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2015 (12) TMI 1696
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....n amendment, to the prayer in the writ petitions, an additional relief is sought to declare the action of the Deputy Commissioner of Customs (the 3rd respondent) in issuing Orders-in-Original dated 30-10-2015 denying preferential rate of duty, claimed by the petitioners, as arbitrary, illegal, unconstitutional, and in violation of principles of natural justice. A consequential direction is also sought to set aside the order dated 30-10-2015. 2. Facts, to the extent necessary, are that the Government of India, in the exercise of the powers conferred by Section 25(1) of the Customs Act, issued Notification dated 46/2011, dated 1-6-2011, in accordance with the Preferential Trading Agreement between the Governments of the Member States of the Association of Southeast Asian Nations and the Republic of India in terms of the 2009 Rules published in Notification No. 189/2009, dated 31-12-2009. Notifications No. 46/2011, dated 1-6-2011, No. 12/2012, dated 17-3-2012, and No. 21/2012, dated 17-3-2012 specify the goods which are to be subjected to a reduced or a nil rate of Customs duty, if the conditions stipulated therein are fulfilled. In terms of Notification No. 46 of 2011, dated ....
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....e to recover the differential duty by referring to certain instructions; the goods imported were not cleared despite all the relevant documents having been submitted; and insistence by the 3rd respondent, on preferential full financial guarantee to release the imported goods, is contrary to the law declared by this Court in W.P. No. 21399 of 2015 and batch dated 9-9-2015 = 2016 (331) E.L.T. 424 (A.P.). 5. After the writ petition was filed, the 3rd respondent passed the orders-in-original on 30-10-2015. The petitioners, thereafter, filed applications to amend the prayer, to include a challenge to the orders-in-original; and the said applications were ordered, and the prayer in the writ petitions were permitted to be amended. 6. By the order-in-original dated 30-10-2015, the adjudicating authority denied preferential rate of duty for the gold jewellery vide Serial No. 966 of the Customs Notification No. 46/2011, dated 1-6-2011, as amended; and ordered for assessment of the gold jewellery, imported vide Bill of entry dated 24-6-2015 from Indonesia, at merit rate of duty at 15% BCD, 2% ED and 1% SHE Ed. Cess on the BCD and SAD at 1%. 7. In his order dated 30-10-....
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....e produced documentary evidence to show that the goods satisfy the origin criteria stipulated in the Rules; the importer had failed to furnish the relevant information/documents to establish that the local content/RVC, in the impugned goods, satisfied the conditions stipulated in Rule 5 read with Rules 6 and 12, and the non-originating material had been subjected to the manufacturing process as mandated in Rule 5(ii); in the present case the importer, instead of submitting the documents/information sought for by the Department by their letter dated 9-10-2015 in terms of Rule 16(b) of the Operational Certification Procedures for the Rules, to determine compliance of the impugned goods to the origin criteria under Rule 5, had approached the High Court by filing the Writ Petitions; it was evident that the importer did not have any evidence/information to establish conformity of the impugned goods to the origin criteria, as prescribed in the Rules, to claim preferential rate of duty; and the importer had failed to discharge the obligation cast on them under the 2009 Rules. 9. The adjudicating authority, thereafter, referred to certain other certificate of origin for which a ret....
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....thority, i.e., the Deputy Commissioner of Customs (Import) (the 3rd respondent). 10. Sri Avinash Desai, learned counsel for the petitioners, would submit that the documents, referred to in the order-in-original dated 30-10-2015, were not supplied to the petitioners before the impugned adjudicating order was passed; the genuineness of the certificate of origin is not in dispute; the documents, referred to in the order of adjudication, could only have been relied upon if they had been made available to the petitioners earlier, and they were given an opportunity to put forth their submissions regarding these documents; even otherwise, Clause 16(b) of Annexure-III to the 2009 Rules is merely a prelude to Clause 16(a); no adjudication order can be passed without a retroactive check being conducted in terms of Clause 16(a); and both on the grounds of violation of principles of natural justice, and non-compliance with the 2009 Rules, the adjudication order necessitates being set aside. 11. On the other hand Sri P.S.P. Suresh Kumar, learned Standing Counsel for Central Excise, would draw our attention to the letter addressed by the PT Antam on 27-4-2015 to the Director of E....
