Customs, Excise and Gold Tribunal - Delhi
Hindsutan Copper Ltd. vs Collector Of Customs on 12 February, 1987
Equivalent citations: 1987(12)ECC59, 1987(11)ECR679(TRI.-DELHI), 1987(31)ELT809(TRI-DEL)
ORDER I.J. Rao, Member (T)
1. The appellants - a Public Sector Undertaking - imported and cleared an ore sorter under a Bill of Entry No. DI-564 dated 16.7.1983. On certain representations being made by the importers/appellants, the Government of India issued an Exemption Order No. 191 dated 12.10.1983 under Section 25(2) of the Customs Act granting exemption from customs duty, auxiliary duty and additional duty. This order was to be valid upto, and inclusive of, 31.3.1984.
2. The appellants, who paid the duty earlier, made an application for refund on the basis of the Exemption Order. The Assistant Collector of Customs rejected the same on the ground that the Exemption Order No. 191 was issued subsequent to the importation of the goods and payment of duty thereon. While doing so, the Assistant Collector observed that the exemption under the authority of Sub-section (2) of Section 25 of the Customs Act, 1962, is, in fact, a post-facto exemption applicable only to subsequent importation of goods. (The Assistant collector meant 'prospective' but appears to have wrongly used the word 'post-facto'). He further observed that (the exemption) has no retrospective effect and does not apply to goods imported earlier.
3. Aggrieved, the appellants filed an appeal before the Collector of Customs (Appeals). The appellants pleaded before the Collector that the correspondence for the ad hoc exemption was initiated much earlier and relied upon a decision of the Madras High Court in the case of 'Indian Loaf Tobacco Development Limited (ITC Ltd.) v. Union of India and Ors. (Writ Petitions Nos. 3025 and 3026 of 1978) where, according to the appellants, it was clearly held that exemption could be granted, under circumstances of an exceptional nature, even before a levy is made or after the levy but before the recovery of the amount and even in a case where customs duty has been collected, it would be certainly open to the Central Government to exercise their power under Section 25(2) of the Customs Act to grant exemption and refund of levy. The appellants also cited before the Collector an order of the Tribunal (Order No. 239/84-C, dted 24.4.1984). The Collector of Customs (Appeals) rejected the appeal holding that the exemption granted after payment of duty could not be accepted in the absence of any specific endorsement to the extent that the certificate issued would be valid for the goods "already imported. Hence, the present appeal.
4. Shri M.A. Rangaswamy, the learned Counsel for the appellants, appearing with Miss Radha Rangaswamy, reiterated his arguments and took the Bench through the facts of the matter. He cited the following case law in support of his argument that even though the Exemption Order was issued after the importation of the goods and of payment of customs duty thereon, it is a valid order and refund should be granted:-
(1) C.C. Rajkot v. Cotton Corporation of India 1986 (25) ELT 327;
(2) Food Corporation of India v. C.C. Bombay 1985 (21) ELT 128;
(3) Dr. Hari Vishnu Pophale v. Union of India 'ILR (1981) 1 Delhi 514'; and (4) Indian Leaf Tobacco Development Company Ltd. (ITC Ltd.) v. Union of India, reported in '1984 (16) ELT 234 Madras'.
5. Shri Rangaswamy also submitted that the appellants were heard in person by one Collector of Customs (Appeals) whereas the order impugned was passed by his successor in office who did not extend a personal hearing to the appellants. He submitted that there was, thus, violation of the principles of natural justice.
6. Shri J. Gopinath, the learned SDR, submitted that, as the learned Counsel for the appellants has pleaded, that there was violation of the principles of natural justice, before the Collector of Customs (Appeals), the matter may be remanded to him for de_ novo consideration. On the merits of the matter, Shri Gopinath referred us to his arguments in the matter of 'Food Corporation of India v. Collector of Customs, Bombay' reported in '1984 (17) ELT 180' and to the arguments he advanced in the appeal, disposed of by Order No. 205/8-5-82, dated 29.10.1985, (Shri Dalip Singh, Jalandhar City v. The Collector of Customs, Bombay) and reiterated the same arguments.
