Karnataka High Court
M/S Patanjali Foods Limited vs Union Of India on 17 November, 2025
Author: S.R.Krishna Kumar
Bench: S.R.Krishna Kumar
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NC: 2025:KHC:47220
WP No. 38704 of 2018
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 17TH DAY OF NOVEMBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR
WRIT PETITION NO.38704 OF 2018 (T)
BETWEEN:
M/S PATANJALI FOODS LIMITED
(FORMELY M/S RUCHI SOYA INDUSTRIES LTD)
HAVING ITS REGISTERED OFFICE AT
RUCHI HOUSE, SURVEY NO.169
ROYAL PALMS, AAREY COLONY
GOREGAON (EAST), MUMBAI - 400 065.
REPRESENTED BY ITS
AUTHORISED SIGNATORY
SRI. T. GAJENDRA.
...PETITIONER
(BY SRI. RAJESH RAWAL, FOR
SRI. K.P. CHANDRASHEKAR REDDY, ADVOCATES)
AND:
1. UNION OF INDIA
THROUGH THE SECRETARY
MINISTRY OF FINANCE
Digitally signed NORTH BLOCK, NEW DELHI-110 001.
by CHANDANA
BM 2. COMMISSIONER OF CUSTOMS
Location: High IN THE OFFICE OF COMMISSIONER OF CUSTOMS
Court of
Karnataka NEW CUSTOM HOUSE, PANAMBUR
MANGALORE-575 010.
3. DEPUTY COMMISSIONER OF CUSTOMS
IN THE OFFICE OF COMMISSIONER OF CUSTOMS
NEW CUSTOM HOUSE,
PANAMBUR
MANGALORE-575 010.
...RESPONDENTS
(BY SRI. AKASH B.SHETTY, ADVOCATE)
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NC: 2025:KHC:47220
WP No. 38704 of 2018
HC-KAR
THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE
CONSTITUTION OF INDIA PRAYING TO DECLARE AND HOLD THAT
SECTION 25(4) OF THE CUSTOMS ACT, 1962 AS AMENDED BY THE
FINANCE ACT, 2016 IS ARBITRARY ILLEGAL, ULTRAVIRUS AND
UNCONSTITUTIONAL AND STRIKE DOWN THE SAME ACCORDINGLY.
THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER
WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR
ORAL ORDER
In this petition, petitioner seeks the following reliefs:
" (a) Declare and hold that Section 25(4) of the Customs Act, 1962 as amended by the Finance Act, 2016 is arbitrary, illegal, ultravires and unconstitutional and strike down the same accordingly.
(b) Issue a writ of certiorari or any other appropriate writ, direction or order while quashing and setting aside the Notification No. 29/2018-Cus dated 1.3.2018 (Annexure G) being illegal, arbitrary, ultravires and infringing the fundamental rights of the Petitioner to trade and otherwise bad in law.
(c) In alternate subject to what is stated above, this Hon'ble Court may be pleased to issue writ of mandamus or any other appropriate writ, direction or order that the Notification No. 29/2018-Cus dated 1.3.2018(Annexure G) is effective and operational from 6.3.2018 only and not prior thereto and that the same is not applicable in the facts of the instant case.-3-
NC: 2025:KHC:47220 WP No. 38704 of 2018 HC-KAR
(d) Issue a writ of certiorari or any other appropriate writ, order or direction while quashing the re- assessment/assessment of the subject three Ex-Bond Bills of Entry viz. Ex-Bond of Entry No.5401809, Annexure-K. Ex- bond Bill of Entry No. 5401837, Annexure-Y and Ex-Bond Bill Entry No.5401810 all dated: 1.3.2018 and one subject Bill of Entry No.5420843, Annexure-JJ dated 2.3.2018 as done by the Respondents on 5.3.2018 and 2.3.2018 as stated above while asking the Petitioner to pay higher rate of duty for clearance of the subject goods.
(e) Issue a writ of mandamus or any other appropriate writ, order or direction while directing the Respondents, its officials, agents, servants etc. to pay a place at the disposal of the Petitioner an amount of Rs.3,40,99,332/- with interest paid by the Petitioner from the date of deposit till the date of payment as consequence of grant of aforesaid prayers by this Hon. Court.
(f) pending final hearing and disposal of the instant petition, this Hon. Court may be pleased to direct the respondent authorities to refund and place at the disposal of the Petitioner an amount of Rs.3,40,99,332/- with interest accrued there upon.
(g) Pass any other appropriate Orders(s) as this Hon'ble Court may deem fit and proper in the facts and circumstances of the instant case and in the interest of justice."
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2. Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record.
3. A perusal of the material on record will indicate that the issue in controversy between the parties which is involved in the present petition and the reliefs sought for by the petitioner are directly and squarely covered by the following judgments of various High Courts and the Hon'ble Supreme Court:
(a) In Ruchi Soya Industries Ltd. Vs. Union of India -2019 SCC Online AP 151;
(b) In Ruchi Soya Industries Ltd., Vs. Union of India & others - 2020 SCC Online Guj. 3595;
(c) In M.D.Overseas Ltd., Vs. Union of India & others - 2019 SCC Online Delhi 11885;
(d) In Ruchi Soya Industries Ltd. Vs. Union of India & others - (2020) 13 GSTR - OL - 585 &
(e) In Union of India & others Vs. G.S.Chatha Rice Mills & another- (2021) 2 SCC 209.