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....3; State of U.P. v. Mohd. Nooh - AIR 1958 SC 86; Titaghur Paper Mills Co. Ltd. v. State of Orissa - (1983) 2 SCC 433; Harbanslal Sahnia v. Indian Oil Corpn. Ltd. - (2003) 2 SCC 107; State of H.P. v. Gujarat Ambuja Cement Ltd. - (2005) 6 SCC 499; K.S. Rashid and Son v. Income Tax Investigation Commission - AIR 1954 SC 207; Sangram Singh v. Election Tribunal - AIR 1955 SC 425; Union of India v. T.R. Varma - AIR 1957 SC 882; K.S. Venkataraman and Co. (P) Ltd. v. State of Madras - AIR 1966 SC 1089; N.T. Veluswami Thevar v. G. Raja Nainar - AIR 1959 SC 422; Municipal Council, Khurai v. Kamal Kumar - AIR 1965 SC 1321; Siliguri Municipality v. Amalendu Das - (1984) 2 SCC 436; S.T. Muthusami v. K. Natarajan - (1988) 1 SCC 572; Rajasthan SRTC v. Krishna Kant - (1995) 5 SCC 75; Kerala SEB v. Kurien E. Kalathil - (2000) 6 SCC 293; A. Venkatasubbiah Naidu v. S. Chellappan - (2000) 7 SCC 695; L.L. Sudhakar Reddy v. State of A.P. - (2001) 6 SCC 634; Shri Sant Sadguru Janardan Swami (Moingiri Maharaj) Sahakari Dugdha Utpadak Sanstha v. State of Maharashtra - (2001) 8 SCC 509; Pratap Singh v. State of Haryana - (2002) 7 SCC 484; and GKN Driveshafts (India) Ltd. v. ITO - (2003) 1 SCC 72]. 13.&em....
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.... procedures shall be followed. Clause 7 thereof relates to issuance of AIFTA Certificate of Origin. Clause 7(a) stipulates that the AIFTA Certificate of Origin shall be in International Organisation for Standardisation (ISO) in conformity with the specimen as in the Attachment to these Operational Certification Procedures. Clause 7(b) stipulates that the original copy shall be forwarded, together with the triplicate, by the exporter to the importer; and the original copy shall be submitted by the importer to the Customs Authority at the port or place of importation. Clause 7(c) stipulates that, in cases where an AIFTA Certificate of Origin is not accepted by the Customs Authority of the importing party, such AIFTA Certificate of Origin shall be marked accordingly in box 4, and the original AIFTA Certificate of Origin shall be returned to the issuing Authority within a reasonable period, but not to exceeding two months. Clause 7(c) also requires the Issuing Authority to be notified of the grounds for denial of preferential tariff treatment. Clause 7(d) stipulates that in cases where an AIFTA Certificate of Origin is not accepted, as stated in Clause 7(c), the Issuing Authority shall....
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.... to the Issuing Authority within six months. While the process of the retroactive check is being undertaken, sub-paragraph (iii) shall be applied. Clause 16(b) reads thus : "(b) The Customs Authority of the importing party may request an importer for information or documents relating to the origin of imported goods in accordance with its domestic laws and regulations before requesting the retroactive check pursuant to Paragraph (a)." 17. From a reading of Clause 16(b), it is evident that the requirement of obtaining information of the documents, relating to the origin of the imported goods in accordance with its domestic laws and regulations, is a preclude to the request for retroactive check in terms of Clause 16(a). If the documents, sought for by the competent authority, are furnished by the importer and, if the concerned authority is satisfied with it, then preferential tariff can be extended to the importer. If, on the other hand, the information, or the documents furnished, are found not to be satisfactory, then, in terms of Clause 16(a), a retroactive check can be conducted. 18. Sri Avinash Desai, learned counsel for the petitioner, would sub....
