The Petitioner, inter alia engaged in the business of manufacture of soya products, had imported certain edible oil. The Petitioner filed Bills of Entry on 01 March 2018 seeking clearance of the imported goods for home consumption by paying 30% BCD along with the applicable IGST.
In the meanwhile, the Customs Department issued Notification No. 29/2018 – Customs dated 01 March 2018 (‘NN.29/2018’) u/s. 25(1) of the Customs Act increasing the BCD on the imported goods from 30% to 44%. Accordingly, the Customs Department insisted the Petitioner to pay the enhanced duty.
Aggrieved, the Petitioner had filed a Writ before the Gujarat HC inter alia for declaring Section 25(4) of the Customs Act, as unconstitutional.
Section 25(1) r/w. 25(2A) of the Customs Act inter alia provides that the Central Government, in the public interest may, by notification in the official gazette, exempt goods from the custom duties. Further, the Central Government is empowered to insert explanation in such notification.
Further, Section 25(4) of the Customs Act inter alia provides that notifications shall come into force on the date of its issue by the Central Government for publication in the Official Gazette.
The Petitioner submitted that as NN.29/2018 was published electronically on 06 March 2018, the same would not be applicable for the clearance of the imported goods for which the BOE were filed on 01 March 2018. It had been further submitted that the Respondent authorities could not have reassessed the bills of entry 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 u/s. 25(1) or 25(2A) 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.
The Respondent submitted that a operation of a notification under the Customs Act comes into force on the date of its issue by the Central Government for publication in the Official Gazette so the relevant date in for coming into force is the date of issue of notification by the Central Government for publication in the official gazette, and not the date on which it is published in the official gazette.
It was further submitted by the Respondent that the time of coming into operation would be the moment of expiration of the day preceding commencement of the notification. In this regard, the Respondent relied upon the judgement of the Punjab and Haryana HC in the case of Commissioner of Income Tax vs. RB Jodha Mal Kuthiala [Income-tax Reference No. 16 of 1960].
The Gujarat HC relied upon the judgement of the Andhra Pradesh HC in the case of Ruchi Soya Industries Limited vs. Union of India [MANU/AP/0325/2019], wherein Section 25(4) of the Customs Act had been struck down declaring the same as arbitrary and contrary to the provisions of Section 25(1)(2A) of the Customs Act.
It had been observed that according to Section 25(1) of the Customs Act, whenever, a notification is to be issued in the public interest, 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. As NN.29/2018 enhanced the rate of duty from 30% to 44% by Amendment Act 28 of 2018 to be notified in the Gazette, it must be only in the public interest in general. However, according to subsection (4) of Section 25, introduced by Amendment Act 28 of 2018, substituted subsection says that every notification issued under subsections (1) & (2A) of Section 25 of the Act shall be, unless otherwise provided came into force by the date of issue by the Central Government for publication in the Gazette. Accordingly, it was held by the AP HC that the purport of subsections (1), (2A) and (4) of Section 25 are inconsistent with one another and therefore, liable to struck down.
Relying upon the judgement of AP HC in the case of Ruchi Soya (supra) and various other judgements, the Gujarat HC held that the provisions of Section 25(4) of the Customs Act, is arbitrary and contrary to Section 25(1) & (2A) of the Customs Act. The HC further directed the Respondent to refund the excess amount of custom duty and differential amount of IGST collected from the Petitioner for clearance of imported goods for home consumption as per the Notification published subsequent to the date of filing of the bills of entry with simple interest @ 6% p.a. from the date of deposit till the date of payment.
Ruchi Soya Industries Limited vs. Union of India and Ors. [R/Special Civil Application No. 11063 Of 2018]
Disclaimer:
The information provided in this update is intended for informational purposes only and does not constitute legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein. This update is not intended to address the circumstances of any particular individual or corporate body. There can be no assurance that the judicial/ quasi judicial authorities may not take a position contrary to the views mentioned hereinrra quis.
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