Madras High Court
M/S.R.C.Impex vs / on 8 August, 2019
Author: Anita Sumanth
Bench: Anita Sumanth
W.P.(MD)Nos.5388 and 5420 of 2019
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 08.08.2019
CORAM:
THE HONOURABLE DR.JUSTICE ANITA SUMANTH
W.P.(MD)Nos.5388 and 5420 of 2019
and
W.M.P.(MD)No.4282 and 4309 of 2019
M/s.R.C.Impex,
Represented by its Proprietor Mr.S.Chellappa,
26/948, GM House, 40 Road,
Rehmath Nagar, Maharaja Nagar Post,
Tirunelveli – 627 011. ... Petitioner in W.P.(MD)No.5388 of 2019
M/s.Ebanesar Traders,
Represented by its Proprietor Mr.Selvanathan,
2H/829/4, SBM Nagar,
Millerpuram, Toothukudi,
Tamilnadu – 628 008. ... Petitioner in W.P.(MD)No.5420 of 2019
/Vs./
1.Union of India,
Ministry of Finance, Department of Revenue,
Through the Secretary,
North Block, New Delhi – 110 001.
2.The Chairman,
Central Board of Indirect Taxes & Customs,
North Block, New Delhi – 110 001.
3.The Commissioner of Customs,
Custom House, New Harbour Estate,
Tuticorin – 628 004. ... Respondents in both W.P.s
1/20
http://www.judis.nic.in
W.P.(MD)Nos.5388 and 5420 of 2019
COMMON PRAYER:- Writ Petitions - filed under Article 226 of the
Constitution of India, praying for the issuance of a Writ of
Mandamus, directing the respondents herein to allow clearance of
the goods viz., 280 MTS., viz., 5600 Bags of Ordinary Portland
Cement, Grade 53, shipped vide Bill of lading No.MAX / KAR /
0824 / 1819 dated 11/02/2019 and 280 MTS., Viz 5600 Bags of
Ordinary Portland Cement, Grade 53, shipped vide Bill of Lading No.
HDMUKNIU0203219, dated 15/02/2019, viz., 980 MTS., viz.,
19,600 Bags of Ordinary Portland Cement, Grade 53, shipped vide
Bill of lading Nos.MAX/KAR/0812/1819, dated 12/02/2019,
MAX/KAR/0827/1819, dated 13/02/2019 and MAX/KAR/0813/1819,
dated 12/02/2019, applying the Tariff Rate of Duty as per customs
Tariff Heading No.2523 for Cement without insisting the increased
Rate of Duty as per Notification No.05/2019-Customs, dated
16.02.2019, for the subject goods which was shipped on
11.02.2019 and 15.02.2019 & 12.02.2019 and 13.02.2019.
For Petitioner : Mr.A.K.Jayaraj [in both petitions]
For R-1 : Mr.K.Baalasundaram
[W.P.(MD)No.5388 of 2019]
For R-1 : Mr.M.Karthikeya Venkatachalapathy
[W.P.(MD)No.5420 of 2019]
For R-2 & R-3 : Mr.B.Vijay Karthikeyan
[in both petitions]
COMMON ORDER
The facts and circumstances in the case of both petitioners is similar/identical and hence a common order is passed disposing the two writ petitions. The facts and dates in W.P.5388 of 2019 are 2/20 http://www.judis.nic.in W.P.(MD)Nos.5388 and 5420 of 2019 taken to be illustrative of those in both writ petitions and the conclusions arrived at by me are equally applicable to both petitioners.
