home consumption beyond the original rate prevailing on the date of prior to date of publication of notification i.e. ₹ 2,88,16,200/- with interest paid by the petitioner from the date of deposit till the date of payment. Petition allowed. - WRIT PETITION NOs.4533 AND 4534 OF 2019 - - - Dated:- 28-9-2019 - THE HON BLE THE ACTING CHIEF JUSTICE C. PRAVEEN KUMAR AND THE HON BLE SRI JUSTICE M. SATYANARAYANA MURTHY For the Petitioner : SHANTHASREE ELIPE For the Respondent : B KRISHNA MOHAN ASST SOLICITOR GENERAL OF INDIA COMMON ORDER: (Per Hon ble Sri Justice M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further contended that the petitioner filed Six Ex-Bond Bills of Entry under Section 68 of the Customs Act, 1962, for clearance of the subject goods for home consumption viz., Bills of Entry Nos.5401915 and 5402027, both dated 01.03.2018 and Bills of Entry No.5419273, 5419349, 5419387 and 5419452, all dated 02.03.2018, the subject goods shipped had initially filed Warehousing Bill of Entry No.5295797 dated 21.02.2018. The subject goods merit classification under Customs Tariff Heading 15111000 of the Customs Tariff Act and the subject goods are covered by Entry 57 II(A) of the Notification No.50/2017-Cus dated 30.06.2017 and the petitioner was required to pay, 30% basic customs duty. Further, vide Notification No.50/2017-Cus dated 30.06.2017, rate of duty from 7.5% (basic customs duty) was increased from time to time and by the date of import, the rate of duty was 30%, vide Notification No.87/2017-Cus dated 17.11.2017. It is further contended that, the petitioner filed the aforesaid two Ex-Bond Bills of Entry both dated 01.03.2018 claiming classification and rate of duty under Section 68 of the Customs Act, 1962 seeking clearance of 2000 Metric Tonnes of subject goods for home c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and contrary to the intention of the Legislature in incorporating sub-sections (1) and (2A) of Section 25 of the Customs Act, as such there is any amount of contradiction between subsections (1)(2A) and (4) of Section 25 of the Customs Act. Giving effect to the notifications from the date of issue of notification, for publication in the gazette will have serious consequences if it is not published in the gazette on the same day and it is nothing but arbitrary exercise of power by the Legislature, creating confusion, and inconvenience to the persons dealing with the import business. Sub-section (4) of Section 25 of the Act is amended as per Notification No.28/2018-Cus, published on 06.03.2018 giving effect from 01.03.2018. The amendment of sub-section (4) of Section 25 is arbitrary, illegal and contrary to purport of sub-sections (1) and (2A) of Section 25 of the Act, seeks declaration as stated supra. In W.P.No.4534 of 2019, the petitioner sought for a consequential direction for refund of the amount of ₹ 2,88,16,200/- paid, with interest, as the petitioner paid in excess of the rate of customs duty applicable as on the date of presentation of Bills of Entry referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bills of Entry on 02.03.2018 for clearance of total quantity of 4000 Metric Tonnes of imported cargo for home consumption. By the date of presentation of Bills of Entry, the rate of customs duty is increased to 44% and consequently, petitioner is liable to pay customs duty as per prevailing rate @ 44%. A letter dated 07.03.2018 08.03.2018 was addressed to the Commissioner, Customs of Kakinada, claiming that the petitioner is liable to pay customs duty @ 44% vide Notification No.29/2018 dated 01.03.2018, paid customs duty @ 44% on six bills of entry under protest. Thus, the petitioner paid ₹ 1,44,08,102/- for the two Bills of Entry dated 01.03.2018 and ₹ 1,44,08,102/- on other bills (four bills of entry) reserving the right to claim refund in future. One of the contentions raised in the counter is that the petitioner is having efficacious alternative remedy provided under Section 128 and 129(A) of the Customs Act, 1962, by approaching the Commissioner (Appeals) and Tribunal. But the petitioner approached this Court at premature stage, even before the assessment is not finalized and on this ground also, the writ petitions are liable to be dismissed. The contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on No.20859 of 2015 dated 10.04.2017. Whereas, learned counsel for the respondents relied on the judgments of the Supreme Court in S.G. Jaisinghani v. Union of India AIR 1967 SC 1427, Global Energy Limited and another v. Central Electricity Regulatory Commission AIR 2009 SUPREME COURT 3194, Lala Hari Chand Sarda v. Mizo District Council and another AIR 1967 SC 829 and State of Rajasthan v. Nath Mal and Mitha Mal AIR 1954 SC 307 in support of their contention, while reiterating the grounds raised in the counter affidavit. Considering rival contentions, perusing the material available on record, the point that arise for consideration is: whether amended sub-section (4) of Section 25 of the Customs Act creates any amount of confusion, absurdity and contradiction to sub-sections (1) and (2A) of Section 25 of the Customs Act. If so, sub-section (4) of Section 25 of Customs Act be declared as arbitrary and illegal? In Re POINT: The major contention urged before this Court is that, Section 25(4) of Customs Act, 1962, introduced by Amendment Act 28 of 2018 is contrary to sub-section (1) of Section 25 of the Customs Act. According to sub-section (1), whenever, a notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. The Apex Court further observed that In construing a statutory provision the first and foremost rule of construction is the literary construction. All that the court has to see at the very outset is what does the provision say. If the provision is unambiguous and if from the provision the legislative intent is clear, the court need not call into aid the other rules of construction of statutes. The other rules of construction are called into aid only when the legislative intent is not clear. The role for interpretation of exemption clause is strict Construction. The law is well settled that a person who claims exemption or concession has to establish that he is entitled to that exemption or concession. A provision providing for an exemption, concession or exception, as the case may be, has to be construed strictly with certain exceptions depending upon the settings on which the provision has been placed in the Statute and the object and purpose to be achieved. If exemption is available on complying with certain conditions, the conditions have to be complied with. The mandatory requirements of those conditions must be obeyed or fulfilled exactly, though at times, some lati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/Assessee and it must be interpreted in favour of the revenue. (3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export Case (supra) stands over-ruled. The Apex Court in the above judgment considered various judgments as to how the provision in taxing statutes have to be interpreted including exemption notifications, concessions or exceptions in the statute to be given the subject/assessee. The Larger Bench judgment has clarified the rule of interpretation and as to the benefit to be given either to the assessee or to the revenue. In view of the law declared by the Apex Court in the judgments, which we referred in the earlier paragraphs, it is necessary to advert to certain provisions of the Customs Act. Keeping in view the specific contention, it is necessary to advert to Section 14 of the Act, which deals with valuation of goods. According to sub-section (2) of Section 14 of the Act, notwithstanding anything contained in sub-section (1), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts publication and the transactions prior to publication of notification are not governed by the amended provision. The Apex Court finally concluded that publication of the notification in the official gazette in the manner contemplated by Section 25(1) of the Act would be enough to import the liability to pay customs duty without regard to the inquiry into the fact whether the notification had actually come to the knowledge of the importer or not. Whatever will be the impact of publication in the Government Gazette, though the Gazette in spite of having been published, was not available, to be seen by the persons affected when criminal consequences are sought to be inflicted is a question which should be left open to be gone into in an appropriate case. Non-availability of the Gazette carrying the notification may provide the foundation for a defence plea of innocence where mens rea is an ingredient of offence committed by breach of notification. Even now, Section 25(1) and (2A) remained as it is and it specifically says that a notification is required to be published in the official gazette of the Central Government, to bring any provision into force. The word notification m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be published in the gazette, unless it is published, it is not deemed to have been came into force. The facts of the present case are almost identical to the facts of the above judgment. The main reason for publication in the gazette is only to attribute knowledge to the public or the persons dealing with imported goods, but not otherwise. Therefore, by applying the principle laid down in the above judgment, it can safely be concluded that sub-section (4) of Section 25 giving effect to the notifications under sub-sections (1) and (2A) from the date of issue of notification for publication is an arbitrary act of the Government. Learned Government Pleader Sri Y. N. Vivekananda and the learned Assistant Solicitor General for Central Government contended that, similar question was raised before Calcutta High Court in Ruchi Soya Industries Limited v. Union of India (referred supra) and the Calcutta High Court held against the petitioner. It is brought to the notice of this Court that the order passed by the Calcutta High Court was challenged before the Supreme Court in Ruchi Soya Industries Limited v. Union of India 2017 (350) E.L.T. A53 (SC) while granting leave, observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of acrylonitrile butadiene rubber (rubber product), Notification