HC explains relevant date for application of notification

Ruchi Soya Industries Ltd Vs. Union of India (Gujarat High Court)

1. Rule returnable forthwith. Mr.Nirzar Desai, learned Standing Counsel waives service of notice of rule on behalf of the respondent no.1. Mr.Parth Bhatt, learned advocate waives service of notice of rule on behalf of the respondent nos.2 and 3. Mr.Kartik Pandya, learned advocate waives service of notice of rule on behalf of the respondent no.1.

2. Since all these petitions are involving common issues, the same were heard analogously and are being disposed of by this common order.

3. For the sake of convenience, Special Civil Application 11063 of 2018 is treated as lead matter. However, facts for each of the petitions are also stated separately because they are different with regard to the same issue arising for declaring Section 25(4) of the Customs Act, 1962 as amended Finance Act, 2016 as unconstitutional and quashing and setting aside the Notification no.29 dated 1^st March 2018 or In alternative to direct that the Notification no.29 dated 1st March 2018 is effective and operational from 6^th March 2018 only and not prior thereto.

Facts of SCA No.11063 of 2018.

4. The petitioner is a limited company incorporated under the provisions of 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 8^th February 2018. M/s. S. N. Overseas, imported said goods no.8 “MT BRILLANTE VOY. NO. 1801” vide 5 bills of Lading dated 7^th February 2018. M/s. S. N. Overseas raised 3 invoices dated 23^rd February 2018 upon the petitioner pertaining to the aforesaid imported goods.

4.1 The petitioner filed three bills of entry dated 1^st March 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 1^st March 2018.

4.3 According to the petitioner, the crude palm oil and edible grade falls under the classification under custom tariff heading 15111000 of the Customs Tariff Act and the subject goods were covered by Entry 57 II (A) in the Notification no.50/2017­Cus dated 30^th June 2017 and the petitioner was required to pay basic custom duty @ 30%.

4.4 Thereafter, the Custom Authorities assessed the subject goods on 1^st March 2018 and the basic custom duty was assessed @ 30% plus 10% 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 1^st March 2018 under Section 25(1) of the 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 the Notification no.29 of 2018 – Cus dated 1^st March 2018  was published in official gazette electronically on 6^th March 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 2018­Cus was published electronically on 6^th March 2018, the same would not be applicable for the clearance of the subject goods for which the bills of entry were filed on 1^st March 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.

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, ultravirus 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 the Notification no.29 of 2018 – Cus dated 1^st March 2018 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 of 2018 – Cus dated 1^st March 2018 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.

(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 1.3.2018 done by the Respondents on 9.3.2018 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. 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 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.Rs.90,05,067/­with interest accrued there upon.

(G) Pass any other appropriate Order(s) as this Hon. Court may deem fit and proper in the facts and circumstances of the instant.”

Facts of SCA No.23341 of 2017

5. In the present case, the petitioner had imported goods being edible oil on 17^th November 2017 and had filed Bills of Entry no.4014924 and 4015086 dated 15^th November 2017 and Bills of Entry no.4032071 dated 16^th November 2017 for home consumption.

5.1 That on 17^th November 2017, the vessel was granted an entry inward at 12:45 hrs. therefore, the date of Bills of Entry would be 17^th November 2017 as per the proviso to Section 15 of Customs Act, 1962.

5.2 That further on 17^th November 2017, at 12:45 hours. The Risk Management System (RMS) assessed the said Bill of Entry @ 17.5% which was the applicable rate in the system as well.

5.3 That subsequently, vide notice dated 23^rd November 2017, the Deputy Commissioner of Customs (Gr.VII), Kandla informed that such Bill of Entry needs to be re­assessed on the ground of issuance of Notification No.87/2017­Cus dated 17^th November 2017.

5.4 That the new Notification No.87/2017­Cus dated 17^th November 2017 was neither in existence nor released till 20^th November 2017. The Copy of the Notification digitally signed to be published in official Gazette is enclosed herewith the Note.