4. Prayer (a), (b) and (c) sought for by the petitioner are directly covered by the judgment of the Andhra Pradesh High Court and followed by the other High Courts referred to supra and -5- NC: 2025:KHC:47220 WP No. 38704 of 2018 HC-KAR Section 25(4) of the Customs Act has been held to be illegal, ultra-
vires and unconstitutional by the Andhra Pradesh High Court .
5. (a) In Ruchi Soya Industries Ltd.'s case referred to supra, the High Court of Andhra Pradesh has held as under:
4. The petitioner entered into a contract dated January 18, 2018 with its foreign supplier "Just Oil and Gran Pte, Ltd"
Singapore for purchase of 9500 metric tonnes (+/-two per cent) of crude palm oil of edible grade in bulk which will hereinafter be referred, as "the subject goods". Pursuant to and in terms of the aforesaid contract, the aforesaid foreign supplier of the petitioner, shipped 4000 metric tonnes of the subject goods vide four bills of lading No. C18/DMI/KK -01 to No. C18/DMI/KK-04 all dated February 6, 2018 as per vessel "MT CAMDEN VOY.18" from the port of Dubai, Indonesia with port of discharge being Kakinada, Andhra Pradesh.
5. The petitioner 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 March 1, 2018 and bills of entry Nos. 5419273, 5419349, 5419387 and 5419452, all dated March 2, 2018, the subject goods shipped had initially filed warehousing bill of entry No. 5295797, dated February 21, 2018. The subject goods merit classification under Customs Tariff Heading 1511 10 00 of the Customs Tariff Act and the subject goods are covered by entry 57 II(A) of Notification No. 50/2017-Cus., dated June 30, 2017 and the petitioner was required to pay, 30 per cent. basic Customs duty. Further, vide Notification No. 50/2017-Cus., dated June 30, 2017, rate of duty from 7.5 per cent. (basic customs duty) was increased from time to time and by the date of import, the rate of duty was 30 per cent., vide Notification No. 87/2017-Cus., dated November 17, 2017.
6. It is further contended that, the petitioner filed the aforesaid two ex- bond bills of entry both dated March 1, 2018 claiming classification and rate of duty under section 68 of the Customs Act, 1962 seeking clearance of 2000 metric tonnes of -6- NC: 2025:KHC:47220 WP No. 38704 of 2018 HC-KAR subject goods for home consumption. The subject goods with regard to ex-bond bills of entry dated March 1, 2018 were assessed on March 1, 2018, levied at 30 per cent. basic Customs duty, where the duty structure with regard to the subject goods was 30 per cent. (basic Customs duty) plus ten per cent. (social welfare surcharge).
7. The two ex-bond bills of entry both dated March 1, 2018 were assessed as claimed by the petitioner and the records were updated in the Department on March 2, 2018. Vide Notification No. 29/2018-Cus., (purportedly dated March 1, 2018) issued under section 25(1) of the Act, basic Customs duty on the subject goods was increased from 30 per cent. to 44 per cent. It is contended that with regard to the balance 2000 metric tonnes of the subject goods, the petitioner filed four ex-bond bills of entry Nos. 5419273, 5419349, 5419387 and 5419452, all dated March 2, 2018 for clearance of the subject goods for home consumption.
8. The petitioner pursued the matter with the Department for clearance of the subject goods, but to no avail, as the Department was insisting upon the petitioner to pay enhanced rate of duty for permitting clearance of the subject goods. It is also contended that Notification No. 29/2018-Cus., was published in the Official Gazette only on March 6, 2018 and the same was made available to the public only on March 6, 2018; hence, the notified rate is not applicable to the issue on hand. The Revenue was not permitting clearance of the subject goods as requested by the petitioner; however, as the subject goods were urgently needed by the petitioner, amongst others, on account of business commitments, and to run the manufacturing units, the petitioner was incurring lot of expenses everyday on various counts, paid duty at 44 per cent. under protest.
34. 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" means a notification in the Gazette unless the Act otherwise provides. The word "notification" is not defined in the General Clauses Act, but the word "Official Gazette" or "Gazette" is defined under section 3(39) of the General Clauses Act, 1897, which -7- NC: 2025:KHC:47220 WP No. 38704 of 2018 HC-KAR defined that the word "Gazette" or "Official Gazette" shall mean the Gazette of India or the Official Gazette of a State.
35. Section 21 of the General Clauses Act deals with power to issue, to include power to add to, amend, vary or rescind notifications, orders, rules or bye-laws, it is also relevant to the present case and it reads as follows :
"Where, by any (Central Act) or Regulation, a power to (issue notifications), orders, rules or bye-laws is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions (if any), to add to, amend, vary or rescind any (notifications), orders, rules or bye-laws so (issued)."
36. When the rule prescribed specific procedure to be followed, the Central Government has to follow such rules and issue notifications. In the instant case, section 25(1), (2A) of the Act mandates issue of notification in the Official Gazette, whereas, sub-section (4) of section 25 says that notification is deemed to have been came into force when it was issued by the Central Government for publication in the Gazette.
37. In State of Maharashtra v. Mayer Hans George (1965) 1 SCR 123 ; AIR 1965 SC 722, the apex court observed that, there would be no question of individual service of a general notification on every member of the public and all that the subordinate law making body can or need do, would be to publish it in such a manner that persons can, if they are interested, acquaint themselves with its content.
38. In Pankaj Jain Agencies v. Union of India (1994) 55 ECR 28 (SC), the Supreme Court while relying on the judgment in State of Maharashtra v. Mayer Hans George (1965) 1 SCR 123 ; AIR 1965 SC 722 (referred supra), held that, the notification was duly published in the Official Gazette and thus became operative and enforceable. "We, therefore, see no substance in the contention that notwithstanding the publication in the Official Gazette there was yet a failure to make the law known and that, therefore, the notification did not acquire the elements of operativeness and enforceability."