2. The petitioners are dealers in cement. The facts in regard to the petitioner in W.P.5388 of 2019 are elucidated and are taken to be illustrative of the position in both writ petitions. The petitioner had purchased 280 metric tonnes each (560 MTS) of Portland cement under two invoices, bearing nos.19 and 20, dated 14.2.19 and 15.02.19 respectively on High Seas Sales basis from one Rohit Enterprises, Tuticorin (in short 'importer'). The importer had imported the same under a shipment from Pakistan in terms of its contract with two suppliers namely, Lucky Cement Limited and Maple Leaf Cement Factory Limited. The shipments were taken on board on 11.02.2019 and 15.02.2019 at the Load Port at Karachi, Pakistan under Bills of Lading dated 11.02.2019 and 15.02.2019 by the importer. Payment was made in advance by the importer through Bank of Habib Metropolitan Bank Limited, Karachi. The rate of import duty payable in India on the consignments of cement at the time of shipment was 10%.
3. While the goods were in transit, the Department of 3/20 http://www.judis.nic.in W.P.(MD)Nos.5388 and 5420 of 2019 Revenue, Ministry of Finance, Government of India, vide Notification No.05/2019-Customs, dated 16.02.2019 in exercise of powers conferred by Section 8A of the Customs Tariff Act 1975 (in short 'CTA') amended the First Schedule to the CTA and introduced a new tariff item, bearing No:9806 00 00 by virtue of which 'all goods originating in or exported from Islamic Republic of Pakistan' would suffer the imposition of duty of 200% thereupon.
4. The first ground raised in the Writ Petition is to the effect that Notification No.5 of 2019 is only directory. Section 8A of the CTA provides emergency powers to the Central Government to increase/enhance import duties, where the Central Government is satisfied that such import duty leviable under Section 12 of the Customs Act, 1962 should be increased in the light of the circumstances that existed on that date. According to the petitioner, items/articles covered under entry 9806 00 00 would not come under the First Schedule at all and thus, Section 8A of the CTA is itself inapplicable. The petitioner relies on the bar set out under Section 11A of the CTA, specifically the proviso thereto from making any amendment of the First Schedule that would impact the rates of duty. Though the aforesaid issue has been raised as a ground, it has 4/20 http://www.judis.nic.in W.P.(MD)Nos.5388 and 5420 of 2019 not been seriously pursued or argued, and neither has the Notification itself been challenged. Learned counsel for the petitioner confines his arguments to the prayer in Writ Petition which is for a Mandamus directing the 2nd respondent to release the consignments in question at the rate of duty that prevailed at the time the consignment were loaded in Pakistan.
5. The sole argument advanced by the petitioner is that the Notification is itself based on a sanction issued by the Government of India against Pakistan in the aftermath of terror attacks on 14.02.2019. The power of the Union to initiate such a measure in terms of Section 8A of the CTA has not been questioned, and, rightly so.
6. The point put forth repeatedly and with great passion is that the petitioner, a citizen of India and a bonafide purchaser, has been caught unawares by the sudden enhancement of the duty. The negotiations for the purchase of the commodity, the remittances of the consideration in advance through Bank and the shipment of the commodity have admittedly taken place prior to the date of the Notification, which is 16.02.2019. The petitioner is an innocent domestic importer. Having paid for the consignment, he is unable to 5/20 http://www.judis.nic.in W.P.(MD)Nos.5388 and 5420 of 2019 reject the same, as the importer has confirmed that the vendor has refused to receive the consignment back or refund the consideration received in advance. The thrust of the argument raised is to the effect that the petitioner should not be prejudiced by virtue of the duty enhancement, seeing as the intention of the Government was to target only the source country and not a domestic importer. He thus prays, in summary, that the petitioners be permitted to import the cement at the the rates of duty that were prevailing when the consignments were loaded at source.
7. Upon notice, learned counsels for respondents, Union of India, Ministry of Finance, Department of Revenue (R1), the Central Board of Indirect Taxes & Customs (R2) and the Commissioner of Customs (R3) sought time to file a counter. R-2 and R-3 have filed a counter and R-1, after several opportunities, has adopted the stand taken in the counter filed by R-2 and 3.