dated 31.12.2013 initiated sunset review and inter alia, called upon the interested parties to submit relevant information in the prescribed form, manner and furnish their views to the authority for its consideration. The Notification dated 31.12.2013 was published on the same date, however, it was made available (sent for distribution to Kitab Mahal Book) only on 06.01.2014 i.e. after the expiry of original notification. In those circumstances, the Court was called upon to decide the duty commencement notification dated 31.12.2013. Having considered the facts and circumstances of the case, the Apex Court was of the opinion that once a decision is taken by the Government on a particular date, that would be the relevant date and not the date on which it is made public. Therefore, initiation of sunset review by Notification dated 31.12.2013 is permissible and valid. The facts in the present case are slightly different, as the notification was not published on the same day when it was issued and even signed on the subsequent date by digital mode. In those circumstances, the notification is deemed to have been cam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -amended Act of Section 25(4), every notification issued under sub-section (1) or sub-section (2A) is deemed to have come into force on the date of issue of notification by the Central Government for publication in the official gazette. Clause (b) of the pre-amended Act further says that notification shall also be published and offered for sale on the date of its issue by the Directorate of Publicity and Public Relations of the Board, New Delhi. No doubt, Clause (b) of Section 25(4) of pre-amended Act is totally omitted and the notification is deemed to have come into force on the date of its issue by the Central Government for publication in the official gazette remained intact. Therefore, the pre-amended provisions of Sub-sections (1), (2A) and (4) are not reconciling with one another, but on account of deletion of Clause (b) of sub-section (4) of Section 25, a friction was created and both Sections 25(1), (2A) and 25(4) are not reconciling with one another. According to subsection (1) of Section 25 of the post-amended Act, the Central Government if satisfied that it is necessary in the public interest, may by notification issue an Official Gazette , exempt generally either a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of conflict between two sections of the same Act a more logical approach is indicated by LORD HERSCHELL, L.C.: You have to try and reconcile them as best as you may. If you cannot, you have to determine which is the leading provision, and which the subordinate provision and which must give way to the other. (vide Institute of Patent Agents v. Lockwood (1894) AC 347 p. 360 quoted in another connection in Chief Inspector of Mines v. Karam Chand Thapar AIR 1961 SC 838, Laxmi Devi v. Mukund Kanwar AIR 1965 SC 834 where Section 2(d) of the Transfer of Property Act was held to prevail over Section 5 of the same Act.) To avoid uncertainty and friction in the system which the statute purports to regulate, where words of a statute are clear, they must, of course, be followed but where alternative constructions are equally open, that alternative is to be chosen which will be consistent with the smooth working of the system which the statute purports to be regulating; and that alternative is to be rejected which will introduce uncertainly, friction or confusion into the working of the system. (vide Shannon Realities Limited v. St. Michel (Ville De) (1924) AC 185 pp.192 193 (PC), Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the State as used therein did not include the High Court staff and the subordinate judiciary, although the same words used in Article 311 include these categories. The narrower construction of these words in Article 371-D was adopted on the ground that a wider construction would encroach upon the principle of independence of judiciary enshrined in Articles 229 and 235 of the Constitution and the narrower construction ensures smooth working of the Constitution and harmony amongst its various provisions, the Court observed: Where two alternative constructions are possible, the court must choose the one which will be in accord with the other parts of the statute and ensure its smooth, harmonious working and eschew the other which leads to absurdity, confusion or friction, contradiction and conflict between its various provisions, or undermines or tends to defeat or destroy the basic scheme and purpose of the enactment. (vide Chief Justice of Andhra Pradesh v. L.V.A. Dikshitulu AIR 1979 SC 193). One of the contentions raised before this Court is that, when an Act leads to absurdity, the Court can declare such statute as illegal and drawn attention of this Court to the judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty is deemed to have come into force on the date of issue of such notification by the Central Government for publication in the Official Gazette. The issue of gazette notification, as contemplated under sub-section (1), (2A) of Section 25 is to bring the