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39. As per the principle laid down in the above judgment, when a notification is required 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.
46. Section 25(1) of the Act is not amended and according to section 25(1), if the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) 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.
47. 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.
48. 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 sections 25(1), (2A) and (4) are not reconciling with one another. According to sub-section (1) of section 25 of the post-amended Act, the Central Government if satisfied that it is necessary in the public -9- NC: 2025:KHC:47220 WP No. 38704 of 2018 HC-KAR interest, may by "notification issue an Official Gazette", exempt generally either absolutely or subject to such conditions, as such, the main intention of the Legislature to publish notification in the Gazette is only to inform the public about the notifications in their interest. But, on account of amendment, such public interest becomes redundant or otiose and issuance of notification for publication in the Gazette is sufficient. Therefore, there is any amount of inconsistency between sub-sections (1), (2A) and (4) of section 25 of the Act.
53. Following the principles laid down in the above judgments, the basic purpose construction or interpretation of statute is to avoid inconvenience, friction, confusion in the working of the provision. Such interpretation is permissible when there is ambiguity in the two provisions of same section or two sections of the same enactment. The power of the court is to achieve the real object to serve the purpose of enactment introducing any amendment. Moreover, if two constructions are possible then the court must adopt that which will ensure smooth and harmonious working of the enactment and eschew the other which will lead to absurdity or give rise to practical inconvenience or make well-established provision of existing law nugatory.
54. Keeping in view the principles, we would like to examine the inconsistency which may result in absurdity, confusion or friction, contradiction and conflict between two provisions of the section, i. e., sub-sections (1), (2A) and (4) of section 25 of the Act. We have extracted the pre-amended and post-amended provisions of section 25(4) and even section 14(2) made it mandatory for the purpose of the Customs Act, 1975 or any other law for the time being in force. Even according to section 14(2) of the Customs Act, a Gazette notification is mandatory fixing the tariff value for any class of import goods. Sub-section (1) of section 25 remains as it is, on the statute even after amendment to sub-section (4) and the entire section 25 of the Act deals with power to grant exemption from duty. The Central Government, on satisfaction, issues any notification in the Gazette, keeping in mind the public interest exempting generally either absolutely or subject to such conditions. Whereas, the language used in sub-section (4) of the amended provision conveys a different meaning that the notifications issued under sub-section (1), i. e., for exemptions from duty is deemed to have come into force on
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NC: 2025:KHC:47220 WP No. 38704 of 2018 HC-KAR 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 extreme instance where a notification was issued for publication in the Gazette, but not published for sufficiently long time, the public are in total darkness about the amended provisions of the enactment or any new enactment. But, still they are liable for the consequences of such amendment or enactment passed by either State or Central Government, in view of similar provision section 25(4) of the Act. In those circumstances, it leads to serious absurdity, confusion or friction, contradiction and conflict between various provisions. In those circumstances, by applying the principles laid down in the above judgments, interpreting the section to achieve the object and to avoid resulting serious inconvenience, serious absurdity, confusion or friction, contradiction and conflict between its various provisions to the public is essential. On conjoint reading of sub- sections (1), (2A) and (4) of section 25, there is any amount of inconsistency leading to serious absurdity, confusion or friction, contradiction and conflict between its sub-section of same provision. When sub-section (1) made it clear that in the public interest, a notification shall be published in the Official Gazette granting exemption, only to impute or attribute knowledge to the public about such exemptions. But, whereas, sub-section (4) runs contra to sub- section (1), since the amended provisions are deemed to have been came into force when it was issued for publication. Thus, it creates any amount of inconvenience to the public.
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NC: 2025:KHC:47220 WP No. 38704 of 2018 HC-KAR Therefore, to avoid such serious absurdity, confusion or friction, contradiction and conflict between two sub-sections of section 25, we find that it is a fit case to declare Notification No. 29/2018-Cus., dated March 1, 2018 as arbitrary and inconsistent with sub-section (1) and (2A) of section 25, keeping in view the principles of statutory interpretation laid down by various courts referred above.
60. 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 that the consequences are serious and nobody knows what is duty payable.
61. In S. G. Jaisinghani v. Union of India (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 application of known principles and rules and, in general, such decisions should be predictable and the citizen should know where he is. If a decision is taken without any principle or without any rule, it is unpredictable and such a decision is the antithesis of a decision taken in accordance with the rule of law. (See Dicey- Law of the Constitution-Tenth Edition, Introduction ex). The apex court made a reference to United States v. Wunderlick (1951) 342 US 98, wherein it was held that, "when it has freed man from he unlimited discretion of some ruler. .. where discretion ; absolute, man has always suffered". It is in this sense that the rule of law may be said to be the sworn enemy of caprice. Discretion, as Lord Mansfield stated it in classic terms in the case of John Wilkes. . ., "means sound discretion guided by law. It must be governed by rule, not by humour : it must not be arbitrary, vague and fanciful."
62. In view of the observations of the larger Bench of the apex court, it is clear that the decision of the Government should be predictable and the citizen should know where he is ; giving effect on the date of its issue of notification before its publication means such notification is not known to any citizen as to the rate of duty on imported goods; amendment of sub- section (4) of
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NC: 2025:KHC:47220 WP No. 38704 of 2018 HC-KAR section 25 of the Act is not only arbitrary exercise of power by the Central Government, but also created friction and contradiction between two sub-sections of same section.
