By TIOL News Service

BANGALORE, APRIL 09, 2018: THE petitioner entered into a contract dated 27.07.2015 with its foreign supplier M/s. Aavanti Industries Private Limited, Singapore for import of 10,000 MTs of Crude Palm Oil of Edible Grade. Accordingly, the vessel carrying the aforesaid imported goods arrived at Mangalore port on 17.09.2015 around 1600 hours. The petitioner had filed Bills of Entry dated 16.09.2015 seeking clearance of the subject goods for home consumption.

The subject goods merited classification under CH 15111000 of the CTA, 1975 and are covered by Entry 51-II (A) of the notification No.12/2012-Cus dated 17.03.2012 whereby the petitioner was liable to pay duty at 7.5%. Accordingly, the petitioner filed the aforesaid four Bills of Entry claiming classification and rate of duty at 7.5%. The same was assessed on 16.09.2015 and the petitioner was required to deposit duty of Rs.2,64,95,907/- in terms of the Bills of Entry and TR-6 challans were generated by EDI Service Centre, Mangalore.

It is also not in dispute that the entry inward was granted to the vessel at 22.45 hours on 17.09.2015 .

It is the grievance of the petitioner that the Department instead of clearing the aforesaid Bills of Entry, recalled the said Bills of Entry and reassessed the same, behind the back of the petitioner, on the alleged basis that the rate of duty on the subject goods has increased by 5% in terms of notification No.46/2015-Cus dated 17.09.2015 and the duty payable is at 12.5% and the petitioner was asked to deposit the duty at the enhanced rate in terms of the Bills of Entry and TR-6 challans generated by EDI Service Centre, Mangalore on 18.09.2015.

Aggrieved by the said enhanced demands made by the respondents on 18.09.2015, the petitioner is before this Court.

The petitioner's arguments are two fold, one, that no opportunity was provided by the Department while issuing the revised demand enhancing the duty to 12.5% from 7.5% and, two, the notification 46/2015-Cus which prescribes the rate of duty at 12.5% substituting the earlier duty fixed at 7.5% is not applicable to the subject goods.

Furthermore, the subject goods were imported on 17.09.2015 at 16 hours before the notification No.46/2015 has come into effect inasmuch as the notification, on the basis of which the revised demand was made enhancing the rate of duty was not available for the department to enhance the duty ; thatthe notification would come into force only after satisfying two conditions as contemplated under Section 25(4) of the Act namely, that it shall be published in the official gazette and should also be offered for sale on the date of its issue by the Directorate of Publicity and Public Relations of the Board, New Delhi.

It is submitted that in terms of the information received through RTI application from the department concerned, the said notification No.46/2015-Cus dated 17.09.2015 was received in the sale counter of the department from the Government of India Press, Mayapuri, Ring Road, New Delhi on 21.09.2015 at 3.30 p.m., and put on sale to the General Public on 21.09.2015. Thus, it is submitted that the second condition specified under Section 25(4) of the Act was not complied with, as on 17.09.2015 and, therefore,the notification No.46/2015-Cus has come into force only on 21.09.2015.

Reliance is placed on the apex court decision in PARAM INDUSTRIES LTD., =  2015-TIOL-140-SC-CUS .

The counsel for the respondent/department submitted that Section 25(4) of the Act was amended by Finance Act, 2016 (28 of 2016) w.e.f. 14.05.2016 and whereby second condition of offering the notification for sale on the date of its issue by the Directorate of Publicity and Public Relation Board, New Delhi has been omitted.

Inasmuch as the amended provisions of section 25(4) of the Customs Act reads thus:

"(4) Every notification issued under subsection (1) or sub-section 2(A) shall, unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette."

The High Court considered the submissions made by both sides and after extracting section 25 of the Customs Act and the amendment made thereto observed –

++ A bare reading of these provisions makes it clear that the amended Act 28 of 2016 has come into force with effect from 14.05.2016. It is trite law that any amendment to the Statute is prospective unless it is explicitly made retrospective. It is not disputed by the Revenue that this amendment is prospective. Such being the position, the provisions of Section 25(4) as it stood prior to 14.05.2016 shall be made applicable to the facts on hand. If so, the two conditions contemplated under Section 25(4) of the Act has to be satisfied for the notification issued under Section 25(1) of the Act to come into force. The information placed on record i.e., the letter of the Government of India, Department of Publication, Civil Lines, Delhi on the information sought by the petitioner under the RTI Act, 2005 reads thus:

"With reference to the above, it is informed that the copy of Gazette of India containing notification No .46/2015–customs dated 17.09.2015 was received on 21.09.2015 at 3.30 PM at Kitab Mahal, Sale Counter of this Department from Govt. of India Press, Mayapuri, Ring Road, New Delhi and put on sale to the general public on 21.09.2015…”

++ It is clear that the notification was offered to sale to the general public on 21.09.2015, the second condition of Section 25(4) not having fulfilled, the said notification is not available for the department to enhance the duty from 7.5% to 12.5%."

++ In such circumstances, it is held that notification may even though published on the date when the copies were cleared, it was not justified and lawful on the part of the department to claim the differential amount of duty on the basis of the said notification. This judgment [PARAM INDUSTRIES LTD (supra)] is squarely applicable to the facts of the present case.

Concluding that the demand made by the department is not justified, the claim of differential amount of duty was set aside and the Writ Petitions were allowed.

(See 2018-TIOL-638-HC-KAR-CUS)