TaxTMI 
TaxTMI 
2019 (1) TMI 784
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....engaged in import and trading of various items including mild steel varieties like Hot Rolled Coils, Cold Rolled Coils, Hot Rolled Steel Plates, Pre Painted Steel Coils etc. 2. "Mild Steel Items" fall under Chapter-72 of the Indian Trade Clarification (Harmonized System) ('ITC-HS', for short)-2012, Schedule-I of the Foreign Trade Policy, 2015-20. These items were freely importable. 3. On 5th February, 2016, Notification No.38/2015-2020 ('Notification No. 38/2105-2020', for short) was issued by the Ministry of Commerce and Industry, Government of India, Directorate General of Foreign Trade by way of trade notice fixing Minimum Import Price ('MIP', for short) as per the annexure by amending Import Policy Conditions against Codes under Chapter-72 of the ITC (HS)-2012, Schedule-I. Notification No. 38/20152020 (dated 5th February, 2016) was subsequently published vide SO No. 391(E) in the Gazette of India on 11th February, 2016. Notification as published in the Official Gazette reads:- "Ministry of Commerce and Industry (Department of Commerce) (DIRECTORATE GENERAL OF FOREIGN TRADE) Notification New Delhi, the 5th February, 2016 No. 38/2015-2020 Subject: Minim....
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....ubject to paragraph 1.05 (b) of the Foreign Trade Policy, 2015-2020. As per the petitioners, the date of notification should read as 11th February, 2016, i.e. the date on which the Notification No.38/2015-2020 was published in the Official Gazette and not 5th February, 2016, i.e., the date on which the trade notice was published. In support of the said contention, it is submitted that the respondents could not have imposed duties and restrictions retrospectively by way of subordinate legislation. Further, the Directorate General of Foreign Trade ('DGFT', for short) is not authorized to issue any notification, as this power under the FT Act vests exclusively with the Central Government. 5. The petitioners proclaim that they had entered into contracts with exporters from China and South Korea prior to 5th February, 2016. These contracts for import of different items were as per the prevailing international rates. They have relied upon the data of London Metal Exchange ('LME') for the same. For the purpose of record, we have extracted details of the contracts entered into by the petitioners for import of mild steel items in the table below:- " Petitioner Exporter's nam....
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.... the Official Gazette on 11th February, 2016. 7. Sub-sections (1) and (2) of Section 3 of the FT Act read as under:- "3. Powers to make provisions relating to imports and exports. - (1) The Central Government may, by Order published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. (2) The Central Government may also, by Order published in the Official Gazette, make provision for prohibiting, restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the Order, the [import or export of goods or services or technology]: Provided that the provisions of this sub-section shall be applicable, in case of import or export of services or technology, only when the service or technology provider is availing benefits under the foreign trade policy or is dealing with specified services or specified technologies." Sub-section (1) of Section 3 of the FT act states that the Central Government may by an order published in the Official Gazette make provisions for the development and regulation of foreig....
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....tion is all pervasive and that there is hardly any field of activity where governance by delegated or subordinate legislative powers is not as important if not more important, than governance by parliamentary legislation. But unlike parliamentary legislation which is publicly made, delegated or subordinate legislation is often made unobtrusively in the chambers of a Minister, a Secretary to the Government or other official dignitary. It is, therefore, necessary that subordinate legislation, in order to take effect, must be published or promulgated in some suitable manner, whether such publication or promulgation is prescribed by the parent statute or not. It will then take effect from the date of such publication or promulgation. Where the parent statute prescribes the mode of publication or promulgation that mode must be followed. Where the parent statute is silent, but the subordinate legislation itself prescribes the manner of publication, such a mode of publication may be sufficient, if reasonable. If the subordinate legislation does not prescribe the mode of publication or if the subordinate legislation prescribes a plainly unreasonable mode of publication, it will take effect....