76. In view of the law declared by the courts with regard to interpretation of taxing statutes, it is clear that when the amended provision or any provision of the statute creates serious inconvenience, serious absurdity, confusion or friction, contradiction and conflict between its various provisions, the same is illegal and amendment of sub-section (4) of section 25 giving effect to the notification from the date of its issue for publication in the Gazette is an arbitrary exercise of power by the Legislature and it is totally contrary to the purport of sub-section (1) and sub- section (2A) of section 25 of the Act, which mandates publication of notification in the Official Gazette. Therefore, to avoid inconvenience, serious absurdity, confusion or friction, contradiction and conflict between various provisions, amended provision of sub-section (4) of section 25 which is enacted by arbitrary exercise of power by the Legislature, is liable to be struck down.
77. The notification was published on March 6, 2018 which is impugned in these writ petitions, published electronically on March 6, 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 March 6, 2018 at 19:15:13 +05:30'. When notification needs to be signed digitally, 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 the 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 authority on the date of presentation of ex-bond bill of entry before the competent authority for release of imported goods for home consumption in accordance with section 15(1)(b) read with section 68 of the Customs Act for clearance of the goods for
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NC: 2025:KHC:47220 WP No. 38704 of 2018 HC-KAR home consumption and the relevant date for determination of the duty is the date of presentation of ex-bond bills of entry for release of the goods which is explicit from section 15(1)(b) of the Act. But the respondents collected the Customs duty initially at 30 per cent., but later by the time of release, Customs duty was enhanced at 44 per cent. and they demanded the variation of 14 per cent.
78. As discussed above, sub-section (4) of section 25 created absurdity, confusion and friction. The very collection of customs duty at 44 per cent. on the imported goods belonging to these petitioners prior to the publication of notification in electronic mode is an illegality. Therefore, the petitioners are entitled to claim refund of the amount paid in excess of 30 per cent. 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 home consumption. Therefore, the respondents are liable to repay the excess amount which they collected from the petitioners beyond 30 per cent. of Customs duty.
79. One of the contentions raised by the learned counsel for the respondents, when a remedy by way of appeal under section 128 and 129A of the Customs Act is available, the petitioner is disentitled to claim relief under article 226 of the Constitution of India. But, the said contention cannot be accepted for the simple reason that the appellate authority or Tribunal cannot declare any provision in the statute as illegal or arbitrary. Therefore, we find no force in the argument of the learned counsel for the respondents and the same is rejected.
80. In view of our foregoing discussion, 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., Rs. 2,88,16,200 with interest paid by the petitioner from the date of deposit till the date of payment."
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(b) In Ruchi Soya Industries Ltd.'s case referred to supra, the High Court of Gujarat has held as under:
"4. The petitioner is a limited company incorporated under the provisions of the Companies Act, 1956 and is engaged in the business of solvent extraction, refining of edible oils, manufacture of soya foods products, import, export and trading of agri commodities (for short "the subject goods"). The petitioner purchased crude palm oil of edible grade in bulk on high seas sales basis from M/s. S. N. Overseas, Bathinda, Punjab vide high seas sale agreements dated February 8, 2018. M/s. S. N. Overseas, imported said goods No. 8 "MT BRILLANTE VOY. NO. 1801" vide 5 bills of lading dated February 7, 2018. M/s. S. N. Overseas raised 3 invoices dated February 23, 2018 upon the petitioner pertaining to the aforesaid imported goods.
4.1 The petitioner filed three bills of entry dated March 1, 2018 under section 46 of the Customs Act, 1962 (for short "the Customs Act") seeking clearance of the said imported goods for home consumption so as to pay the custom duty as per section 15(1)(a) of the Customs Act, which provides date for determination of rate of duty and tariff valuation of imported goods.
4.2 According to the petitioner, the bills of entry filed by the petitioner would not be governed by the provisions of section 15(1)(a) of the Customs Act as aforesaid bills of entry was filed under the provisions of section 46 of the Customs Act seeking clearance of goods for home consumption and for the purpose of determination of duty and tariff valuation if applicable shall be the date when such bills of entry were presented on March 1, 2018.
4.3 According to the petitioner, the crude palm oil and edible grade falls under the classification under Customs Tariff Heading 1511 10 00 of the Customs Tariff Act and the subject goods were covered by Entry 57 II (A) in Notification No. 50/2017-Cus., dated June 30, 2017* and the petitioner was required to pay basic customs duty at 30 per cent.
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NC: 2025:KHC:47220 WP No. 38704 of 2018 HC-KAR 4.4 Thereafter, the Customs authorities assessed the subject goods on March 1, 2018 and the basic customs duty was assessed at 30 per cent. plus ten per cent. social welfare surcharge, which was discharged by the petitioner along with the payment of integrated goods and service tax (for short "IGST").
4.5 It appears that the custom department issued a Notification No. 29 of 2018-Cus., dated March 1, 2018** under section 25(1) of the Customs Act increasing the basic customs duty from 30 per cent. to 44 per cent. Accordingly, the Customs Department insisted upon the petitioner to pay enhanced difference and accordingly calculated IGST for clearance of the subject goods.
4.6 It is the case of the petitioner that Notification No. 29 of 2018- Cus. was published in the Official Gazette electronically on March 6, 2018 at 19:15 hours and was signed by one Rakesh Sukul digitally.