8. Respondent 3 i.e., the Commissioner of Customs, has adopted the legal stand that the relevant date for determination of rate of duty is as provided under Section 15(1)(a) of the Act and as such, the imposition of the higher rate as per Notification No.5/19- Customs, dated 16.02.2019 is correct in law. The third respondent 6/20 http://www.judis.nic.in W.P.(MD)Nos.5388 and 5420 of 2019 has stated that such imposition is an emergent decision by the Union of India taken in the interests of the sovereignty of the Country and hence should be found to be correct and appropriate. After several opportunities were granted for filing of counter by the Union to ascertain their stand in the matter, a communication dated 26.07.2019 is circulated from the Assistant Commissioner (Legal) addressed to the Senior Panel Counsel stating that the counter filed is on behalf of all respondents, including the Union of India. Thus, the Union sails with the Department in urging that, as per the provisions of Section 15(1)(a) of the Act, it would be the rate of duty as on date of presentation of bill of entry in India that is the appropriate and correct rate to be imposed.
9. The respondents thus rely wholly upon the provisions of Section 15(1) of the Customs Act, 1962 [in short 'Act'] in terms of which the rate of duty in respect of an imported product would be the rate prevailing as on the date of bill of entry. This, according to them, is a settled position and the request of the petitioner to the effect that the import duty be determined as per the date of bill of lading is contrary to the statute.
10. The petitioner relies on a decision dated 27.02.2019 in 7/20 http://www.judis.nic.in W.P.(MD)Nos.5388 and 5420 of 2019 the case of Royal Impex vs. The Commissioner of Customs and another in W.P.No.4403 of 2019 dated 27.02.2019 and connected writ petitions (authored by me) wherein at Paragraph No.17, I have stated as follows:
'17. As regards the first issue, Regulation 9.11 of the Foreign Trade Policy specifically states that for the purpose of reckoning the date of import, the relevant date which be the date of Bill of Lading only. In the light of the aforesaid the Foreign Trade Police being a complete code by itself, reference by the learned counsels for the Revenue to Section 15 of the Customs Act, which fixes the date for determination of rate of duty and tariff for the purpose of valuation of imported goods as the date of Bill of Entry, may not be relevant.'
11. This decision is distinguished by the respondents by stating that the above decision has turned on the application of the Foreign Trade Policy, which would not be applicable in the present case. I agree. The matter before me now concerns only the interpretation of Section 15 of the Act and has thus to be tested solely in the light of the same.
12. The respondents rely upon two judgments of the Supreme Court in the cases of Bharat Surfactants (Private) Ltd., and another vs. Union of India and another ((1989) 4 SCC 21) and Dhiraj Lal H. Vohra and others vs. Union of India and others (1993 8/20 http://www.judis.nic.in W.P.(MD)Nos.5388 and 5420 of 2019 Supp (3) SCC 453) that analyze in detail the provisions of Section 15 of the Act in the context of the legal issue that arises for determination now.
13. I extract below the relevant provision, Section 15 of the Act, that reads as follows:
'Section 15. Date for determination of rate of duty and tariff valuation of imported goods.- (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 that 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 other goods, on the date of payment of duty:
[Provided that if a bill of entry has been presented before the date of entry inwards of the vessel or the arrival of the aircraft by which the goods are imported, the bill of entry shall be deemed to have been presented on the date of such entry inwards or the arrival, as the case may be.] (2) The provisions of this section shall not apply to baggage and goods imported by post.'
14. The judgment of the Full Bench in Bharat Surfactants (supra) deals with the case of a petitioner which had contracted with 9/20 http://www.judis.nic.in W.P.(MD)Nos.5388 and 5420 of 2019 foreign sellers for supply of edible oil. The vessel arrived on 11.07.1981 and was waiting in the port to be granted a berth. Since the Bombay port authorities were unable to allot a berth and there was pressure from other purchasers whose cargo was also being carried on the same vessel, the vessel was constrained to leave Bombay for unloading the other cargo. It re-entered Indian Territorial Waters on 31.07.1981 and was granted 'entry inward' for discharging its cargo in India. The dispute that arose before the Supreme Court was whether the relevant rate of duty applicable would be that on 11.07.1981 when the vehicle had first arrived and had been registered in the port, i.e. 12.5% but was forced to leave for extraneous reasons, or the rate as on 31.07.1981, i.e. 42.5%, which was the date of inward entry when the vessel was berthed and the cargo discharged.
