Court Invalidates Unpublished Tariff Notification, Cancels Duty Demands

PARAM INDUSTRIES LTD. Versus UNION OF INDIA

PARAM INDUSTRIES LTD. Versus UNION OF INDIA - 2002 (150) E.L.T. 3 (Kar.) Issues Involved:
1. Validity of the Notification dated 3-8-2001.
2. Discriminatory nature of the Notification.
3. Interim orders and subsequent appeals.
4. Exhaustion of alternative remedies.

Summary:

1. Validity of the Notification dated 3-8-2001:
The petitioners challenged the notification dated 3-8-2001 u/s 14(2) of the Customs Act, 1962, which raised the tariff value for RBD Palmolein to 372 US$ per metric ton. They argued that the notification was not published in the Official Gazette on 3-8-2001 but rather on or after 6-8-2001. The respondents contended that the notification was published on 3-8-2001 itself. The Court found that the notification was not published and offered for sale on 3-8-2001, as required by law, and thus could not be effective from that date. The Court held that the notification dated 3-8-2001 did not acquire the elements of operativeness and enforceability on 3-8-2001 and hence additional duty imposed by the notification could not be levied on 3-8-2001.

2. Discriminatory nature of the Notification:
The petitioners argued that the notification was discriminatory as it raised the tariff value only for certain goods like RBD Palmolein, RBD Palm Oil, and Crude Palm Oil, while leaving out other similar goods such as sunflower, safflower, cotton seed oil, rapeseed oil, and soybean oil. The Court found that such discriminatory fixation of trend value for only part of a class of goods is not authorized by statute and is not sustainable in the absence of any reasonable explanation and materials justifying the same.

3. Interim orders and subsequent appeals:
The petitioners sought an interim order to stay the demand for differential tariff amounts. The learned Single Judge rejected this prayer, leading the petitioners to file writ appeals. The Court initially granted an interim order allowing the release of goods upon furnishing solvent security. However, the respondents did not accept the solvency certificate, leading to further legal proceedings. Eventually, the Court ordered the release of goods upon furnishing 25% of the value of the goods as a bank guarantee.

4. Exhaustion of alternative remedies:
The respondents argued that the petitioners should exhaust the remedy u/s 128 of the Customs Act by filing an appeal before the Commissioner. However, the Court noted that alternative remedy is not a bar if the issuance of the notification is bad and ultra vires on its face.

Conclusion:
The Court allowed the writ petitions, set aside the impugned notification dated 3-8-2001, and the consequent demand for differential duty. The security and bank guarantee furnished by the petitioners were ordered to be canceled. The writ appeals and contempt petitions were disposed of accordingly.