4.7 The petitioner was therefore, required to pay the increased basic custom duty and IGST to get release of the subject goods though the petitioner was not required to pay the same as according to the petitioner such increased duty would come into force from the date of uploading the notification on the website. According to the petitioner as the impugned Notification No. 29 of 2018-Cus., was published electronically on March 6, 2018, the same would not be applicable for the clearance of the subject goods for which the bills of entry were filed on March 1, 2018 and the respondent-authorities could not have reassessed the bills of entries demanding enhanced duty and differential IGST relying upon the provisions of section 25(4) of the Customs Act as amended in the year, 2016, which provides that every notification issued under sub-section (1) or subsection (2A) of section 25 shall unless and otherwise provided would come into force on the date of its issue by the Central Government for publication in the Official Gazette.
*See (2018) 4 GSTR-OL (St.) 147.
**See (2018) 4 GSTR-OL (St.) 55.
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NC: 2025:KHC:47220 WP No. 38704 of 2018 HC-KAR 4.8 The petitioner has therefore, filed this petition with the following prayers :
"(A) The Hon'ble court be pleased to declare and hold that section 25(4) of the Customs Act, 1962 as amended by the Finance Act, 2016 is arbitrary, illegal, ultra virus and unconstitutional and strike down the same accordingly.
(B) The Hon'ble court be pleased to issue a writ of certiorari or any other appropriate writ, direction or order while quashing and setting aside Notification No. 29/2018-Cus., dated March 1, 2018 being illegal, arbitrary, ultra virus and infringing the fundamental rights of the petitioner to trade and otherwise bad in law.
(C) In alternate subject to what is stated above, this Hon'ble court may be pleased to issue writ of mandamus or any other appropriate writ, direction or order that Notification No. 29/2018-Cus., dated March 1, 2018 is effective and operational from March 6, 2018 only and not prior thereto and that the same is not applicable in the facts of the instant case.
(D) The Hon'ble court be pleased to issue a writ of certiorari or any other appropriate writ, order or direction while quashing the respondent-assessment of the subject three bills of entry, viz., bill of entry No. 5410142, bill of entry No. 5415313 and bill of entry No. 5409458 all dated March 1, 2018 done by the respondents on March 9, 2018 while asking the petitioner to pay higher rate of duty for clearance of the subject goods.
(E) The Hon'ble court be pleased to issue a writ of mandamus or any other appropriate writ, order or direction while directing the respondents, its officials, agents, servants, etc., to pay and place at the disposal of the petitioner an amount of Rs. 90,05,067 with interest paid by the petitioner from the date of deposit till the date of payment as consequence of grant of aforesaid prayers by this honourable court.
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NC: 2025:KHC:47220 WP No. 38704 of 2018 HC-KAR (F) Pending final hearing and disposal of the instant petition, this honourable court may be pleased to direct the respondent-authorities to refund and place at the disposal of the petitioner an amount of Rs.90,05,067 with interest accrued thereupon.
(G) Pass any other appropriate order(s) as this honourable court may deem fit and proper in the facts and circumstances of the instant."
20. In view of above judgment and order of the Andhra Pradesh High Court dealing with the same issue, we are of the opinion that the same should also apply to the cause of action within the territorial jurisdiction of this court also so as to maintain consistency for application of the provision of the Customs Act, 1962, which is a Central Act. As held by the Supreme Court in the case of Kusum Ingots (supra), Parliamentary legislation without receiving the consent of the President of India and published in a Official Gazette unless specifically excluded will apply to entire territory of India. If passing of the legislation gives rise to cause of action, the writ petition questioning the constitutionality thereof can be filed in any High Court of the country having requisite territorial jurisdiction and an order passed on writ petition questioning the constitutionality of Parliamentary Act, where interim or final keeping in view the provisions contained in clause (2) of article 226 of the Constitution of India will effect throughout the territory of India, subject to applicability of the Act.
21. In such circumstances, we concur with the judgment and order passed by the Andhra Pradesh High Court and the judgment of the Calcutta High Court in the case of Ruchi Soya Industries Ltd. (supra) is not applicable in the facts of the case, as the same pertains to the provisions of section 25(4) prior to its amendment by the Finance Act, 2016 and the said decision was rendered on the facts of the case relying upon the affidavit of the respondent with regard to the publication of the notification of September 17, 2015.
22. As the contentions raised by the respondents are duly considered in the judgment and order passed by the Andhra Pradesh High Court, we do not reiterate the reasons to deal with the same.
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23. In view of the foregoing reasons, the provisions of section 25(4) of the Customs Act, 1962 is declared as arbitrary and contrary to section 25(1) and (2A) of the Customs Act, 1962. The respondents are therefore, directed to refund the excess amount of custom duty and differential amount of IGST collected from the petitioners for clearance of imported goods for home consumption as per the notification published subsequently to the date of filing of bills of entry with simple interest at six per cent. per annum from the date of deposit till the date of payment. The writ petitions therefore, succeed and are allowed. Rule made absolute to the aforesaid extent with no order as to costs."
(c) In M.D.Overseas Ltd.'s case referred to supra, the High Court of Delhi has held as under
"30. Section 8 of the Information Technology Act, 2000 (hereinafter referred to as "the IT Act") reads thus :
"8. Publication of rule, regulation, etc., in Electronic Gazette.-- Where any law provides that any rule, regulation, order, bye-law, notification or any other matter shall be published in the Official Gazette, then, such requirement shall be deemed to have been satisfied if such rule, regulation, order, bye- law, notification or any other matter is published in the Official Gazette or Electronic Gazette :
Provided that where any rule, regulation, order, bye-law, notification or any other matter is published in the Official Gazette or Electronic Gazette, the date of publication shall be deemed to be the date of the Gazette which was first published in any form."