15. The Full Bench, considering the provisions of Section 15(1) of the Act, held that the proper rate of duty and tariff valuation in the case of goods imported for home consumption, (as in the present case as well), would be the date on which the bill of entry in respect of such goods is presented under that Section, viz, 31.07.1981. The Bench examined the procedure of import minutely 10/20 http://www.judis.nic.in W.P.(MD)Nos.5388 and 5420 of 2019 noticing that prior to 11.07.1981 the bill of entry had been presented to the customs authority on 09.07.1981 itself, accepted by the Import Department and an order passed by the Customs Officer on 18.07.1981 directing the examination of the consignment. The date of inward entry recorded was 31.07.1981. The contention of the petitioner, that customs duty at the rate of 12.5% which was the rate in force on the date when the vessel first sought berthing and discharge, should be levied, was rejected. It was also urged in that case that the 'date of entry inwards' should be construed as the date on which the vessel enters the territorial waters of India.
16. At Paragraphs 11 and 14, the Bench states as follows:
'11. The rate of duty and tariff valuation has to be deter- mined in accordance with s. 15(1) of the Customs Act. Under s. 15(1)(a), the rate and valuation is the rate and valuation in force on the date on which the Bill of Entry is presented under s.
46. According to the proviso, however, if the Bill of Entry has been presented before the entry in- wards of the vessel by which the goods are imported, the Bill of Entry shall be deemed to have been presented on the date of such entry inwards. In the present case the Bill of Entry was presented on 9 July, 1981. What is "the date of entry inwards" of the vessel? We may refer to the detailed procedure in this matter set forth in the counter affidavit of Shri R.S. Siddhu, then under Secretary to the Government of India.11/20
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14. It is urged on behalf of the petitioners that the import of the goods must be deemed to have taken place on '11 July, 1981, when the ship originally arrived in Bombay Port and registered itself. The rate of customs duty prevailing on that date was 12.5 per cent, and that, learned counsel contends, should be the rate applicable to the edible oil consignment under s. 15 of the Act. The circumstance that the vessel was unable to secure a berth in the Port of Bombay compelled it to proceed to Karachi to discharge the cargo pertaining to that Port, and but for the non-avail- ability of the berth she would not have undertaken that voyage but would have continued in Bombay and discharged the edible oil consignment there. The customs duty which could have been levied then would have been 12.5 per cent. It is pointed out that the vessel was unable to do so for no fault of the petitioners and a reasonable construction must be given to s. 15 taking into account the particular circumstances of the case, so that the vessel must be deemed to have made the "Entry Inwards" on 11 July, 1981. We do not find it possible to accept this submission. The provisions of s. 15 are clear in themselves. The date on which a Bill of Entry is presented under s. 46 is, in the case of goods entered for home consumption, the date relevant for determining the rate of duty and tariff valuation. Where the Bill of Entry is presented before the date of Entry Inwards of the vessel, the Bill of Entry is deemed to have been presented on the date of such Entry Inwards.'