notifications to the notice of the public or to bring the same into effect on the date of publication. The purpose of gazette notification time and again is discussed by the Courts and intention of the Legislature of publication of any notification is only to give effect to particular provision or enactment, making the public to know about the Act or amendment, after any enactment passed by the State or Central Legislature. Unless, the public are aware about any enactment or amendment of any provision, they cannot be made liable for any acts or omissions which the public committed. Thus, the purpose of gazette notification is to import or attribute knowledge about amended provision or enactment to the public, to act within the limitations prescribed under the enactment or amended provisions. Otherwise, it amounts to keeping the public in dark and create confusion about the acts or omissions, if any, they committed. Take for an ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in terms of the decision taken by the Legislature. On this ground also, the notification cannot be said to have came into force on the date of its issue for publication in the gazette, but, it shall be deemed to have come into force on the date when it is published. Since the amended provision seriously affects the rights of the public, creating absurdity, confusion or friction, contradiction and conflict among the provisions i.e. sub-sections (1), (2A) and (4) of Section 25, it is difficult to uphold the notification issued by the Government as valid. Section 15 of the Act deals with date for determination of rate and tariff valuation of imported goods, it reads as thus; (1) The rate of duty and tariff valuation, if any, applicable to any imported goods, shall be the rate and valuation in force a. In the case of goods entered for home consumption under section 46, on the date on which a bill of entry in respect of such goods is presented under this section; b. In the case of goods cleared from a warehouse under section 68, on the date on which a bill of entry for home consumption in respect of such goods is presented under that section; c. In the case of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 28 of 2018. Publication of a notification in the final gazette is mandatory under Section 25(1) and Section 25(2A). The amendment to sub-section (4) of Section 25 creates any amount of confusion and causes inconvenience to the assessee and to the public at large as to the rate of duty payable on the imported goods and contrary to Section 25(1) and (2A). The main intention to issue notification in the gazette is to import or attribute knowledge about rate of duty payable on imported goods. But, at this stage, it is important to emphasize the requirement of issue of notifications granting exemptions or fixing rate of duty payable on the imported goods, the consequences are serious and nobody knows what is duty payable. In S.G. Jaisinghani v. Union of India and others (1967) 2 SCR 703, the Larger Bench of the Apex Court observed that the absence of arbitrary power is the first essential of the rule of law upon which our whole constitutional system is based. In a system governed by rule of law, discretion, when conferred upon executive authorities, must be confined within clearly defined limits. The rule of law from this point of view means that decisions should be made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... '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 Government or other official dignitary. It is, therefore, necessary that subordinate legislation, in order to take effect, must be published or promulgated in some suitable manner, whether such publication or promulgation is prescribed by the parent statute or not. It will then take effect from the date of such publication or promulgation. Where the parent statute prescribes the mode of publication or promulgation that mode must be followed. Where the parent statute is silent, but the subordinate legislatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment in Harla v. The State of Rajasthan 1952 (1) SCR 110, where the question was whether mere passing of a resolution without promulgation or publication in the gazette or other means to make the Act known to the public, was sufficient to make it law was decided. The Court observed as follows: what laws were operative in Jaipur regarding the coming into force of an enactment in that State. We were not shown any, nor was our attention drawn to any custom which could be said to govern the matter. In the absence of any special law or custom, we are of opinion that it would be against the principles of natural justice to permit the subjects of a State to be punished or penalised by laws of which they had no knowledge and of which they could not even with the exercise of reasonable diligence have acquired any knowledge. Natural justice requires that before a law can become operative it must be promulgated or published. It must be broadcast in some recognisable way so that all men may know what it is; or, at the very least, there must be some special rule or regulation or customary channel