31. In terms of the section 8 of the IT Act, the following Office Memorandum (OM) was issued by the PSP Division in the Ministry of Urban Development on September 30, 2015 :
"No. O-17022/1/2015-PSP-I Government of India Ministry of Urban Development (PSP Division) Nirman Bhawan, New Delhi
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NC: 2025:KHC:47220 WP No. 38704 of 2018 HC-KAR Dated : September 30, 2015 Office memorandum Subject : E-publishing of Government of India Gazette Notification Discontinuing of the practice of physical printing.
In compliance with the provisions of section 8 of the Information Technology Act, 2000, it has been decided in consultation with Department of Legal Affairs to switch over to exclusive e-publishing of the Government of India Gazette Notification on its official website with effect from October 1, 2015 and to do away with the physical printing of Gazette Notification. The date of publishing shall be the date of e- publication on official website by way of electronic gazette in respect of Gazette Notifications. The Gazette Notification can be accessed and downloaded/printed from the official e- Gazette website, i. e., www.egazette.nic.in free of cost.
All the Ministries and Departments are requested to give wide publicity to bring this to the notice of all attached and subordinate offices, PSU, etc., as well as various stakeholders including all private users.
This issues with the approval of competent authority. Sd/-
(Kailash Choudhary) Under Secretary to the Govt. of India"
(emphasis supplied)
32. The endorsement on the electronic copy of the Gazette, whereby the impugned Notification Nos. 24 and 25, dated August 25, 2017, were notified, seen in juxtaposition with section 8 of the IT Act, and of the OM dated September 30, 2015 supra, of the Ministry of Urban Development, makes it clear that the impugned Notification Nos. 24 and 25, dated August 25, 2017 were, in fact, electronically published in the Official Gazette only at or after 10:47 p. m. on August 28, 2017.
33. It has been conclusively held, by the Supreme Court, in a catena of decisions--including Harla v. State of Rajasthan (1952) 1 SCR 110, B. K. Srinivasan v. State of Karnataka AIR 1987 SC 1059 and Union of India v. Param Industries Ltd. [2016] 41 GSTR 1 (SC) ; (2016) 16 SCC 692 that, notifications would come into force on their publication in the Official Gazette, i. e., in the present case, with effect from the date and time when they were electronically printed in the Gazette, which was at or after 10:47 p. m. on August 28, 2017.
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34. The imports of the gold coins by the petitioners in these writ petitions took place prior thereto.
35. It is also worthwhile to note that, from the time of their import on August 25, 2017, the petitioners had made numerous efforts to have the gold coins cleared immediately, including representations in writing addressed to the respondents, but to no avail.
36. Clearly, the submission, of the petitioners in these writ petitions, that the imports of gold coins effected by them, could not be subjected to the rigour of Notification Nos. 24 and 25, dated August 25, 2017 or Public Notice No. 20 dated August 25, 2017, is well merited and commends acceptance.
42. In view of the aforesaid discussions, these writ petitions succeed and are allowed, in the following terms :
(i) It is declared that the impugned Notification Nos.
24/2015-2020, dated August 25, 2017 and 25/2015-2020, dated August 25, 2017, and Public Notice No. 20/2015- 2020 issued by the DGFT, would not apply to the gold coins, imported by the petitioners in these writ petitions, which had left the Republic of Korea on August 25, 2017.
(ii) Inasmuch as the gold coins already stand provisionally released, no order for release thereof is required to be passed ; however, the bonds executed by the petitioner, pursuant to the order dated September 14, 2017 of this court, shall stand discharged.
(iii) The show-cause notice dated September 8, 2017, issued to petitioner in W. P. (C) No. 8667 of 2017 is quashed. The show-cause notices, if any, issued to the petitioners in the other writ petitions shall be adjudicated in the light of the observations and findings contained in this judgment, in accordance with law.
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(d) In Ruchi Soya Industries Ltd.'s case referred to supra, the High Court of Madras has held as under:
"17. The reasoning given by the Division Bench of the Delhi High Court in M.D. Overseas Ltd. (supra) does not appear to be suffering from any legal infirmity, nor any material or argument has been placed before us to take a different view in the matter. We, therefore, accept the contention of the learned counsel for the petitioner on this count.
18. We find that the aforesaid issue relating to publication has also been answered in favour of petitioner and not only this, the contention with regard to the amendment has also been answered in detail by the Division Bench of the Andhra Pradesh High Court in Ruchi Soya Industries Ltd. (supra). The findings recorded in the said judgment are extracted herein under:
"In view of the law declared by the Courts with regard to interpretation of taxing statutes, it is clear that when the amended provision or any provision of the statute creates serious inconvenience, serious absurdity, confusion or friction, contradiction and conflict between its various provisions, the same is illegal and amendment of sub-section (4) of Section 25 giving effect to the notification from the date of its issue for publication in the Gazette is an arbitrary exercise of power by the Legislature and it is totally contrary to the purport of sub-section (1) and subsection (2-A) of Section 25 of the Act, which mandates publication of notification in the Official Gazette. Therefore, to avoid inconvenience, serious absurdity, confusion or friction, contradiction and conflict between various provisions, amended provision of sub-section (4) of Section 25 which is enacted by arbitrary exercise of power by the Legislature, is liable to be struck down.
The notification was published on 6.3.2018 which is impugned in these writ petitions, published
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NC: 2025:KHC:47220 WP No. 38704 of 2018 HC-KAR electronically on 6.3.2018. 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 6.3.2018 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 (2-A) of Section 25 were not suitably amended and they remained as it is. Therefore, sub-sections (1), (2-A) and (4) of Section 25 are running contra to one another, creating confusion in the minds of public at large, atleast to the person who is dealing with the department. Thus, it is evident from the record that the notification was not signed atleast by the competent authority on the date of presentation of ex-bond bill of entry before the competent authority for release of imported goods for human consumption in accordance with Section 15(1)(b) read with Section 68 of the Customs Act for clearance of the goods for human consumption and the relevant date for determination of the duty is the date of presentation of ex-bond bills of entry for release of the goods which is explicit from Section 15(1)(b) of the Act. But the respondents collected the customs duty initially @ 30%, but later by the time of release, customs duty was enhanced @ 44% and demanded the variation of 14%.