17. At paragraphs 15 and 16, the Bench considered the case of Omega Insulated Cable Co., (India) Limited vs. Collector of Customs, Madras (W.A.No.539 of 1969, decision dated 09.07.1975), 12/20 http://www.judis.nic.in W.P.(MD)Nos.5388 and 5420 of 2019 wherein the Madras High Court had addressed the specific question as to whether 'date of entry inwards of the vessel by which the goods are imported' would connote 'actually entry of the vessel inwards' or 'the date of entry in the register kept by the Department permitting the entry inwards of the vessel'. The Madras High Court had held that the date of entry inward for the purpose of Section 15(1)(a) of the Act and the proviso thereto is the date when the entry had been made in the customs register. This view was found to be correct and at Paragraph 16, the Full Bench states as follows:
'16. We have considered the matter carefully and given due heed to the submissions of learned counsel for the petitioners rounded, inter alia, on the provisions of the Sea Customs Act and the amendment made in s. 16 of the Customs Act and we are of opinion that the view taken by the Madras High Court in M/s. Omega Insulated Cable Co. Ltd., (supra) represents the correct view. The amendment made in s. 16 of the Act appears to have been made by way of clarification and, in our opinion, does not detract from the conclusion that "the date of entry inwards of the vessel" is the date re- corded as such in the Customs register. In the present case, "the date of inwards entry" is mentioned as 31 July, 1981.1n the absence of anything else, we may take it that the entry was recorded on the date itself. Accordingly, the rate of import duty and the tariff valuation shall be that in force on 31 July, 1981. The contention of the petitioners that the rate of import duty and tariff 13/20 http://www.judis.nic.in W.P.(MD)Nos.5388 and 5420 of 2019 valuation will be that ruling on 11 July, 1981 cannot be sustained and is rejected.'
18. Reliance is also placed by the respondents on a Full Bench judgment of the Supreme Court in the case of Dhiraj Lal H.Vohra and others vs. Union of India and others [1993 Supp (3) SCC 453], wherein at Paragraph 3, the Bench states as follows:
'3. It is clear from bare reading of these relevant provisions that the due date to calculate the rate of duty applicable to any imported goods shall be the rate and valuation in force, in the case of the goods entered for home consumption under Section 46, is the date on which the bill of entry in respect of such goods is presented under that section and in the case of goods cleared from a warehouse under Section 58, the date on which the goods arc actually removed from the warehouse. By operation of the proviso if a bill of entry has been presented before the date of an entry inwards the bill of entry shall be deemed to have been presented "on the date of such entry inwards" but would be subject to the operation of Section 66 and 31(1) of the Act. Section 46(1) provides that the importer of any goods, other than goods intended for transit or transhipment, shall make entry thereof by presenting to the proper officer a bill of entry for whom consumption or warehousing in the prescribed form and it may be presented under Sub-section (3) thereof at anytime after delivery of the import manifest. Section 31(1) provides that the master of the vessel shall not permit the unloading of any imported goods until an order has been given by the proper officer "granting entry inwards" to such vessel and no order under Sub-section (1) shall be given until an import manifest has been delivered or the proper officer is satisfied that there was sufficient cause for not delivering it. Granting entry inward on delivery of 14/20 http://www.judis.nic.in W.P.(MD)Nos.5388 and 5420 of 2019 import manifest and the date of arrival of the vessel into port admittedly are on March 2, 1989 and the Master of the vessel made a declaration in this behalf that they would discharge the cargo on March 2, 1989. Therefore, the relevant date under Section 15(1)(a) is the date on which entry inwards after delivery of import manifest was granted to discharge the cargo for the purpose of the levy of the customs duty and rate of tariff. The contention, therefore, that the ship entered Indian territorial waters on February 20, 1989 and was ready to discharge the cargo is not relevant for the purpose of Section 15(1) read with sccs. 46 and 31 of the Act. The prior entries regarding presentation of the bill of entry for clearance of the goods on February 27, 1989 and their receipt in the appraising section on February 28, 1989 also arc irrelevant. The relevant date to fix the rate of customs duty, therefore, is March 2, 1989. The rate prevailed as on that date would be the duty to which the goods imported arc liable to the impost and the goods would be cleared on its payment in accordance with the rate of levy of customs prevailing as on March 2, 1989.'
