2020 (9) TMI 903 - SC - Customs

Court Clarifies No Retrospective Application of Enhanced Customs Duty on Pre-Notification Entries.

The HC ruled that the enhanced customs duty notification under Section 8A of the Customs Tariff Act 1975 could not apply retrospectively to goods for ... Date for determination of rate of duty - presentation of bill of entry - deemed filing and self-assessment under Regulation 4(2) - notification under Section 8A of the Customs Tariff Act - delegated legislation prospective effect - effect of electronic gazette publication and timestamp - power of re-assessment under Section 17(4) - General Clauses Act Section 5(3) - Information Technology Act - time and place of electronic recordsDate for determination of rate of duty - presentation of bill of entry - deemed filing and self-assessment under Regulation 4(2) - Rate of customs duty for goods entered for home consumption is the rate in force at the date and time when the bill of entry is presented and self-assessment is completed as provided by law and regulations. - HELD THAT: - Section 15(1)(a) fixes the rate of duty by reference to the date on which a bill of entry under Section 46 is presented. Section 46 and the 2018 Regulations prescribe electronic presentation; Regulation 4(2) creates a deeming fiction that a bill of entry is filed and self-assessment completed when an electronic declaration is entered and an EDI bill of entry number is generated. Once the deeming fiction operates, the rate and valuation in force at that date/time stand crystallized. The Court held that self-assessment here was carried out before the impugned notification and therefore the earlier rate governed the imports. [Paras 22, 23, 24]The bills of entry which were deemed filed and self-assessed prior to the e-Gazette publication are to be assessed at the duty prevailing at that time.Notification under Section 8A of the Customs Tariff Act - effect of electronic gazette publication and timestamp - Information Technology Act - time and place of electronic records - A notification under Section 8A comes into force when it is published/uploaded in the Official (electronic) Gazette at the recorded timestamp; it cannot be treated as effective for earlier hours of the same calendar day absent statutory language authorizing retrospective effect. - HELD THAT: - Section 8A delegates to the Central Government an emergency power to amend the First Schedule by notification; delegated notifications must be published to take effect. The Information Technology Act and the Government's e Gazette regime permit and require electronic publication with timestamps; Section 8 and related rules mean the date/time of e Gazette upload is the relevant moment of publication. The Court held that Section 5(3) of the General Clauses Act, which treats Central Acts/Regulations as coming into operation from the expiry of the previous day, does not apply to such subordinate notifications; therefore a notification published at 20:46:58 on 16 February 2019 is effective from that timestamp and not from midnight earlier that day. [Paras 36, 40, 51, 58]Notification 5/2019 took effect only upon its upload/publication in the e Gazette at 20:46:58 on 16 February 2019 and does not relate back to earlier hours of that date.Power of re-assessment under Section 17(4) - delegated legislation prospective effect - Re assessment under Section 17(4) could not be validly invoked to apply the later published Section 8A notification to bills of entry that were duly self assessed and deemed filed before the notification's publication. - HELD THAT: - Section 17(4) permits re assessment where self assessment is found to be incorrect upon verification, examination or testing, or 'otherwise' in limited circumstances; it does not empower the department to revisit correctly completed self assessments simply because a later notification (which is prospective) was published. The Court held the self assessments here were correctly completed under the rate in force at the time of filing and therefore were not amenable to reassessment on the basis of the subsequent notification. [Paras 23, 67]The customs authorities' re assessment to apply Notification 5/2019 to bills of entry filed and self assessed prior to its e Gazette publication was impermissible.Final Conclusion: The appeals are dismissed. Where a bill of entry was duly presented and self assessed on the customs automated system before the e Gazette upload of Notification 5/2019 (20:46:58 on 16 February 2019), the rate of duty in force at the time of that deemed filing governs; the Section 8A notification took effect only upon its electronic publication at the recorded timestamp and is prospective, and re assessment under Section 17(4) could not be used to apply the later notification to completed self assessments. Issues Involved:1. Aftermath of Pulwama2. Backdrop3. Petitions before the High Court4. Judgment of the High Court5. Submissions in the appeals6. Determination of the rate under Section 15 of the Customs Act 19627. Precedent8. Interpreting 'day' and 'date'9. Notification under Section 8A of the Customs Tariff Act10. General Clauses Act11. Information Technology Act, 200012. Effect of notifications issued in e-gazettes13. Retrospectivity14. SummationDetailed Analysis:1. Aftermath of Pulwama:A terrorist attack in Pulwama on 14 February 2019 led the Union Government to issue a notification on 16 February 2019 under Section 8A of the Customs Tariff Act 1975, enhancing customs duty to 200% on all goods originating from Pakistan. The notification was uploaded at 20:46:58 hours. Customs authorities enforced the enhanced rate on importers who had already presented bills of entry before the notification's upload, leading to legal challenges.2. Backdrop:The first respondent, a partnership firm, imported cement from Pakistan. The goods arrived at the Land Customs Station, and the bill of entry was filed and self-assessed before the notification was issued. The customs authorities reassessed the duty after the notification, leading to a dispute.3. Petitions before the High Court:Importers challenged the reassessment, arguing that the enhanced duty could not apply retrospectively to goods for which bills of entry were filed before the notification. They contended that the notification should only apply prospectively from the time of its publication.4. Judgment of the High Court:The High Court ruled in favor of the importers, stating that the enhanced duty could not apply to goods for which bills of entry were filed before the notification's publication. The court held that the relevant date for duty determination is the date of bill of entry presentation, and the notification's late issuance meant it applied from the next day.5. Submissions in the appeals:The Union of India argued that the notification should apply from the date of its issuance, covering the entire day. The importers contended that the notification could not apply retrospectively and should only affect bills of entry filed after its publication time.6. Determination of the rate under Section 15 of the Customs Act 1962:Section 15 specifies that the rate of duty is determined by the date of bill of entry presentation. The court emphasized that the self-assessment and duty payment must align with the rate in force at that time. The notification's late issuance meant it could not retroactively alter the duty rate for already filed bills of entry.7. Precedent:Previous cases, such as Bharat Surfactants and Priyanka Overseas, established that the date of bill of entry presentation determines the duty rate. The court reaffirmed that the notification's effect could not precede its publication.8. Interpreting 'day' and 'date':The court examined various interpretations of 'day' and 'date' in legal contexts. It concluded that the notification's effect starts from its publication time, not retroactively from the beginning of the day.9. Notification under Section 8A of the Customs Tariff Act:The notification issued under Section 8A is a legislative act amending the First Schedule. However, it cannot have retrospective effect unless explicitly stated. The court held that the notification's effect begins from its publication time.10. General Clauses Act:Section 5(3) of the General Clauses Act, which states that a Central Act or Regulation comes into operation immediately after the preceding day, does not apply to notifications under Section 8A. The notification is not a 'Central Act' or 'Regulation' as defined in the General Clauses Act.11. Information Technology Act, 2000:The Information Technology Act supports the use of electronic records and timestamps. The court noted that the notification's publication time is crucial in determining its effect, aligning with the principles of electronic governance.12. Effect of notifications issued in e-gazettes:The shift to electronic gazettes means the precise publication time is significant. The court held that the notification's effect starts from its e-gazette publication time, not retroactively.13. Retrospectivity:Section 8A does not authorize retrospective application of notifications. The court emphasized that delegated legislation cannot have retrospective effect unless explicitly stated.14. Summation:The court concluded that the notification's effect starts from its publication time. The importers' bills of entry, filed before the notification's publication, should be assessed at the pre-notification duty rate. The appeals were dismissed, affirming the High Court's judgment.