2025 (1) TMI 1688 - AT - Customs

Safeguard duty and IGST demand on solar module imports quashed as provisional assessments set aside for protected period

CESTAT set aside the order finalizing provisional assessment of six Bills of Entry and demanding safeguard duty with corresponding IGST on imported solar ... Rejection of order finalizing the provisional assessment of six Bills of Entry and orders for recovery of safeguard duty and corresponding IGST in terms of a Notification dated 30.07.2018 - Revenue submitted that the matter before the Supreme Court, in which the interim order passed by the Orissa High Court was under challenge, is still pending before the Supreme Court and, therefore, the appellant is not justified in asserting that safeguard duty cannot be imposed - HELD THAT:- It is not in dispute that the Bills of Entry were filed by the appellant for import of solar modules between 10.08.2018 and 16.08.2018. The safeguard duty was imposed in terms of the Notification dated 13.08.2018 issued by the Government of India pursuant to the final findings rendered on 16.07.2018. In view of the decision of the Madras High Court in Shapoor Pallonji Infrastructure [2024 (5) TMI 82 - MADRAS HIGH COURT], safeguard duty could not have been imposed between 23.07.2018 (on which date the interim order was granted by the Orissa High Court) and 10.09.2018 (on which date the Supreme Court vacated the interim order by the Orissa High Court). The impugned order passed by the Commissioner (Appeals) confirming the demand of safeguard duty only on the basis of the Notification dated 30.07.2018 issued by the Central Government, therefore, cannot be sustained. Appeal allowed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether safeguard duty under the notification dated 30.07.2018 could be levied on imports covered by Bills of Entry filed between 10.08.2018 and 16.08.2018, during the subsistence of the interim prohibitory order of the Orissa High Court dated 23.07.2018. 1.2 Whether the pendency of proceedings before the Supreme Court and similar matters before other High Courts affected the applicability of the Madras High Court judgment holding that the safeguard duty notification became operative only from 10.09.2018. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Levy of safeguard duty on imports during subsistence of Orissa High Court's interim order Interpretation and reasoning 2.1 The Court noted that the safeguard duty demand was raised on the basis of the Central Government notification dated 30.07.2018 issued pursuant to the final findings dated 16.07.2018 recommending such duty. 2.2 It was undisputed that: (i) an interim order dated 23.07.2018 of the Orissa High Court restrained issuance of any notification for imposition of safeguard duty without leave of the Court; (ii) the impugned notification imposing safeguard duty was issued during the currency of that interim order; and (iii) the appellant's Bills of Entry were filed between 10.08.2018 and 16.08.2018, i.e., before the Supreme Court stayed the Orissa High Court's interim order on 10.09.2018. 2.3 The Court relied on the judgment of the Madras High Court in Shapoor Pallonji Infrastructure Capital Co. Pvt. Ltd., which had examined the same safeguard duty notification and the same Orissa High Court interim order. That judgment held: (a) the notification imposing safeguard duty, though legislative in character, was 'certainly inoperative' during the subsistence of the injunction; (b) on and from 10.09.2018, when the Supreme Court stayed the Orissa High Court's prohibitory order, the notification 'would become operative and binding upon the parties'; and (c) any assessment seeking to impose safeguard duty for a period when the prohibitory order was in force was illegal and liable to be set aside. 2.4 Applying this reasoning, the Court held that safeguard duty could not have been imposed for the period 23.07.2018 to 10.09.2018, and hence could not be levied on the appellant's Bills of Entry filed between 10.08.2018 and 16.08.2018. Conclusions 2.5 Safeguard duty under the notification dated 30.07.2018 was inoperative during the period 23.07.2018 to 10.09.2018, when the interim order of the Orissa High Court subsisted. 2.6 The appellant's imports under Bills of Entry filed between 10.08.2018 and 16.08.2018 fell within this inoperative period; safeguard duty could not lawfully be imposed on those imports. 2.7 The order confirming demand of safeguard duty based solely on the notification dated 30.07.2018 in respect of these Bills of Entry is unsustainable and liable to be set aside. Issue 2: Effect of pendency before Supreme Court and other High Courts on applicability of Madras High Court decision Interpretation and reasoning 2.8 The departmental representative argued that, since the challenge to the Orissa High Court's interim order was still pending before the Supreme Court and similar issues were pending before other High Courts, the appellant could not assert non-liability to safeguard duty. 2.9 The Court nevertheless accepted the appellant's contention, expressly applying the ratio of the Madras High Court judgment in Shapoor Pallonji Infrastructure that the safeguard duty notification became operative only from 10.09.2018. 2.10 The Court did not find the pendency of matters before the Supreme Court or other High Courts to be a bar to following the Madras High Court's interpretation of the effect of the interim and stay orders for the relevant period. Conclusions 2.11 The mere pendency of related proceedings before the Supreme Court and other High Courts does not detract from the applicability of the Madras High Court's holding that the safeguard duty notification was inoperative up to 10.09.2018. 2.12 On that basis, the demand of safeguard duty on the appellant's Bills of Entry for the period 10.08.2018 to 16.08.2018 is illegal; the impugned appellate order is set aside and the appeal allowed with consequential reliefs, if any.