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....ns is not whether publication in the Official Gazette was sufficient or the notification should have been made available to the public. The issue in the present cases is somewhat different. The contention of the petitioners is that the Notification No.38/2015-2020 though made public on 5th February,2016 was published in the Official Gazette only on 11th February, 2016, and therefore prior notice in the form of trade notice, was not material and relevant. Judgment in Ganesh Das Bhojraj (supra) does emphasis on the publication in the Official Gazette. 12. The Supreme Court in Union of India versus Param Industries Limited, (2016) 16 SCC 692 had dealt with and examined the issue of customs notification under Section 14(2) of the Customs Act, 1962 (the 'Customs Act', for short) and has held that the condition of publication of notification in the Official Gazette is mandatory. 13. Recently, the Supreme Court in Director General of Foreign Trade and Another versus Kanak Exports and Another, (2016) 2 SCC 226 had held that subordinate legislation could only be prospective and not retrospective unless the rule making authority was vested with the power to make retrospective subordina....
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....print and electronic media, albeit the notification issued banning export of pulses for a period of six months in exercise of power under Section 5 of the FT Act was published in the Official Gazette on 27th June,2006. By another Notification on 4th July, 2006 published under Section 5 of the FT Act the Central Government had permitted export of pulses against irrevocable LoCs opened prior to 22nd June, 2006. In the SLP arising out of the Delhi High Court judgment in the case of M/s Agri Trade India Services (P) Limited, irrevocable LoC for export of pulses in favour of the Indian exporter was opened on 24th June, 2006, i.e., between 22nd June, 2006 when the Central Government's decision to ban export of pulses was reported in electronic and print media and 27th June, 2006 the date when the Notification banning export of pulses was published in the Official Gazette under Section 5 of the FT Act. In the case of M/s Asian Food Industries arising from the judgment of the Gujarat High Court contracts for export of pulses were executed between 22nd April, 2006 and 2nd May, 2006 and advance of approximately 20% of the contract value was received by the Indian party from the importers on ....
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.... Act would have effect accordingly. On analysis of Section 11 of the Customs Act and the Notification dated 27th June, 2006 in exercise of power under Section 3 of the FT Act and published in the manner provided under Section 5 of the FT Act it was held that export of pulses was permissible till 27th June, 2006 and not thereafter. For deciding the date of export, Section 11 read with Section 50 of the Customs Act enjoined a duty upon the exporter to make entry by presenting the shipping bill to the proper officer and thereupon the proper officer was to arrive at a satisfaction (i) that the export of good was not prohibited and (ii) that the exporters had paid the duty assessed thereon and the charges payable there under. Thereupon, the Customs Officers would make an order for clearance and loading of the goods for export. Reference was made to the foreign trade policy, that whenever policy provisions as amended were disadvantageous to the exporters or importers, the same would not be applicable to consignments already handed over to the Customs for examination and subsequent export upto the date of public notice. Reference was also made to paragraph 9.12 of the policy. On the factu....
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....ion 2 of the Customs Act which defines 'goods', 'import', 'imported goods', Section 12 dealing with dutiable goods, Section 13 dealing with duty on pilfered goods, Section 23 dealing with remission of duty on lost, destroyed and abandoned goods, Section 47 dealing with clearance of goods for home consumption and Rules 2(1)(f) and 4(1) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988, to observe as under:- "9. On a reading of the aforesaid provisions, it is clear that the levy of customs duty under Section 12 is only on goods imported into India. Goods are said to be imported into India when they are brought into India from a place outside India. Unless such goods are brought into India, the act of importation which triggers the levy does not take place. If the goods are pilfered after they are unloaded or lost or destroyed at any time before clearance for home consumption or deposit in a warehouse, the importer is not liable to pay the duty leviable on such goods. This is for the reason that the import of goods does not take place until they become part of the land mass of India and until the act of importation is complete which under Sections 13 a....
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....red the territorial waters the import is complete. We do not agree with the submission. This Court in its opinion in Sea Customs Act, 1878, S. 20(2), In re [Sea Customs Act, 1878, S. 20(2), In re, AIR 1963 SC 1760 : (1964) 3 SCR 787] SCR at p. 823 observed as follows: (AIR p. 1776, para 26) '26. ... Truly speaking, the imposition of an import duty, by and large, results in a condition which must be fulfilled before the goods can be brought inside the customs barriers i.e. before they form part of the mass of goods within the country.' 18. It would appear to us that the import of goods into India would commence when the same cross into the territorial waters but continues and is completed when the goods become part of the mass of goods within the country; the taxable event being reached at the time when the goods reach the customs barriers and the bill of entry for home consumption is filed." 15. Secondly, the taxable event in the case of imported goods, as has been stated earlier, is "import". The taxable event in the case of a purchase tax is the purchase of goods. The quantity of goods stated in a bill of lading would perhaps reflect the quantity of goods in ....
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....tio in both M/s Asian Food Industries and M/s Mangalore Refinery and Petrochemicals Limited (supra) is apt and would apply to the present writ petitions. Notification No.38/2015-2020 dated 5th February, 2016 published in the Official Gazette on 11th February, 2016 was in force on the date of 'import' of goods by the petitioners as the 'import' was post publication in the Official Gazette on 11th February, 2016. We would not be giving retrospective effect to Notification No.38/2015-2020, when we hold that it would apply to all 'import' on or after 11th February, 2016. In fact, we would be following the ratio and mandate in Asian Food Industries (supra) and Mangalore Refinery and Petrochemicals Limited (supra). Consequently, the argument that the respondents have given retrospective effect to the Notification No.38/2015-2020, which can be only prospective, falters and is rejected. 22. On the said aspect, we would like to refer to paragraphs 2.17 and 9.11 of the Handbook of Procedure and Appendices & Aayat Niryat Forms of FTP 2015-2020, which read as under:- "2.17 Date of reckoning of import is decided with reference to date of shipment/dispatch of goods from supplying countr....
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....t or export was freely permitted is subjected to any restriction or regulation, such restriction would not be given retrospective effect unless otherwise stipulated. This general principle is subject to the condition that the shipment of export or import should be made within the original validity period of any irrevocable commercial LoC, that was established before the date of imposition of such restriction. Exemption shall be restricted to the balance value and quantity available and time period for operationalization of such irrevocable LoCs and the applicant shall have to register the LoC with the jurisdictional revisional authority. Respondents in the present case by trade notice No. 3/2016 dated 21st April, 2016 had extended the date of registration till 30th April, 2016. The petitioners state that they had applied for registration of the LoCs within the stipulated period, but the registration was not granted on the ground that the LoCs had not been issued prior to the date of public notice, i.e., 5th February, 2016, notwithstanding the fact that Notification No.38/2015-2020 was published in the Official Gazette on 11th February, 2016. 25. The aforesaid submission, accordi....
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....en granted for import/shipments under the irrevocable LoCs entered into before the date of the Notification, i.e., 5th February, 2016. For the purpose of paragraph 2 of the Notification No.38/2015-2020 dated 5th February, 2016, the date of publication in the Official Gazette is not prescribed and is not relevant. The date 5th February, 2016 is a valid date in respect of shipments/imports made under the irrevocable LoCs for this was the date on which the decision of the Central Government to impose MIP was put on the web-site and made known to public, though it was not gazetted. 27. The contention that the Gazette Notification quoted above is invalid as it was not an order of the Central Government under Section 3 read with Section 5 of the FT Act is erroneous and should be rejected. Notification in the heading states; published by the Ministry of Commerce and Industry, Department of Commerce, Director General of Foreign Trade. The first paragraph of the Notification records:- "the Central Government hereby amends the import policy conditions against 173 HS Codes under Chapter 72 and had imposed the conditions as per annexure". Clearly, this is a Notification by the Central....