Gujarat High Court
M/S. Cairn India Limited vs Union Of India & 6 on 8 September, 2015
Author: Harsha Devani
Bench: Harsha Devani, A.G.Uraizee
C/SCA/10934/2015 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO.10934 of 2015
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M/S. CAIRN INDIA LIMITED....Petitioner(s)
Versus
UNION OF INDIA & 6....Respondent(s)
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Appearance:
MR MIHIR JOSHI, SR. ADVOCATE with MR HARDIK P MODH, ADVOCATE
for the Petitioner(s) No.1
MR RJ OZA, ADVOCATE for the Respondent(s) No.4 - 5
NOTICE SERVED BY DS for the Respondent(s) No.1 - 3 , 6 - 7
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CORAM: HONOURABLE MS. JUSTICE HARSHA DEVANI
and
HONOURABLE MR. JUSTICE A.G.URAIZEE
Date : 08/09/2015
ORAL ORDER
(PER : HONOURABLE MS. JUSTICE HARSHA DEVANI)
1. The issue involved in this case relates to the levy of safeguard duty on goods imported by the petitioner. By a notification dated 13th August, 2014, the Central Government in exercise of powers under sub-section (1) of section 8B of the Customs Tariff Act read with rules 12, 14 and 17 of the Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997, (hereinafter referred to as "the rules") after considering the findings of the Director General (Safeguards) regarding injury caused to the domestic producers of Seamless Pipes and Tubes, imposed on Seamless Pipes and Tubes falling under the tariff items of the Customs Tariff Act mentioned therein, when imported into India, a safeguard duty at the rate specified in the notification. The note below the notification Page 1 of 12 HC-NIC Page 1 of 12 Created On Sat Sep 12 00:46:33 IST 2015 C/SCA/10934/2015 ORDER says that for the purpose of that notification, Seamless Pipes and Tubes does not include -
(i) Seamless alloy-steel pipes, tubes and hollow profiles of specification ASTM A213/ASME SA 213 and ASTM A335 /ASME SA 335 or equivalent BIS/DIN/BS/EN or any other equivalent specifications;
(ii) Non API and Patented Premium Joints/Premium Connections/Premium Threaded Tubes and Pipes of grades Q-125, 13CR, L-80, P110, C-90, C-95, T-90 and T- 95;
(iii) All 13 Chromium (13CR) Grades Tubes and Pipes not included in item (ii) above; and
(iv) Drill Collars It is the case of the petitioner that the goods imported by it fall within the excluded categories namely, category (ii) above. The customs authorities, however, are of the view that the goods imported by the petitioner do not fall within any of the excluded categories and accordingly, in respect of three bills of entry submitted by the petitioner prior to the filing of the petition, passed Order-In-Original holding that the subject goods are amenable to safeguard duty. The appeal preferred by the petitioner against the Order-In-Original has been dismissed by the Appellate Commissioner and the petitioner intends to approach the appropriate forum against the said order.
2. It being the case of the petitioner that the goods imported by them would not attract levy of safeguard duty, the petitioner made representations to the Director General Page 2 of 12 HC-NIC Page 2 of 12 Created On Sat Sep 12 00:46:33 IST 2015 C/SCA/10934/2015 ORDER (Safeguard Duty) who in turn, appears to have called for the opinion of the applicants at whose instance safeguard investigation concerning import of Seamless Pipes and Tubes had been initiated. By a communication dated 9th January, 2015 of their advocates, the applicants namely, M/s. ISMT Limited and M/s. Jindal Saw Limited (the Domestic Industry) informed the Directorate General of Safeguards that the products in respect of which clarification had been sought would fall under the exclusion entries listed in the notification and have been specifically excluded from the scope of the product under investigation. Thus, the parties at whose instance safeguard duty came to be levied, have clarified that the goods imported by the petitioner fall within the exclusion entries listed in the notification.
3. The petitioner has also made representations to the Central Board of Excise and Customs (hereinafter referred to as "CBEC") in this regard; however, no decision has been taken thereon. It appears that since the Order-In-Original has been challenged by the petitioner before the appellate forum and the appeal had been dismissed, the CBEC has left it to the statutory authorities under the Customs Act to decide the issue.
