CX - An anomalous consequence cannot be contemplated much less countenanced in law: HC
By TIOL News Service
NEW DELHI, NOV 16, 2018: THE petitioner manufactured Gutkha and forwarded two consignments for export purposes. It claimed the benefit of excise rebate in terms of Rule 18 of the CER, 2002 read with notification 32/2008-CX(NT).
The Assistant Commissioner sanctioned the rebate but in Revenue appeal, the Commissioner(A) reversed the rebate granted on the premise that by a notification of 11.09.2012 issued by the Commissioner, Food Safety, Government of NCT of Delhi, the manufacture, storage, sale, transportation, display or distribution of Gutkha within the territory of Delhi was entirely prohibited.
The petitioner approached the Revisional Authority (viz. Central Government) who endorsed the view of the Commissioner (A).
Therefore, the petitioner is before the Delhi High Court and submits that the conditions of the notification of 11.09.2012 are entirely extraneous to the issue of grant or refusal of rebate which are wholly governed by Rule 18 of the 2002 Rules as well as the relevant procedure spelt out in Rules 2 and 3 of the Notification No.19/2004 - by virtue of its extension to pan masala (by a notification No.32/2008 dated 28.08.2008).
It is further submitted that the ban was with respect to storage, transportation, sale, etc. of gutkha within the territory of Delhi or for the purpose of use, sale and consumption in Delhi and did not per se apply to export transactions that aimed at export.
The Counsel for the Revenue supported the order of the Revisionary Authority by emphasizing that Section 2(33) of the Customs Act, 1962 describes 'prohibited goods' as those which are subjected to "any prohibition under the Act or any other law for the time being in force"; therefore, the notification of 11.09.2012 had universal and wide application; its effect and objective could not be curtailed in the manner sought by the petitioner.
The High Court extracted the notification dated 11.09.2012 and observed thus -
++ A careful reading of the NCT's notification would, in the opinion of this Court, disclose that what was prohibited was the manufacture, storage, sale, transportation, display or the distribution of gutkha and pan masala or other substances containing tobacco and nicotine products within the National Capital Territory of Delhi "being food products in which tobacco and/or nicotine are widely used as ingredients".
++ Although, the notification did advert to prohibition on manufacture, at the same time it is silent as to whether the manufacture for the purposes of sale was per se or even by implication, prohibited.
++ In the opinion of this Court, the Government of NCT could not have banned the export of sale - as is understood in the Customs enactment parlance. This is for the simple reason that the legislative competence and concurrently, the co-extensive executive power, to deal with the subject matter of customs or international transactions are not with the State or the Union Territory but that of the Central Government or Parliament, as the case may be.
++ In this, consequently, upholding the revisional order would lead to anomaly in that so far as the Central Government or Parliament is concerned, gutkha per se is not prohibited at least for export, whereas, for the purposes of interpretation of the notification, even export of gutkha is prohibited. Clearly, such an anomalous consequence cannot be contemplated much less countenanced in law.
Concluding that the impugned order of the Revisional Authority as well as the order of the appellate authority which it confirms cannot be sustained, the same was quashed and the o-in-o was restored.
This writ petition was allowed.
(See 2018-TIOL-2425-HC-DEL-CX)