19. Thus, there is no doubt that the settled position of law is to the effect that the proper date for reckoning the applicable rate of duty would be the date of bill of entry only. The fact that the enhancement of duty in the present cases is brought about by virtue of an order issued by exercise of powers under section 8A of the CTA, which is not the factual situation upon which the judgements in the cases relied upon by the respondents have been rendered, is not, in my considered view, material, and would not advance the 15/20 http://www.judis.nic.in W.P.(MD)Nos.5388 and 5420 of 2019 case of the petitioner.
20. Section 8A of the Customs Tariff Act reads as follows:
'Section 8A. Emergency power of Central Government to increase import duties.-
(1) Where in respect of any article included in the First Schedule, the Central Government is satisfied that the import duty leviable thereon under Section 12 of the Customs Act, 1962 (52 of 1962) should be increased and that circumstances exist which render it necessary to take immediate action, it may, by notification in the Official Gazette, direct an amendment of that Schedule to be made so as to provide for an increase in the import duty leviable on such article to such extent as it thinks necessary:
Provided that the Central Government shall not issue any notification under this sub- section for substituting the rate of import duty in respect of any article as specified by an earlier notification issued under this sub-section by that Government before such earlier notification has been approved with or without modifications under sub-section(2).
(2) The provisions of sub-sections (3) and (4) of section 7 shall apply to any notification issued under sub-section (1) as they apply in relation to any notification increasing duty issued under sub-section (2) of Section 7.'
21. The provisions of Section 8A vests authority in the Central Government either absolutely or conditionally to modify rates of duty, in emergent situations. Such power has been exercised in the present case 16/20 http://www.judis.nic.in W.P.(MD)Nos.5388 and 5420 of 2019 and if at all the petitioner should believe that it should be exempted from the rigour thereof, the remedy lies in the provisions of Section 25 of the Act that vests power to the Central government to grant an exemption from the whole or part of such duty. Section 25 reads as follows:
'Section 25. Power to grant exemption from duty.- (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.
[(2) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case, exempt from the payment of duty, under circumstances of an exceptional nature to be stated in such order, any goods on which duty is leviable.] [(2A) The Central Government may, if it considers it necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or order, as the case may be, by notification in the Official Gazette, at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be.] [(3) An exemption under sub-section (1) 17/20 http://www.judis.nic.in W.P.(MD)Nos.5388 and 5420 of 2019 or sub-section (2) in respect of any goods from any part of the duty of customs leviable thereon (the duty of customs leviable thereon being hereinafter referred to as the statutory duty) may be granted by providing for the levy of a duty on such goods at a rate expressed in a form or method different from the form or method in which the statutory duty is leviable and any exemption granted in relation to any goods in the manner provided in this sub-section shall have effect subject to the condition that the duty of customs chargeable on such goods shall in no case exceed the statutory duty.'
22. In both these Writ Petitions, there is a specific averment by the petitioners that there had been no other transactions with suppliers from Pakistan, the transactions in issue being the only ones engaged in, and that they have been seriously prejudiced by virtue of the duty enhancement, for no fault of theirs. In such a case, the petitioners are permitted to approach the Central Government by way of applications for redressal, in terms of Section 25 of the Customs Act. Such applications, if filed, shall be disposed by the appropriate authority within a period of two (2) weeks from date of filing of the applications, after hearing the petitioner and in accordance with law.
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23.These writ petitions are dismissed with liberty as above. Consequently, connected miscellaneous petitions are closed. No costs.
08.08.2019
Index :Yes/No
Internet : Yes/No
sm
To
1.Union of India,
Ministry of Finance, Department of Revenue, Through the Secretary, North Block, New Delhi – 110 001.
2.The Chairman, Central Board of Indirect Taxes & Customs, North Block, New Delhi – 110 001.
3.The Commissioner of Customs, Custom House, New Harbour Estate, Tuticorin – 628 004.
19/20 http://www.judis.nic.in W.P.(MD)Nos.5388 and 5420 of 2019 DR.ANITA SUMANTH, J.
sm Common Order made in W.P.(MD)No.5388 and 5420 of 2019 Dated:
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