Customs Act Section 25(4) Unconstitutional, Invalid Notification No.29/2018-Cus, Petitioner Entitled to Refund

The court declared Section 25(4) of the Customs Act unconstitutional due to inconsistencies with other subsections. It also invalidated Notification No.29/2018-Cus for not being validly in force when customs duty was paid. The petitioner was entitled to a refund of excess customs duty paid under protest at the enhanced rate, as the original rate applied. The court directed the respondents to refund the excess amount collected with interest.

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Issues Involved:
1. Constitutionality of Section 25(4) of the Customs Act, 1962 as amended by the Finance Act, 2016.
2. Validity of Notification No.29/2018-Cus dated 01.03.2018.
3. Entitlement to a refund of customs duty paid under protest.

Issue-wise Detailed Analysis:

1. Constitutionality of Section 25(4) of the Customs Act, 1962:
The petitioner challenged the constitutionality of Section 25(4) of the Customs Act, 1962, as amended by the Finance Act, 2016, arguing it was arbitrary, illegal, and unconstitutional. The court examined whether the amended sub-section (4) of Section 25 created any confusion or contradiction with sub-sections (1) and (2A) of the same section. The court noted that sub-section (1) mandates that any notification for exemption must be published in the Official Gazette to inform the public. However, sub-section (4), as amended, stated that notifications would come into force on the date of issue for publication, which could lead to situations where the public is unaware of changes in duty rates. The court found this amendment created absurdity, confusion, and friction, making it difficult to reconcile with sub-sections (1) and (2A). Therefore, the court declared Section 25(4) as arbitrary and inconsistent with sub-sections (1) and (2A), rendering it unconstitutional.

2. Validity of Notification No.29/2018-Cus dated 01.03.2018:
The petitioner contended that Notification No.29/2018-Cus, which increased the customs duty on crude palm oil from 30% to 44%, was not valid as it was published in the Official Gazette only on 06.03.2018. The court examined the requirement for publication in the Official Gazette, noting that the purpose of such publication is to inform the public and ensure predictability and transparency in the law. The court referenced several judgments emphasizing the necessity of publication in the Official Gazette for a notification to take effect. The court concluded that since the notification was signed and published electronically only on 06.03.2018, it could not be deemed to have come into force on 01.03.2018. Therefore, the court held that the notification was not validly in force on the dates when the petitioner filed the Bills of Entry for clearance of the goods.

3. Entitlement to a Refund of Customs Duty Paid Under Protest:
The petitioner sought a refund of Rs. 2,88,16,200/- paid under protest at the enhanced rate of 44%. The court noted that the relevant date for determining the rate of duty is the date of presentation of the Bills of Entry. Since the notification increasing the duty to 44% was not validly in force on the dates of the Bills of Entry, the petitioner was liable to pay only the original rate of 30%. The court found that the respondents had collected customs duty at the enhanced rate without legal basis and directed them to refund the excess amount collected, along with interest from the date of deposit till the date of payment.

Conclusion:
The court allowed the writ petitions, declaring Section 25(4) of the Customs Act as unconstitutional and invalidating Notification No.29/2018-Cus dated 01.03.2018. The respondents were directed to refund the excess customs duty collected from the petitioner.

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