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....truction Co. Ltd. v. Govt. of A.P. - (2008) 16 SCC 276]. Rules of natural justice are not codified canons. They are principles ingrained in the conscience of man. Justice is based substantially on natural ideals and human values. It is the substance of justice which should determine its form. Adherence to principles of natural justice, as recognised by all civilised States, is of supreme importance when a statutory authority embarks on any administrative action involving civil consequences. (Nagarjuna Construction Co. Ltd.). 21. An order passed by a statutory authority, which would visit a person with civil or evil consequences, must meet the test of reasonableness. [Banaras Hindu University v. Shrikant - (2006) 11 SCC 42; Kothari Filaments v. Commr. of Customs - (2009) 2 SCC 192 = 2009 (233) E.L.T. 289 (S.C.) = 2009 (13) S.T.R. 225 (S.C.)]. The concept of fairness would require the adjudicating authority to furnish copies of those documents on which he has placed reliance. To this extent, the principles of natural justice and concept of fairness are required to be read into the Rules. A person, to whom a notice is issued, is always entitled to satisfy the adjudicating auth....
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....tion 2 of the 2011 Regulations prescribe the conditions for allowing provisional assessment. Regulation 2(1) stipulates that where (a) an importer or an exporter is unable to make self-assessment under Section 17(1) of the Customs Act and makes a request in writing to the proper officer for assessment; or (b) the proper officer, on account of any of the grounds specified in sub-section (1) of Section 18 of the said Act, is unable to verify the self-assessment or make re-assessment of the duty on the imported goods or the export goods, he shall make an estimate of the duty to be levied (hereinafter referred to as the provisional duty). Under Regulation 2(2), if the importer or the exporter, as the case may be, executes a bond in an amount equal to the difference between the duty that may be finally assessed or reassessed and the provisional duty, and deposits with the proper officer such sum not exceeding twenty per cent of the provisional duty, as the proper officer may direct, the proper officer may assess the duty on the goods provisionally at an amount equal to the provisional duty. Regulation 3 relates to the terms of the bond and Regulation 4 to the surety or security of the b....
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....of the goods on payment of 30% duty, and the remaining 70% by way of a surety bond to the satisfaction of the Customs authorities, a similar order should be passed in these writ petitions also. 28. We must express our inability to agree. Though Regulation 4 of the 2011 Regulations was brought to its notice, the Division Bench, in Mahadev Metaliks Pvt Ltd., did not consider its scope and purport; and, without doing so, directed payment of 30% duty and a surety bond for the balance 70% to be furnished to the satisfaction of the Customs authorities. It is no doubt true that a Division Bench of a High Court is bound by the judgment of another Division Bench, and cannot differ from the earlier judgment of coordinate jurisdiction merely because they hold a different view on the question of law for the reason that certainty and uniformity in the administration of justice are of paramount importance. [Commissioner of Income Tax v. M/s. B.R. Constructions - (1994) 1 AN WR 450 (FB)]. 29. In State of Bihar v. Kalika Kuer - (2003) 5 SCC 448 the Supreme Court observed :- "......Whatever has been held or observed in the case of Ramkrit Singh may not appear to be correct or may....
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....ution of India which embodies the doctrine of precedents as a matter of law. [State of U.P. v. Synthetics and Chemicals - (1991) 4 SCC 139]. If the provisions of the Act/Rules/Regulations were noticed and considered before the conclusion was arrived at, the judgment cannot be ignored merely on the ground that the other bench is of the view that it has erroneously reached the conclusion. (B.R. Constructions). The mere fact that the earlier Court misconstrued a statute/statutory rule, or ignored a rule of construction, is no ground for impugning the authority of the precedent. A precedent, on the construction of a statute, isasmuch binding as any other, and the fact that it was mistaken in its reasoning does not destroy its binding force. (B.R. Constructions; Salmond on jurisprudence, Twelfth Edition, at Page 151). 32. A decision rendered 'without any argument, without reference to the crucial words of the rule and without any citation of the authority' is not a binding precedent. [Lancaster Motor Company (London) Ltd. v. Bremith Ltd. - (1941) 2 All ER 11]. A decision, which is neither founded on reasons nor it proceeds on a consideration of an issue, cannot be deemed to be a....
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.... of the case which constitutes its ratio decidendi. [Union of India v. Dhanwanti Devi - (1996) 6 SCC 44; State of Orissa v. Mohd. Illiyas - (2006) 1 SCC 275; ICICI Bank v. Municipal Corpn. of Greater Bombay - (2005) 6 SCC 404; State of Orissa v. Sudhansu Sekhar Misra - AIR 1968 SC 647 = (1968) 2 SCR 154; Quinn v. Leathem - (1901) AC 495]. 34. If, on an analysis of Regulation 4, the said regulation was misconstrued, it would then not have been a ground for impugning the authority of the earlier judgment. It is only because Regulation 4 was not considered, despite it being brought to their notice, and was not preceded by an analysis of the said Regulation, and no reasons were assigned for issuing such a direction, does the judgment, in Mahadev Metaliks Pvt. Ltd., not constitute a precedent binding on a co-ordinate bench. V. Can an order, similar to that passed by the Supreme Court in "Commissioner of Customs v. M/s. Navashakti Industries Pvt. Ltd.", be passed in these writ petitions also? 35. Reference to the order of the Supreme Court in Commissioner of Customs v. M/s. Navashakti Industries Pvt. Ltd., preferred by the Revenue against the Division Bench judgme....
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....ision Bench in Mahadev Metaliks Pvt. Ltd., we must examine the scope of Regulation 4 for any direction, which we can issue, can only be in terms thereof, and not contrary thereto. As noted hereinabove, Regulation 4 confers a discretion on the proper officer to require a bond to be executed in terms thereof with "such security or surety or both" as he deems fit. In addition to the bond which the proper officer can require the assessee to execute, he has been conferred a discretion to call upon the assessee to also furnish such security, or surety or both, as he considers fit. The discretionary power under Regulation 4 of the 2011 Regulations is conferred only on the proper officer. Such a power can only be exercised by him and no one else. An element which is essential to the lawful exercise of power is that it should be exercised by the authority upon whom it is conferred, and by none else. (Administrative Law : HWR Wade & C.F. Forsyth : 10th Edition). If an authority "hands over its discretion" to another body it acts ultra vires. Such interference by a person or body extraneous to the power is contrary to the nature of the power conferred on the authority. [State of U.P. v. Dharm....
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....etion" signifies exercise of judgment, skill or wisdom as distinguished from folly, unthinking or haste. The word in itself implies vigilance, circumspection and care. (Kuldeep Singh). "Discretion" does not empower a man to do what he likes merely because he is minded to do so, he must in the exercise of his discretion do not what he likes but what he ought. In other words, he must, by the use of his reason, ascertain and follow the course which reason dictates." [Roberts v. Hopwood - 1925 AC 578]. Statutory discretion must be truly exercised, and when exercised it must be exercised reasonably. A statutory body/authority, which is entrusted by the statute/statutory rule with a discretion, must act fairly. Its discretion is never unfettered. It is a discretion which is to be exercised according to law. That means at least this : the statutory body/authority must be guided by relevant considerations, and not by irrelevant ones. If its decision is influenced by extraneous considerations which it ought not to have taken into account, then the decision cannot stand. No matter that the statutory body/authority may have acted in good faith; nevertheless the decision will be set aside. [Br....
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....dated 6-10-2015 issued by the Central Board of Excise and Customs does not fetter exercise of discretion by the third respondent regarding the sum to be deposited by the petitioners, and the surety or security they can be called upon to furnish, in terms of Regulations 2 and 4 of the 2011 Regulations. As is evident from Paras 3 and 7.1 of the Circular dated 6-10-2015, the instructions therein refer to the Certificates of Origin for "wholly obtained imports of gold jewellery from Indonesia". The said Circular has no bearing on "not wholly obtained jewellery imported from Indonesia". Sri P.S.P. Suresh Kumar, learned Standing Counsel for Central Excise, would, however, draw our attention to the last three lines of Para 7.1 of the Circular dated 6-10-2015, to submit that the goods can be released provisionally only after obtaining a Bank Guarantee of 100% in all cases of provisional assessment, and not merely to wholly imported Certificates of Origin. We disagree. Para 7.1 must be read as a whole, and the last three lines cannot be read out of context. On a reading of Para 7.1, of the Circular dated 6-10-2015 in its entirety, it is evident that the direction of the Central Board of Exc....