7. Shri M.A. Rangaswamy, in his rejoinder, submitted that as the legal position and the case-law were overwhelmingly in the appellants' favour, he does not seek a remand; he neither presses the ground regarding the failure of principles of natural justice nor does he withdraw the same. He has left it to the Bench to take a decision as deemed fit.
8. We have considered the arguments of both sides. The question, that is before us for decision, is simply whether in the light of the Government of India's Exemption Order No. 191, dated 12.10.1933, issued under Section 25(2) of the Customs Act, the goods in question, namely, ore sorter, should be allowed free entry and, if duty was already paid, whether the duty should be refunded. In this context, we have respectfully gone through the case-law cited by the learned Counsel for the appellants. In its judgment (Collector of Customs and Central Excise, Rajkot v. Cotton Corporation of India and Ors.), the Tribunal, which referred to the judgments delivered by the Supreme Court and the Delhi High Court, observed as follows :-
"The background leading to the issue of the show cause notice had been already indicated. The show cause notice proceeded on the basis that the ad hoc exemption Order No. 442, dated 11.11.1975 would not have any application with reference to goods which had been already cleared on payment of duty in terms of the earlier order No. 164, dated 31.3.1975. In supporting this contention, Shri Ohri relies on the decision in the "Cannanore Spinning and Weaving Mills' case (AIR 1970 S.C. 1950). He contends that, on the basis of the ratio of the said decision, it has to be held in the present case also that the order dated 11.11.1975 would not have effect with reference to clearances made earlier after assessment under the proper provisions and payment of duty thereunder. In effect, he contends that to hold otherwise would be to give retrospective effect to the order dated 11.11.1975 and that would be against the ratio of the decision of the Supreme Court cited above. But ShriGagrat relies upon the decision of the Delhi High Court in "Dr. Hari Vishnu Pophale and Ors. v. Union of India and Ors." [ILR (1981) 1 DEL 514]. That case also dealt with orders under Section 25(2) of the Customs Act. A contention similar to the one now raised by the department had been raised in that case also on behalf of the Government, on the basis of the decision in AIR 1970 S.C. 1950. Shri Gagrat points out that the Delhi High Court rejected the said contention, pointing out that the decision in AIR 1970 S.C. 1950 dealt with a case where orders had been issued under, Rule 8(1) of the Central Excise Rules which would be in pari materia with the provisions of Section 25(1) of the Customs Act but not similar to orders issued under Section 25(2)" of the Customs Act. The High Court had further pointed out that the legislative schemes of the Central Excises and Salt Act and the Customs Act are different, liability to excise duty arising immediately on the manufacture of the goods liable for excise duty, but liability for customs duty arising not on all goods imported/exported but only on such goods as are specified in the tariff, the Act itself carving out certain areas where customs duty would not be attracted. It was, therefore, pointed out that no taxing event under Section 12 of the Customs Act takes place if the goods are covered by an exemption order. It was pointed out that a special order under Section 25(2) would be an instance of an executive order or an administrative order and not the exercise of a legislative power. At page 534 it had been further pointed out that considerations of retroactivity are not relevant for an order under Section 25(2). For the same reasons we are, unable to agree with the contention of Shri Ohri that the order dated 11.11.1975 would have to be held to be bad on the basis that it was retroactive in character and that in law it cannot have such an effect."