As discussed above, sub-section (4) of Section 25 created absurdity, confusion and friction. The very collection of customs duty @ 44% on the imported goods belonging to these petitioners prior to the publication of notification in electronic mode is an illegality. Therefore, the petitioners 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
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NC: 2025:KHC:47220 WP No. 38704 of 2018 HC-KAR 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.
One of the contentions raised by the learned Counsel for the respondents, when a remedy by way of appeal under Sections 128 and 129(A) of the Customs Act is available, the petitioner is disentitled to claim relief under Article 226 of the Constitution of India. But, the said contention cannot be accepted for the simple reason that the appellate authority or Tribunal cannot declare any provision in the statute as illegal or arbitrary. Therefore, we find no force in the argument of the learned Counsel for the respondents and the same is rejected.
In view of our foregoing discussion, Section 25(4) of the Customs Act is declared as arbitrary and contrary to Section 25(1) and (2-A) of the Customs Act, 1962 and that the respondents are liable to repay the amount collected from the petitioners for clearance of imported goods for home consumption beyond the original rate prevailing on the date of prior to date of publication of notification i.e., Rs.2,88,16,200/- with interest paid by the petitioner from the date of deposit till the date of payment.
81. In the result, writ petitions are allowed."
19. The aforesaid reasons squarely apply, to which no plausible answer could be given by the learned counsel for the respondents.
20. The issues already having been raised and decided, we have not been able to gather any other different reason to keep this matter pending, and adopting the reasoning given by the Andhra Pradesh High Court in Ruchi Soya Industries Ltd. (supra), we allow the writ petition on the same terms and direct the respondents to refund the entire excess amount paid by the petitioner as enhanced duty under protest, including
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NC: 2025:KHC:47220 WP No. 38704 of 2018 HC-KAR the IGST amount, within a period of two months from today."
(e) In G.S.Chatha Rice Mills', case referred to supra, the Hon'ble Supreme Court has held as under:
"87. Section 8 of the Information Technology Act, 2000 creates a legal basis for the publication of laws through e-gazettes. It reads as follows:
"8. Publication of rule, regulation, etc. in electronic gazette.-- Where any law provides that any rule, regulation, order, bye-law, notification or any other matter shall be published in the Official Gazette, then, such requirement shall be deemed to have been satisfied if such rule, regulation, order, bye-law, notification or any other matter is published in the Official Gazette or electronic gazette:
Provided that where any rule, regulation, order, bye- law, notification or any other matter is published in the Official Gazette or electronic gazette, the date of publication shall be deemed to be the date of the gazette which was first published in any form."
88. On 30-9-2015, the Ministry of Urban Development issued Office Memorandum No. O-17022/1/2015-PSP-l which discontinued the practice of physical printing and replaced it with the electronic gazette. The notification, in the relevant part, reads as follows:
"In compliance with the provisions of Section 8 of the Information Technology Act, 2000, it has been decided in consultation with Department of Legal Affairs to switch over to exclusive e-publishing of the Government of India Gazette Notification on its official website with effect from 1-10-2015 and to do away with the physical printing of Gazette Notification. The date of publishing shall be the date of e-publication on official website by way of electronic gazette in respect of Gazette notification."
(emphasis supplied)
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89. Thus far, this Court has not had to confront the question as to whether the shift from the analog to the digital for Gazette notifications has any bearing for ascertaining when they come into force. The judgments which dealt with the starting point for the enforceability of notifications were all concerned with circumstances in which such publication took place in the physical gazette. We are now required to determine if the shift to electronic gazettes has brought about a change in this position.
90. The High Courts have begun offering guidance on this score. The Delhi High Court in M.D. Overseas Ltd. v. Union of India [M.D. Overseas Ltd. v. Union of India, 2019 SCC OnLine Del 11885] , dealt with a situation where the Director General of Foreign Trade issued two Notifications dated 25-8-2017 restricting the importation of gold, including gold coins. Gold coins could no longer be imported freely and had to be imported in accordance with a public notice issued in that behalf. The petitioners urged that the restrictive regime created by these notifications was inapplicable to them because the notifications, they contended, came into force only on 28-8-2017, when they were published in the Official Gazette. The gold coins imported by the petitioners, however, were dispatched on 25-8-2017. Since the notifications came into force three days later, they contended that these were inapplicable to them. The notifications were electronically notified in the gazette.
91. The High Court upheld the petitioner's view that the notifications were inapplicable to the petitioners after considering Section 8 of the Information Technology Act, 2000 along with the Office Memorandum dated 30-9-2015. It held : (M.D. Overseas Ltd. case [M.D. Overseas Ltd. v. Union of India, 2019 SCC OnLine Del 11885] , SCC OnLine Del paras 32-33) "32. The endorsement on the electronic copy of the Gazette, whereby the impugned Notification Nos. 24 and 25, dated 25-8-2017, were notified, seen in juxtaposition with Section 8 of the IT Act, and of the OM dated 30-9-2015 supra, of the Ministry of Urban Development, makes it clear that the impugned Notification Nos. 24 and 25, dated 25-8-2017 were,
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NC: 2025:KHC:47220 WP No. 38704 of 2018 HC-KAR in fact, electronically published in the Official Gazette only at or after 10.47 p.m. on 28-8-2017.