4. It is the case of the petitioner that it has entered into a Production Sharing Contract with the Government of India pursuant to which it has been designated as "Operator" wherein it conducts the petroleum operations at Rajasthan block. The petitioner imports highly specialised goods viz., Patented Premium VAM Top Threaded and Coupled Connection for the purposes of undertaking petroleum operations and time Page 3 of 12 HC-NIC Page 3 of 12 Created On Sat Sep 12 00:46:33 IST 2015 C/SCA/10934/2015 ORDER and again is required to import the subject goods. That while it is true that in respect of three bills of entry, the Order-In- Original has been challenged by resorting to the alternate statutory remedy, such remedy is not an efficacious remedy and that the issue is required to be resolved at the earliest as the same has a huge impact on the operations of the petitioner and that the petitioner would be required to face umpteen litigations of the same kind. The petitioner, therefore, seeks a declaration that the subject goods, including the goods under the bill of entry in question, fall within the exclusion of the definition of Seamless Pipes and Tubes in the notification on which safeguard duty is not imposable, as well as a direction to the respondent No.3 - CBEC to act upon the clarification/letter dated 15th January, 2015 issued by the respondent No.2 - Directorate General of Safeguards and instruct its officers not to collect any safeguard duty on the import of the subject goods including the bill of entry goods and issue a clarification in relation to the same. The petitioner also seeks a direction to the respondents to forbear from charging any safeguard duty upon import of the subject goods including import of goods vide Bill of Entry dated 19th June, 2015. The petitioner has also prayed that Bill of Entry No.9629824 dated 19 th June, 2015 duly assessed by the Assistant Commissioner of Customs, Kandla be quashed and set aside and further seeks a direction to the respondent No.3 to decide the representation dated 16th December, 2014 filed by the petitioner expeditiously.
5. Mr. Mihir Joshi, senior advocate, learned counsel for the petitioner submitted that the nature of the project undertaken by the petitioner involves a large public element, it is a time-bound project and under Article 17.1 of the Page 4 of 12 HC-NIC Page 4 of 12 Created On Sat Sep 12 00:46:33 IST 2015 C/SCA/10934/2015 ORDER Production Sharing Contract, the machinery, plant, equipment, materials and supplies imported by the petitioner for use in petroleum operations are exempted from all customs duties, import taxes or levies. That pursuant to the representation made by the petitioner, the Director General of Safeguards has, by a communication dated 15th January, 2015, addressed to the Commissioner (Customs), CBEC, informed that the domestic industry has accepted that the subject goods mentioned in Annexure 'A' to the representation made by the petitioner are excluded from levy of safeguard duty in terms of the exclusion attached to the notification dated 13th August, 2014 and has further stated that the Board may take necessary further action in that matter. It was submitted that the authority which has recommended imposition of duty has clarified that the goods imported by the petitioner are not covered by the notification, despite which, the customs authorities have imposed levy of safeguard duty on the goods imported by the petitioner. It was argued that the levy is, therefore, without authority of law and falls foul of Article 265 of the Constitution of India. It was submitted that the present case does not involve a classification dispute but the dispute is as regards whether the goods are covered by the duty. It was submitted that the contention of the respondents that an exemption notification has to be strictly construed is misconceived in the facts of the present case, as the notification in question is not an exemption notification, but is a notification levying safeguard duty. The question involved is whether the goods imported by the petitioner fall within the excluded categories which is not the same as being exempted from payment of duty. It was urged that this being a case of imposition of duty, the subject goods must fall clearly within Page 5 of 12 HC-NIC Page 5 of 12 Created On Sat Sep 12 00:46:33 IST 2015 C/SCA/10934/2015 ORDER the levy.