9. We have also perused the judgment of the Delhi High Court in the case of "Dr. Hari Vishnu Pophale v. Union of India" (supra). The High Court held that the distinct language of Section 25(1) and Section 25(2) of the Customs Act makes it clear that an order under Sub-section (1) is a general order and the order under Sub-section (2) is not an order of general nature but a special order passed in each case. The High Court observed that a notification under Section 25(1) would be bad if it had the effect of exempting goods, as that would amount to giving retrospective effect to a notification. Commenting on the role of subordinate authorities such as 'Collector' and 'Board', the High Court observed as follows :-
"If an order under Section 25(2) is quasi-judicial in nature, the subordinate authorities such as Collector and Board are powerless to challenge or ignore it. This is a sound judicial principle. But even if it not, the subordinate authorities must comply with the statutory orders. The area of operation at subordinate level in the administrative process is small and vision of the administrative-problem is necessarily narrow. These authorities are concerned with short term, immediate and smaller administrative problems. Import and export are conditioned by international requirement. They involve fundamental policy considerations. Coming to the facts of the present case, permitting import of free gift of milk powder from donor abroad involves a policy consideration. The social obligations to children and poorer sections of society are also matters of higher national policy and programme. It is beyond the subordinate authorities to comprehend these bigger policy consideration. From purely administrative point of view, the subordinate authorities must comply with the orders of the Central Government and cannot fault them."
10. We have also perused the judgment of the High Court of Madras in 'Indian Leaf Tobacco Development Ltd. and 'ITC Ltd. (supra), the High Court held that Section 25(2) of the Customs Act does not impose any restriction on the Central Government as to the time when it should grant the exemption. They further held that, even in cases when custom duty has been collected, it will be open to the Central Government in exercise of powers under Section 25(2) of the Customs Act to grant exemption and refund the duty. In that case, the facts were that the Government granted exemption after the revision petition was dismissed by the Central Government.
11. In the case of 'Food Corporation of India v. C.C. Bombay' (supra), the Tribunal vide its order allowed the appeal and ordered the Department to grant refund in terms of an ad hoc Exemption Order. While doing so, they referred to the Madras High Court judgment (supra).
12. From the case law cited, it is clear that the High Courts as well as the Tribunal have taken the constant view that the Central Government is competent to issue an ad hoc Exemption Order even after importation of goods and payment of duty thereon. The conclusion is that if duty is already paid on goods and an ad hoc Exemption Order is issued subsequently, the duty should be refunded.
13. In the case of 'Food Corporation of India v. C.C. Bombay' reported in '1984 (17) ELT 180', it was argued for the Department that the claim in question would not be covered by the ad hoc exemption as, in that case also, the goods arrived well before the issue of the ad hoc Exemption Order. He relied on a judgment of the Supreme Court in 'AIR 1970 (S.C.) 385' and other case-law, but the Bench observed that, in all the cases quoted by him, the Courts were dealing with rules or bye-laws, made by the rule-making authority in such a manner that rights of citizens, or the affected persons, were adversely affected upon with retrospective effect. While directing that ad hoc exemption should be extended to the consignment in question, the Bench recorded that "there is no one judgment that says that an order, of the kind issued by the Central Government in this case, giving an exemption that would have retroactive impact on the goods that have been imported and cleared several months before, has been invalid by reason of its retroactivity". The Bench, therefore, dismissed the arguments.
14. In the case of 'Shri Dalip Singh, 3alandhar City v. The Collector of Customs, Bombay' (CEGAT Order No. 205/85-82, dated 29.10.1985) 1986 (26) E.L.T. 187 (Tribunal). Shri J. Gopinath, the learned SDR, argued that the exemption notification did not specify that refund of duty should be granted to the appellant and that, inasmuch as the exemption was not secured prior to the import, the appellant would not be entitled to the refund. Rejecting this argument, the Tribunal held that, if the exemption was granted prior to the levy, it becomes remission, whereas if the duty had already been collected, it is open to the Government to exercise power, under Section 25(2) of the Customs Act, to grant exemption, and (that) the consequential refund would necessarily follow.
15. We referred to the Revenue's arguments in these two cases as Shri J. Gopinath, the learned SDR, referred to the arguments and they were treated as repeated here.
16. Taking into consideration the case-law cited by the learned Counsel of the Appellants, we do agree with his submission that the case-law is overwhelmingly in favour of the appellants to the effect that, in this case, the ad hoc Exemption Order - though issued after the importation of the goods and payment of duty thereon - should be applied and refund granted. We reject the arguments of the learned SDR for the reasons we have recorded above.
17. In the rsult, the appeal is allowed. In view of this, we are not going into the other arguments of the learned Counsel for the appellants.