5.5 That the Notification No.87/2017­Cus dated 17^th November 2017 was digitally signed for being published in Official Gazette only on 20^th November 2017.

5.6 That this was the reason that the effect of notification was also not given in RMS and EDI Bill of Entry at the time of assessment of the Bills of Entry no.4014924, 4015086 and 4032071.

5.7 That therefore, the petitioner vide letter dated 21^st November 2017 and 27^th November 2017 explained the issue to the Deputy Commissioner and requested the Bill of entry not be recalled and reassessed as per the higher Customs duty of 30%.

Facts of SCA No.1919 of 2018

6. That the Petitioner had imported goods being edible oil on 17^th November 2017 and had filed Bills of Entry no. 4032303, 4032304, 4032289, 4032290, 4031615, 4031635, 4031616 and 4031637 dated 16^th November 2017 for home consumption.

6.1 That for Bills of Entry no. 4032303, 4032304, 4032289 and 4032290 dated 16^th November 2017, the Petitioner had to make the duty payment @ 17.5% and for Bills of Entry no. 4031615, 4031635, 4031616 and 4031637 dated 16^th November 2017 @ 15% by vide Notification no.50/2017­Cus dated 30^th June 2017.

6.2 That on 17^th November 2017, the vessel was granted an entry inward and therefore, the date of Bills of Entry would be 17^th November 2017 as per the proviso to Section 15 of Customs Act, 1962.

6.3 That further on 17^th November 2017, RMS assessed the said Bill of Entry @ 17.5% which was the applicable rate in the system as well and communicated to the Petitioner that in spite of the Bills of Entry having inward on 17^th November 2017, the Bills of Entry were kept pending for assessment and therefore, they would be assessed at the higher rate of 30% under Notification No.87/2017­Cus dated 17^th November 2017

6.4 That subsequently, vide notice dated 24^th November 2017, the Deputy Commissioner of Customs (Grade. 1), Kandla informed that such Bills of Entry no. 4032303, 4032304, 4032289 and 4032290 dated 16^th November 2017 needs to be re­assessed on the ground of issuance of Notification No.87/2017­Cus dated 17^th November 2017

6.5 That the new Notification No.87/2017­Cus dated 17^th November 2017 was neither in existence nor released till 20^th November 2017. The Copy of the Notification digitally signed to be published in official Gazette is enclosed herewith the Note.

6.6 That the Notification No.87/2017­Cus dated 17^th November 2017 was digitally signed for being published in Official Gazette only on 20^th November 2017.

6.7 That this was the reason that the effect of notification was also not given in RMS and EDI Bill of Entry at the time of assessment of the Bills of Entry no. 4032303, 4032304, 4032289 and 4032290.

6.8 That therefore, the Petitioner vide letter dated 24^th November 2017 and 27^th November 2017 explained the issue to the Deputy Commissioner and requested the Bill of entry not be recalled and reassessed as per the higher Customs duty of 30%.

Facts of SCA No.23356 of 2017

7. That in the present case, the Petitioner had imported goods being edible oil on 17^th November 2017 and had filed Bills of Entry no.4014311, 4016027 and 4014597, all dated 15^th November 2017 and Bill of Entry No.4031148 and 4031633 dated 16^th November 2017 for home consumption.

7.1 That for Bills of Entry no.4014311, 4016027 and 4014597 all dated 15^th November 2017, and for Bills of Entry no.4031148 dated 16^th November 2017, the petitioner had made the duty payment @ 17.5% by MEIS licenses/scripts vide Notification no.50/2017­Cus dated 30^th June 2017.

7.2 That on 17^th November 2017, the vessel was granted an entry inward and at 12:11 hrs. therefore, the date of Bills of Entry would be 17^th November 2017 as per the proviso to Section 15 of Customs Act, 1962.

7.3 That further on 17^th November 2017, at 12:11 hrs. the Risk Management System (RMS) assessed the said Bill of Entry @ 17.5% which was the applicable rate in the system as well.

