In case of conflict between a contract and law, the Law prevails

Climax Overseas Private Limited Vs Commissioner (Appeal) Custom, Central Excise & Service Tax, (CESTAT Delhi)

The factual matrix of this case clearly shows that not only the goods have reached ICD Garhi, Harsaru after the issue of DGFT notification restricting the import of natural rubber through Nhava Sheva and Chennai only on 20.01.2016, but the goods were also dispatched after this date on 03.02.2016 by the overseas supplier. The Commercial invoice was also issued on 25.01.2016, five days after issue of DGFT notification. The contract, however, was signed with the overseas supplier by the appellant on 12.01.2016 before the issue of DGFT notification. It is a well settled legal principle that any contract between parties is subject to law and public policies. If the laws change making it impossible to fulfil the contracts as per the original terms, it is open for the parties to either cancel or modify the contract to bring it in conformity with the laws of their respective countries. Framing laws is the sovereign right of the state and this is not subservient to any contract between two businesses. Needless to say that in the case of any conflict between a contract and the law, the latter prevails. After the notification was issued on 20.01.2016 the appellant could have negotiated changes to the contract and got an invoice issued and delivery modified to bring it in conformity with the new legal notification. The appellant did nothing but went ahead with inflicting the goods under a bill of lading with the port of discharge as Nhava Sheva and final destination as ICD Garhi, Harsaru. This only establishes that either the appellant was negligent or otherwise decided to import the goods in violation of the law.

FULL TEXT OF THE CESTAT DELHI ORDER

This appeal has been filed by M/s. Climax Overseas Private Limited ¹ assailing the order in appeal² dated 11.03.2019 passed by the Commissioner of Customs (Appeals), New Customs House New Delhi whereby he upheld the order in original dated 31.03.2016 passed by the Joint Commissioner of Customs and rejected the appellant’s appeal. Hence this appeal.

2. The facts of the case, in brief, are that the appellant signed a contract dated 12.01.2016 with a supplier in Vietnam for import of natural rubber RSS3. Thereafter, on 20.01.2016 the Director General of Foreign Trade issued a notification no. 32/2015-2020 revising the policy condition for import of natural rubber as follows:

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