33. It has been conclusively held, by the Supreme Court, in a catena of decisions -- including Harla v. State of Rajasthan [Harla v. State of Rajasthan, 1952 SCR 110 : 1951 SCC 936] , B.K. Srinivasan v. State of Karnataka [B.K. Srinivasan v. State of Karnataka, (1987) 1 SCC 658 : AIR 1987 SC 1059] and Union of India v. Param Industries Ltd. [Union of India v. Param Industries Ltd., (2016) 16 SCC 692] that, notifications would come into force on their publication in the Official Gazette i.e. in the present case, with effect from the date and time when they were electronically printed in the Gazette, which was at or after 10.47 p.m. on 28-8-2017."
(emphasis supplied)
92. Thus, the High Court regarded the time of publication as the relevant marker for determining the enforceability of the notifications. The issue of determining the starting point for the enforceability of a notification in the electronic gazette was considered by the Andhra Pradesh High Court in Ruchi Soya Industries Ltd. v. Union of India [Ruchi Soya Industries Ltd. v. Union of India, 2019 SCC OnLine AP 151] . The petitioner entered into a contract with its foreign supplier on 18-1-2008 for the import of 9500 metric tonnes of crude oil. The first consignment of 4000 metric tonnes was shipped by the supplier on 6-2-2018 from Dubai. The petitioner filed two bills of entry for 2000 metric tonnes of crude oil on 1-3- 2018. They were assessed that day and levied with 30% customs duty and 10% social welfare surcharge. On the same date, a notification raised the basic customs duty from 30 to 44%. The petitioner filed four bills of entry for the remaining 2000 tonnes on 2-3-2018 and argued that the revised rate was not applicable to it because the Notification was published in the electronic gazette only on 6-3-2018. The High Court agreed with the petitioner and held that the revised notification would come into force only after it was digitally signed by the competent official and uploaded and published in the Official Gazette. The relevant excerpt from para 77 of the High Court's judgment is quoted below : (Ruchi Soya Industries Ltd.
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NC: 2025:KHC:47220 WP No. 38704 of 2018 HC-KAR case [Ruchi Soya Industries Ltd. v. Union of India, 2019 SCC OnLine AP 151] , SCC OnLine AP) "77. The notification was ... published electronically on 6-3-2018. In view of the decision taken by the Government of India in terms of Section 8 of the...Information Technology 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 6-3-2018 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."
93. The Madras High Court dealt with a similar situation in Ruchi Soya Industries Ltd. v. Union of India [Ruchi Soya Industries Ltd. v. Union of India, 2020 SCC OnLine Mad 2769] and held that the decision of the A.P. High Court noted above was applicable to the case before it. As a result, it allowed the writ petition on the same terms and directed the respondent to refund the enhanced duty collected from the petitioner, along with IGST.
94. With the change in the manner of publishing gazette notifications from analog to digital, the precise time when the gazette is published in the electronic mode assumes significance. Notification No. 5/2019, which is akin to the exercise of delegated legislative power, under the emergency power to notify and revise tariff duty under Section 8-A of the Customs Tariff Act, 1975, cannot operate retrospectively, unless authorised by statute. In the era of the electronic publication of gazette notifications and electronic filing of bills of entry, the revised rate of import duty under Notification No. 5/2019 applies to bills of entry presented for home consumption after the notification was uploaded in the e-gazette at 20 : 46 : 58 hours on 16-2-2019.
108. In the present case, the twin conditions of Section 15 stood determined prior to the issuance of Notification No. 5/2019 on 16-2-2019 at 20 : 46 : 58 hours. The rate of duty was determined by the presentation of
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NC: 2025:KHC:47220 WP No. 38704 of 2018 HC-KAR the bills of entry for home consumption in the electronic form under Section 46. Self-assessment was on the basis of rate of duty which was in force on the date and at the time of presentation of the bills of entry for home consumption. This could not have been altered in the purported exercise of the power of reassessment under Section 17 or at the time of the clearance of the goods for home consumption under Section 47. The rate of duty which was applicable was crystallised at the time and on the date of the presentation of the bills of entry in terms of the provisions of Section 15 read with Regulation 4(2) of the 2018 Regulations. The power of reassessment under Section 17(4) could not have been exercised since this is not a case where there was an incorrect self-assessment of duty. The duty was correctly assessed at the time of self-assessment in terms of the duty which was in force on that date and at the time. The subsequent publication of the notification bearing No. 5/2019 did not furnish a valid basis for reassessment."
6. In view of the aforesaid facts and circumstances and the judgments of the various High Courts and Hon'ble Supreme Court in the judgments referred to supra, I am of the considered opinion that the present petition deserves to be allowed and disposed of in favour of the petitioner.
7. In the result, I pass the following:
ORDER
(i) The petition is hereby allowed.
(ii) The impugned Bill of Entry bearing No.5401809 at Annexure - K, Bill of Entry bearing No.5401837 at Annexure - Y, Bill of Entry bearing No.5401810 at Annexure
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- AA all dated 01.03.2018 and the Bill of Entry bearing No.5420843 at Annexure - JJ dated 02.03.2018 are hereby quashed.
(iii) Respondents are directed to refund a sum of Rs.3,40,99,332/- together with interest from the date of deposit till the date of refund in favour of the petitioner within a period of three months from the date of receipt of a copy of this order.
Sd/-
(S.R.KRISHNA KUMAR) JUDGE SV List No.: 2 Sl No.: 17