6. On the other hand, Mr. R.J. Oza, learned senior standing counsel for the respondents No.4 and 5 opposed the petition mainly on two counts. Firstly, on the ground that the petition was not maintainable as the petitioner had an efficacious statutory remedy available by way of reassessment by the customs authorities and thereafter, further remedy of appeal as provided under the Act. It was argued that the petition had been filed in the context of applicability of clause
(ii) of the exclusion clause contained in the notification imposing safeguard duty which is primarily a question of fact which ought not to be adjudicated in a writ petition under Article 226 of the Constitution of India. In support of such contention, the learned counsel placed reliance upon the decision of the Supreme Court in the case of State of Goa v. Leukoplast (India) Limited, 1997 (92) E.L.T. 19 (S.C.) as well as the decision of the Madras High Court in the case of Karur District Dyeing and Bleaching Factory Owners' Association v. Assessing Officer, Textile Committee, 2009 (13) S.T.R. 317 (Madras). Secondly, on the question of grant of interim relief, it was submitted that no prima facie case has been made out by the petitioner. Reference was made to the scheme of the rules to point out that the Directorate General of Safeguards can, after giving its final finding on investigation, review the need of imposition of safeguard duty under rule 18 of the rules and that it has no power to issue any clarification as sought for by the petitioner. Referring to the communication dated 15th January, 2015 of the Director General, it was submitted that the same is not a letter of clarification and that he has only communicated the opinion Page 6 of 12 HC-NIC Page 6 of 12 Created On Sat Sep 12 00:46:33 IST 2015 C/SCA/10934/2015 ORDER of the two domestic industries and referred the matter to the Board for further action. It was submitted that the three bills of entry submitted by the petitioner have been assessed and Order-In-Original had been passed confirming levy of safeguard duty and the petitioner has failed in the appeal preferred by it before the Appellate Commissioner. It was submitted that insofar as the present bill of entry is concerned, it has been filed in respect of similar goods for which it had applied for reassessment and, therefore, can resort to the same procedure in this case. It was submitted that the petitioner has not made out any prima facie case for the reason that the contention that a large number of bills of entry would be filed is not borne out from the record. It was contended that the letter of the Directorate General is not clarificatory in nature; in any case under section 8A of the Customs Tariff Act as well as the rules, there is no provision for making any clarification as regards the notification issued by the Central Government; the petitioner has an alternative remedy under the Act to apply for reassessment and have recourse to the appellate remedy; merely because a large number of bills of entry may be filed in future is no reason not to avail of the statutory remedy and that the petitioner is required to undergo the statutory remedy prescribed under the Act. It was also submitted that no irreparable injury is caused to the petitioner as in the event it ultimately succeeds, it would be entitled to refund, on the other hand, the amount paid by the petitioner towards safeguard duty would be well utilised for public welfare. It was, accordingly, urged that the petition may not be admitted and no interim relief be granted.
7. In rejoinder, Mr. Joshi, learned counsel for the petitioner submitted that the petition does not involve any Page 7 of 12 HC-NIC Page 7 of 12 Created On Sat Sep 12 00:46:33 IST 2015 C/SCA/10934/2015 ORDER disputed question of fact and is a straight question of law involving the issue of interpretation of the notification. The facts are admitted and the fact is that though the base pipes are of API grade, what is being imported by the petitioner is Premium Patented Joint Connectors and Threaded Tubes and Pipes. It was submitted that on the question of alternative remedy, it may be possible to take a very narrow view but the facts justify exercise of jurisdiction under Article 226 of the Constitution. Referring to the reliefs prayed for in the petition, it was submitted that such reliefs can be granted only by the High Court in exercise of powers under Article 226 and cannot be subject matter of alternative remedy. It was urged that in respect of individual bills of entry recourse to the alternative remedy would be futile as the appellate authority has already decided against the petitioner. Besides, there is no cause for bifurcation of the prayers qua part of the reliefs. Referring to the affidavit-in-reply filed on behalf of the Directorate General of Safeguards, it was pointed out that he has not refuted the contention raised by the petitioner as regards the goods imported by the petitioner falling within the excluded categories. As regards the powers of the Directorate General of Safeguards, reference was made to rule 4(2) of the rules to submit that it is well within the power of the Directorate General to identify the article liable for safeguard duty. Referring to the letter dated 15th January, 2015, it was submitted that it is clear that the goods imported by the petitioner were never part of the investigation. It was urged that in the light of the divergent views of two statutory authorities namely, the authorities under the Customs Act and the Directorate General of Safeguards and that all that the petitioner seeks is the opinion of the CBEC in this regard. On Page 8 of 12 HC-NIC Page 8 of 12 Created On Sat Sep 12 00:46:33 IST 2015 C/SCA/10934/2015 ORDER the question of irreparable injury, it was submitted that the levy being without constitutional basis is an injury in itself.
8. In the aforesaid backdrop, at this stage, two questions need to be addressed: (i) Whether in the facts and circumstances of the case, this petition under Article 226 of the Constitution of India is maintainable? (ii) Whether the petitioner is entitled to the grant of any interim relief as prayed for, or otherwise?
9. As regards the maintainability of the petition, in the opinion of this court, merely because in respect of other bills of entry, the petitioner has availed of the statutory remedy provided under the Customs Act, the same would not preclude the petitioner from invoking the writ jurisdiction of this court, if other factors are satisfied. As can be seen from the reliefs claimed in the petition, the petitioner has challenged the very jurisdiction of the respondents to levy the safeguard duty on the goods imported by the petitioner. It has been contended that such levy being without jurisdiction is in contravention of the provisions of Article 256 of the Constitution of India. Under the circumstances, when the very jurisdiction of the respondent authorities to levy safeguard duty is under challenge, it cannot be said that the petition under Article 226 of the Constitution is not maintainable. As regards the contention that the petition involves disputed questions of fact and is, therefore, beyond the pale of Article 226, as rightly submitted by the learned counsel for the petitioner, the issue involved in the present case is a pure question of law which requires interpretation of the notification issued by the Central Government and does not involve any question of fact.
Page 9 of 12HC-NIC Page 9 of 12 Created On Sat Sep 12 00:46:33 IST 2015 C/SCA/10934/2015 ORDER Therefore, the contention regarding non-maintainability of the petition does not merit acceptance.
10. Having regard to the submissions advanced by the learned counsel for the parties, as set out hereinabove, this court is of the view that the petition merits consideration. Hence, issue rule, returnable on 28th October, 2015. Mr. R.J. Oza, learned counsel waives service of notice of rule on behalf of the respondents No.4 and 5.
11. On the question of grant of interim relief, from the facts delineated hereinabove, it is clear that the safeguard duty has been imposed to allay the concerns of the domestic industries. After due investigation, the Directorate General of Safeguards has submitted his recommendation which excludes certain categories of goods from the ambit of the notification. On the representation made by the petitioner, the Directorate General of Safeguards has obtained the opinion of the domestic industries, more particularly, the two parties who had filed the application for initiation of safeguard investigation. Both the parties have responded by a common communication dated 9th January, 2015 of their advocate, addressed to the Directorate General of Safeguards, informing him that the products specified thereunder (which include products of the description imported by the petitioner) have been specifically excluded from the scope of the product under investigation vide the exclusion entries mentioned against the product description. It may be noticed that the excluded category under clause (ii) in the notification are Non-API and Patented Premium Joints/Premium Connections/Premium Threaded Pipes and Tubes of grades Q-125, 13 CR, L-80, P110, C-90, C-95, T-
Page 10 of 12HC-NIC Page 10 of 12 Created On Sat Sep 12 00:46:33 IST 2015 C/SCA/10934/2015 ORDER 90 and T-95. It has been submitted by the learned counsel for the petitioner that certain grades mentioned in the notification are API grades and there cannot be non-API pipes of API grade. It has been submitted that what the notification seeks to exclude are non-API premium connections which are custom made with the patented technology of the manufacturer distinct from API standards even if the pipes and tubes conform to API grades. In the opinion of this court, considering the view of the domestic industry in the light of the interpretation put forth by the learned counsel for the petitioner, the petitioner has made out a prima facie case for grant of interim relief. At the same time, the court cannot be oblivious of the fact that in the proceedings under the Customs Act, the petitioner has lost before the adjudicating authority as well as the Appellate Commissioner and hence, the interim relief would be required to be moulded accordingly to take care of the interest of the revenue.
12. Moreover, having regard to the nature of the project and with a view to prevent multiplicity of similar litigation, this court is of the view that it would be expedient if the CBEC decides the representation of the petitioner without leaving it to the concerned statutory authorities to decide the issue.
13. In view of the above discussion, by way of interim relief, the respondents are directed to allow clearance of the subject goods by the petitioner as and when they are imported, including goods as described at Annexure 'A' to the representation dated 16th December, 2014 (page 459 of the petition) including the subject goods imported under Bill of Entry No.9629824 dated 19th June, 2015, subject to the Page 11 of 12 HC-NIC Page 11 of 12 Created On Sat Sep 12 00:46:33 IST 2015 C/SCA/10934/2015 ORDER petitioner furnishing a bank guarantee to the extent of 25% of the duty that may be assessed. The petitioner shall also furnish an undertaking before this court that in case the petitioner ultimately fails in the present petition, they would deposit the entire amount of duty together with statutory interest. The respondent No.3 - Central Board of Excise and Customs shall decide the representations dated 16th December, 2014, 12th February, 2015 and 13th March, 2015 filed by the petitioner on or before 23rd October, 2015 and a copy of such decision shall be placed before this court on or before the returnable date.
Direct Service is permitted.
( Harsha Devani, J. ) ( A.G. Uraizee, J. ) hki Page 12 of 12 HC-NIC Page 12 of 12 Created On Sat Sep 12 00:46:33 IST 2015