7.4 That subsequently, vide notice dated 23^rd November 2017 & 24^th November 2017, the Deputy Commissioner of Customs (Grade. VII), Kandla informed that such Bills of Entry needs to be re­assessed on the ground of issuance ofNotification No.87/2017­Cus dated 17^th November 2017.

7.5 That the new Notification No.87/2017­Cus dated 17^th November 2017 was neither in existence nor released till 20^th November 2017. The Copy of the Notification digitally signed to be published in official Gazette is enclosed herewith the Note.

7.6 That the Notification No.87/2017­Cus dated 17^th November 2017 was digitally signed for being published in Official Gazette only on 20^th November 2017.

7.7 That this was the reason that the effect of notification was also not given in RMS and EDI Bill of Entry at the time of assessment of the Bills of Entry no. 4014311, 4016027, and 4014597.

7.8 That therefore, the Petitioner vide letter dated 24.11.2017 and 27.11.2017 explained the issue to the Deputy Commissioner and requested the Bill of entry not be recalled and reassessed as per the higher Customs duty of 30%.

Facts of SCA No.732 of 2018

8. Vide High Seas Sale Agreement dated 2^nd November 2017, Petitioner had purchased 500 MTs of Crude Degummed Soyabean Oil of Edible Grade in bulk (referred to herein after as subject goods) from M/s. Kanpur Edibles Pvt. Ltd., Kanpur, Uttar Pradesh. M/s. Kanpur Edibles Pvt. Ltd. had imported the subject goods per vessel “MT LACERTA” vide Bills of Lading No.KE5 and KE6 both dated 2^nd October 2017 (for 250 MTs each).

8.1 Thereafter petitioner, being owner of the subject goods as stated above, filed Bill of Entry No.4016010 dated 15^th November 2017 under Section 46 of the Customs Act, 1962 seeking clearance of the subject goods for home consumption. The subject goods merit classification under Customs Tariff Heading 15071000 of the Customs Tariff Act and petitioner was required to pay duty @ 17.50% (basic customs duty). Accordingly petitioner had filed the aforesaid Bill of Entry claiming classification and rate of duty as stated above.

8.2 The subject goods were assessed accordingly on 15^th November 2017 and duty was assessed @ 17.50%. Duty structure in regard to the subject goods is 17.50% (basic customs duty) plus 3% (education cess). Accordingly duty was assessed to the tune of Rs.50,80,779/­, which was discharged by the petitioner by MEIS Licences/scripts on 15^th November 2017. Thereafter, petitioner paid Integrated Goods and Service Tax (IGST) to the tune of Rs.16,63,409/­ payable on importation of the subject goods under the subject Bill of Entry on 16^th November 2017.

8.3 Vessel carrying the subject goods had arrived at Kandla Port on 12^th November 2017. Further, it would be relevant to mention here that the Entry Inward was granted to the said Vessel carrying the subject goods on 17^th November 2017.

8.4 As per revenue, clearance of the subject goods was held up on the ground that duty on the subject goods (basic customs duty) had increased from 17.50% to 30% in terms of Notification No.87/2017­Cus dated 17^th November 2017 (purportedly dated 17^th November 2017) issued under Section 25(1) of the Customs Act, 1962. To the best of the petitioner’s information, the said Notification was uploaded on the website of Central Board of Excise and Customs i.e. www.cbec.gov.in only on 18^th November 2017 around 01:30 hours and was published in the Official Gazette on 20^th November 2017 at 11:56 hours.

It is pertinent to mention here that the said Notification which was uploaded on website of Central Board of Excise and Customs as stated above had remarks “TO BE PUBLISHED IN THE GAZETTE OF INDIA”. Further, the said Notification was published electronically in the Official Gazette of India only on 20^th November 2017 at 11:56 hours as is evident from the digital signature thereon and petitioner has placed on record at pages 46­48 an electronic copy of the Gazette where at the end of the subject Notification the following endorsement appears: