TaxTMI 
TaxTMI 
TaxTMI 
2022 (2) TMI 24
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....nue. The members of the respondent association/mills and the other individual mills are engaged in the manufacture of yarn both cotton as well as synthetic. Their main raw material is cotton and the major component in their input cost is the price of cotton, which works out to about 40% to 50% of their production cost. 3. The respondent mills use different varieties of cotton for manufacture of different counts of yarn. Cotton being a seasonal product, the mills are forced to procure the required quantity of cotton in advance, as and when it is available on the basis of the orders placed on the mills and also on the basis of the prospective orders and market requirements, which include both local and international. The respondent mills import cotton in view of the fact that adequate quantity of cotton may not be available within the country. Importantly, it is submitted by the respondent association/mills that the duty element is taken into account, while deciding the import and also offering quotation to its customers. The orders on the foreign exporters are normally placed 5 to 6 months in advance and the prices are fixed on the basis of the duty prevailing on the date on which ....
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....n reference was made to starred question in Parliament by some members and response of the concerned Ministry in relation to the impugned notification. Therefore, the learned Judge was of the view that no effective counter affidavit has been filed by the Ministry of Finance, Department of Revenue. d) In any event, the counter affidavit which has been subsequently filed explaining that the impugned notification was issued with a view to restrict undesired cotton imports thereby protecting the interest of domestic cotton, is unacceptable, in view of the law laid down in Mohinder Singh Gill and another v. the Chief Election Commissioner, New Delhi and others (AIR 1978 SC 851 ) that the case of the Central Government cannot be improved on the basis of counter affidavit. 6.2 It was thus, concluded by the learned Judge that the impugned Notification No.2/2002-Customs dated 08.01.2002 does not satisfy the requirements of Section 8A(1) of the Customs Tariff Act, 1975, and is hence, set aside. SUBMISSIONS OF THE PARTIES: 7.1 The learned senior standing counsel appearing for the appellants submitted that the order of the learned Judge holding the impugned notification as invalid on the ....
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....aside the order of the learned Judge. 8.1 Mr.R.Thiagarajan, learned senior counsel appearing for the respondents contended that by the Notification No.2/2002 dated 08.01.2002, an unilateral increase of import duty on the import of cotton to India was sought to be enforced from the then existed rate of 5% to 10% without the stakeholders being put on notice in any manner. When the same was put to challenge in the batch of writ petitions by the respondents, by contending that the ingredients of section 8A(1) of the Customs Tariff Act, 1975 are not satisfied warranting the increase in import duty from 5% to 10% and the notification was issued arbitrarily and in exercise of power capriciously, the learned Judge, after providing sufficient opportunities to the appellants, has ultimately concluded that the said notification does not satisfy the requirements of section 8A (1) of the Customs Tariff Act, 1975 and accordingly, set aside the same and thereby allowed the writ petitions. 8.2 Pointing out that the increase of import duty was introduced with immediate effect by Notification No.2/2002 dated 08.01.2002, which was in force till 08.07.2008 and the same was removed with nil rate of c....
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....st? 10.1.1 In this context, it may be relevant to refer to Section 8A of the Customs Tariff Act, 1975 which reads as under: "8A. Emergency power of Central Government to increase import duties (1) Where in respect of any article included in the First Schedule, the Central Government is satisfied that the import duty leviable thereon under section 12 of the Customs Act, 1962 should be increased and that circumstances exist which render it necessary to take immediate action, it may, by notification in the Official Gazette direct an amendment of that Schedule to be made so as to provide for an increase in the import duty leviable on such article to such extent as it thinks necessary: Provided that the Central Government shall not issue any notification under this sub- section for substituting. the rate of, import duty in respect of any article as specified by an earlier notification issued under this sub- section be that Government before such earlier notification has been approved with. or with. out modifications under sub- section (2). (2) The provisions of sub-sections(3) and (4) of Section 7 shall apply to any notification issued under sub-section(1) as they apply in relati....
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....f power by the Central Government nor was the file pertaining to the impugned notification submitted despite repeated directions of this Court. Further, the proceedings in the form of response to starred questions by some members, placed before the Parliament, was not relevant. In any event, the materials produced, in the view of the learned Judge, were not sufficient. For better understanding, the observation of the learned Judge is extracted below: "15. ....In the case on hand, when a specific challenge has been made, the first respondent is unable to satisfy the Court that there was sufficient material before the Central Government to satisfy itself that import duty leviable under Section 12 of the Customs Act, 1962 should be increased and circumstances did exist rendering it necessary for immediate action. Since the Ministry of Finance, Department of Revenue had failed to satisfy this Court that such a contingency did exist, the Court is inclined to interfere with the notification, as has been laid down in decisions, referred to above. It is trite law that Courts will not interfere with the decision taken by Department concerned one way of the other, but it can certainly inte....
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....s not correct. But even where the recital is not there on the face of the order, the order will not become illegal ab initio and only a further burden is thrown on the authority passing the order to satisfy the court by other means that the conditions precedent were complied with. In the present case this has been done by the filing of an affidavit before us." 10.1.6 The above view of the Hon'ble supreme court was reiterated in Narayan Govind Gavate v. State of Maharashtra (1977) 1 SCC 133 wherein, with regard to presumption that is raised by a recital in the notification, it was held as under: "28. The High Court opined that the presumption of regularity, attached to an order containing a technically correct recital, did not operate in cases in which Section 106 Evidence Act was applicable as it was to the cases before us. We do not think that we can lay down such a broad general proposition. An order or notification, containing a recital, technically correct on the face of it, raises a presumption of fact under Section 114 illustration (e) of the Evidence Act. The wellknown maxim of law on which the presumption found in illustration (e) to Section 114 of Evidence Act is:....
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....ch in turn has been reiterated in Narayan Govind Gavate (1977) 1 SCC 133 and Prafulla Churan Law (2011) 4 SCC 537 with regard to the relevance and sanctity to be attached to a recital in the subordinate legislation, we are of the view that the notification cannot be said to be invalid, on the premise that the notification itself does not elaborate the circumstances/reasons for issuance of the same. Accordingly, the first issue is answered. Issue No.2: Whether the order of the learned Judge setting aside the notification on the premise that the Central Government is unable to satisfy the Court that there was "sufficient material", before the Central Government to satisfy itself that import duty leviable under Section 12 of the Customs Act, 1962 should be increased and circumstances exist rendering it necessary for immediate action under Section 8A(1) of the Customs Tariff Act, 1975, is legal and valid, when viewed in the light of the presumption as to the constitutionality of a subordinate legislation? 10.2.1 According to the respondents, the notification does not set out the reasons which warrant the exercise of power under Section 8A(1) of the Customs Tariff Act, 1975. The lea....
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.... the Rajya Sabha Practice and Procedure Series, while dealing with the relevance of the "Question Hour" and the sanctity attached to the response given by the Ministry, it is stated as under: "DISCUSSION IN RAJYA SABHA: The 'Question Hour' is an important part of the parliamentary proceedings which gives the institution of Parliament the great significance it possesses. This Hour has assumed greater importance because the members can elicit information through questions on matters affecting the day-today life of the citizens for which Ministers are collectively and severally answerable to the legislature. This parliamentary device, in fact, is primarily meant for exercising a kind of legislative control over executive actions. Besides, the Members also find an opportunity through this device to criticise Government's policies and programmes; ventilate public grievances; expose Government's lapses; and extract promises from Ministers. Members also get opportunity to give vent to their feelings when they are not satisfied with the answers by putting supplementaries. The Question Hour serves another purpose. The Ministers are also made aware of the working of their departm....
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.... record in the form of "recital in the notification", the Minister's answers during "Question Hour", and the counter affidavit filed by the appellants relating to the circumstances warranting the issuance of the impugned notification. 10.2.5 Further, the reasoning of the learned Judge that the Central Government failed to satisfy the Court with "sufficient material" that the twin requirements for issuance of the impugned notification under Section 8A(1) of the Customs Tariff Act, 1975 existed, is contrary to the law laid down by the Hon'ble Supreme Court and contrary to the facts on record as discussed supra. 10.2.6 In any event, the aforesaid reasoning of the learned Judge viz., failure to satisfy the court that there was "sufficient material" with the Central Government for issuance of notification and thus setting aside the impugned notification, is also contrary to the law as to the scope of judicial review, while testing the validity of a subordinate legislation. Adequacy or wisdom of legislative measures be it plenary or subordinate falls within the exclusive domain of the Legislature and its delegate and the courts have adopted "hands off" approach qua economic leg....
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....olicy laid down by the regulation-making body and declare a regulation to be ultra vires merely on the ground that, in the view of the Court, the impugned provisions will not help to serve the object and purpose of the Act.... the Court should not concern itself with the wisdom or efficaciousness of such rules or regulations. It is exclusively within the province of the legislature and its delegate to determine, as a matter of policy, ........It is not for the Court to examine the merits or demerits of such a policy " "16. In our opinion, the aforesaid approach made by the High Court is wholly incorrect and fallacious. The Court cannot sit in judgment over the wisdom of the policy evolved by the legislature and the subordinate regulation-making body. It may be a wise policy which will fully effectuate the purpose of the enactment or it may be lacking in effectiveness and hence calling for revision and improvement. But any drawbacks in the policy incorporated in a rule or regulation will not render it ultra vires and the Court cannot strike it down on the ground that, in its opinion, it is not a wise or prudent policy, but is even a foolish one, and that it will not really serve t....
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....9;ble Supreme Court in M.Jhangir Bhatusha v. Union of India 1989 Supp (2) SCC 201 to conclude that the notification itself must set out elaborately the circumstances/reasons which warranted exercise of power under Section 8A(1) of the Customs Tariff Act, 1975, is legal? 10.3.1 The order of the learned Judge insofar as it placed reliance on the judgment of the Hon'ble Supreme Court in M.Jhangir Bhatusha ibid and interpreted Section 25(2) of the Customs Act, 1962, is misplaced. It may be relevant to note the difference in the language employed in Section 8A of the Customs Tariff Act, 1975 and Section 25(2) of the Customs Act, 1962, which is tabulated below: Section 8A of the Customs Tariff Act, 1975 Section 25(2) of the Customs Act, 1962 Emergency powers of Central government to increase import duties (1) Where in respect of any article included in the First Schedule, the Central Government is satisfied that the imported duty leviable thereon under Section 12 of the Customs Act, 1962 (52 of 1962) should be increased and that circumstances exist which render it necessary to take immediate action, it may, by notification in the Official Gazette, direct an amendment of that Sc....
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....nt, the declaration by notification of the government that a certain place shall be a principal market yard for a market area, upon which declaration certain statutory provisions at once spring into action and certain consequences prescribed by statute follow forthwith. The making of the declaration, in the context, is certainly an act legislative in character and does not oblige the observance of the rules of natural justice. In Bates v. Lord Halsham [(1972) 1 WLR 1973] , Megarry,J., pointed out that the rules of natural justice do not run in the sphere of legislation, primary or delegated, and in Tulsipur Sugar Co. v. Notified Area Committee [(1980) 2 SCC 295 : (1980) 2 SCR 1111] , our brothers Desai and Venkataramiah, JJ. approved what was said by Megarry,J., and applied it to the field of conditional legislation too. In Paul Jackson's Natural Justice (2nd Edn.), it has been pointed out (at p. 169): "There is no doubt that a minister, or any other body, in making legislation, for example, by statutory instrument or by law, is not subject to the rules of natural justice - Bates v. Lord Haisham of St. Marylebom [(1972) 1 WLR 1973] - any more than is Parliament itself; Edinbu....
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....otification, which is legislative in character. Thus, the reliance on the decision of the Hon'ble Supreme Court in Mohinder Singh Gill ibid case, while deciding the validity of a notification, which is a piece of a subordinate legislation is wholly misplaced and erroneous. This would also be clear that while examining the validity of a notification, there is a presumption as to its Constitutionality and to sustain the Constitutionality it is permissible to take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived as existing at the time of legislature as held in RK Garg 1981 (4) SCC 675 and Charajit Lal AIR 1951 SC 41. In such view of the matter, we find that the order of the learned Judge in setting aside the notification, is erroneous and contrary to law. Hence, the first question raised herein deserves to be answered in favour of the appellants and is accordingly, answered. Second Question: 11.1 We shall now proceed to examine the second question that the impugned notification should not be made applicable to cotton in transit at the time of issuance of notification an....
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....m a warehouse under Section 68 of the Customs Act, 1962, the date on which the goods are actually removed from the warehouses (or) on the date of payment of duty. 11.3 The above position would be clear from the following decisions of the supreme court: 1.Bharat Surfactants (P) Ltd. v. Union of India (1989) 4 SCC 21 In that case, the ship arrived in Bombay Port on 09.07.1981 and the rate of customs duty prevailing on that date was 12.5% however, as the vessel was unable to secure a berth in the Port of Bombay, it was compelled to proceed to Karachi to discharge the cargo pertaining to that Port. It was submitted that but for the non-availability of the berth, the voyage to Karachi would not have been made and the vessel would have discharged the consignment meant for Bombay on that day, in which event, the Customs duty that could have been levied was only 12.5%. However, when the goods returned to Bombay, there was a material change in the rate. It was submitted that the rate applicable is the one prevailing on 09.07.1981 when the ship originally arrived in the Bombay Port, though the vessel was unable to discharge the imported material for no fault of the petitioners therein a....
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....the goods could not be cleared until March 2, 1989 by which time the rate of duty had materially changed. It was submitted that the cargo was ready for discharge in the Indian waters since February 20, 1989 and the importer has presented the bill of entry for home consumption on February 28, 1989 which was received by the appraising section on February 28, 1989 and thus, the duty which is leviable, should be one of the above dates and not March 02, 1989, when the goods were cleared. Rejecting the said contention, it was held by the Hon'ble Supreme Court as follows: 2. ".........We find no force in the contention Section 15 of the Customs Act of 1962 for short 'the Act' prescribe the rate of duly and tariff valuation on imported goods.... 3. It is clear from bare reading of these relevant provisions that the due date to calculate the rate of duty applicable to any imported goods shall be the rate and valuation in force, in the case of the goods entered for home consumption under Section 46, is the date on which the bill of entry in respect of such goods is presented under that section and in the case of goods cleared from a warehouse under Section 58, the date on whi....
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.... the relevant date would be the date on which the goods are actually removed from the warehouse...." 5. Kiran Spg. Mills (2000) 10 SCC 228 : When the goods were imported into India, the Ordinance providing for Special Additional Duty had not been promulgated. However, the goods which were imported were cleared from the bonded warehouse on subsequent dates by which time the Ordinance providing for Special Additional Duty had been promulgated. While considering the submission that as the ordinance had not been promulgated at the time the goods were imported into India, the levy of Special Additional Duty introduced subsequently cannot be applied was rejected holding as under: "6. .......... We are unable to accept the contention of Mr Ramachandran that what has to be seen is whether additional duty of excise was payable at the time when the goods landed in India or, as he strenuously contended, they had crossed into the territorial waters. Import being complete when the goods entered the territorial waters is the contention which has already been rejected by this Court in Union of India v. Apar (P) Ltd. [(1999) 6 SCC 117] decided on 22-7-1999. The import would be completed....
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....ssued at 20:46:58 hrs on 16.02.2019 resulting in enhancement of rate of duty from nil to 200%. The imports in question had entered the Indian Territory before 18.00 hrs on 16.02.2019. The bill of entry was self-assessed at 18.08 hrs on 16.02.2019 under the provisions of the Customs Act, 1962. Question arose as to whether the enhanced rate imposed vide notification No.5 of 2019 would apply only to Bills of entry for home consumption presented after 20:46:58 hrs on 16.02.2019 or it would apply from the first moment of 16.02.2019. While it was contended by the assessee that the notification would apply only to bills of entry for home consumption presented after 20:46:58 hrs on 16.02.2019. It was the contention of the Union that Section 15 which prescribes the method and the manner for determining the rate of duty only refers to date and not time and therefore once a notification has been issued, it should be given effect from the first moment on that day. The Hon'ble Supreme Court after referring to the various case laws under Section 15, held as under: "46. The presentation of a bill of entry for home consumption under Section 46 is hence the definitive event with reference to ....