by or through which such knowledge can be acquired with the exercise of due and reasonable di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited (referred supra) so also the Division Bench judgment of High Court of Judicature at Hyderabad in Agarwal Industries Limited v. Union of India 2016 (5) ALT 795, the Court held that the date of publication for sale of notification is deemed to have been came into force. But on account of deletion of clause (b), amending sub-section (4) of Section 25, this Court is called upon to decide the arbitrariness and legality of the provision i.e. subsection 4 of Section 25, as it is totally contrary to the intention of the Legislature in incorporating sub-sections (1) and (2A) of Section 25 of the Act. When sub-sections (1) and (2A) of Section 25 made publication in the official gazette mandatory, such exemptions of customs duty is deemed to have come into force only from the date of notification in the official gazette, since publication of notification in the official gazette is the best method to attribute knowledge to the assessee or the public in general. Therefore, the judgment of the Gujarat High Court, affirmed by the Apex Court in Union of India v. M/s M.D. Overseas Limited (referred supra) has no direct bearing on the issue involved in this case. Further, learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. 1996(86)ELT477(SC) and other matters. Hence, it is difficult to agree that the decision in Pankaj Jain Agencies case was not helpful in deciding the question dealt with by the Court. Section 25 of the Customs Act empowers the Central Government to exempt either absolutely or subject to such conditions, from the whole or any part of the duty of customs leviable thereon by a notification in Official Gazette. The said notification can be modified or cancelled. The method and mode provided for grant of exemption or withdrawal of exemption is issuance of notification in the Official Gazette. For bringing Notification into operation, the only requirement of the section is its publication in the Official Gazette and no further publication is contemplated. Additional requirement is that under Section 159 such notification is required to be laid before each House of Parliament for a period of thirty days as prescribed therein. Hence in our view Mayer Hans George [1965]1SCR123 (supra) which is followed in the Pankaj Jain Agencies case: 1994ECR28(SC) represents the correct exposition of law and the Notification under Section 25 of the Customs Act would come into operation as soon as it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on issued for publication is an arbitrary exercise of power by the Legislature and it would cause not only inconvenience to the assessee or the person concerned with such notification, it is nothing but absurdity creating friction and it would also create any amount of confusion as to the rate of customs duty payable on the imported goods as on the relevant date of presentation of ex bond bills of entry for clearance for home consumption as per the Customs Act. Learned counsel for respondents placed reliance on various judgments of the Apex Court with regard to necessity of issuing notifications. In S.G. Jaisinghani v. Union of India and others (referred supra), the question before the Court as to constitutional validity of 'seniority rule' in Income-tax Service and 'quota' recruitment challenged as being violative of Articles 14 and 16 (1) of the Constitution of India. But, this judgment has no remote application to the present facts of the case, since it pertains to a service matter. Even in the facts of the above judgment, the notification was required to be published, but not published and that would not effect the rule. In the same judgment, the Apex Court m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06.03.2018 which is impugned in these writ petitions, published electronically on 06.03.2018. In view of the decision taken by the Government of India in terms of Section 8 of the Income Tax Act, to avoid physical printing of gazette notification to publish the same exclusively by electronic mode, so as to attribute knowledge to the public at large. The notification was signed by Rakesh Sukul on 06.03.2018 at 19:15:13 +05 30 . When notification needs to be signed digitally and only when the notification was uploaded and published in the official gazette, the same is made available for public. Perhaps, to avoid such contingency to give effect to the notification on the date of publication, the Government of India amended sub-section (4) of Section 25 of Customs Act, 1962. But, sub-section (1) and sub-section (2A) of Section 25 were not suitably amended and they remained as it is. Therefore, sub-sections (1), (2A) and (4) of Section 25 are running contra to one another, creating confusion in the minds of public at large, at least to the person who is dealing with the department. Thus, it is evident from the record that the notification was not signed at least by the competent author ..... X X X X Extracts X X X X X X X X Extracts X X X X
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