TaxTMI 
TaxTMI 
2023 (12) TMI 196
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....Origin dated 29.05.2020 passed by respondent no. 3 - the Additional Commissioner of Customs, Kandla under Section 28 of the Customs Act, 1962. This petitioner came to be imposed penalty of Rs. 25,90,825/- under section 112 (a) of the Customs Act, 1962. (b) The very aforementioned Order dated 29.05.2020 is challenged by Lykos India Pvt. Ltd. - the petitioner of Special Civil Application No. 13365 of 2020. The customs authority held this petitioner liable to pay the differential customs duty amounting to Rs. 3,18,194/-. Interest was ordered to be charged for the confirmed duty amount under Section 28AA of the Customs Act, 1962 (hereinafter referred to as 'the Act'). The goods in question valued at Rs. 52,80,791/- was held liable to be confiscated under Section 111(m) and 111(o) of the Act. Penalty of equivalent duty amount of Rs. 3,18,194/- was imposed under Section 114A of the Act, giving option under the Proviso to the Section. (c) The third Special Civil Application No. 14937 of 2020 is also by Lykos India Pvt. Ltd. wherein the challenge is directed against Order-in-Origin dated 24.06.2020 of the Assistant Commissioner of Customs, Mundra, respondent no. 3....
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.... the petitioner of second Special Civil Application purchased the goods from M/s. Trafigura India Pvt. Ltd. on ex-warehouse basis and filed ex-bond Bill of Entry. This petitioner also claimed the duty exemption on the basis of the same exemption notification No. 46/2011. 3.1.2 The same party-petitioner Lykos India Pvt. Ltd. in its Special Civil Application No. 14937 of 2020, purchased the Tin Ingots wherein 25 Metric Tons from M/s. Trafigura India Pvt. Ltd. under High Sea Sale Agreement dated 28.04.2017. The Bill of Entry dated 09.05.2017 was filed for home consumption. The petitioner availed the exemption under the very notification. 3.1.3 The petitioner of Special Civil Application No. 1835 of 2022 is Talin International Pvt. Ltd. As per the case, it has been engaged in the manufacturing and trading activity to regularly import both ferrous and non-ferrous metals from various countries. It was stated that in regular course of business, the petitioner purchased different quantities of Tin Ingots from one M/s. Welcome Impex Pvt. Ltd. The purchase was on the High Seas Sale Basis by Agreement dated 8.8.2017. The goods were procured by the high seas seller M/s. Welcome Impex Pvt....
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....on inquiry and investigation, the customs authorities found that the petitioners were not entitled to the exemption. Broad Controversy 3.3 Stating the controversy broadly and in brief, leaving elaboration in subsequent stages of discussion, the petitioners came to be subjected to proceedings under Section 28(4) of the Act on the ground inter alia that they, by suppressing the facts and by misrepresenting them, had wrongly availed the benefit of exemption of basic customs duty under Notification No. 46/2011 in respect of the goods imported from Malaysia. The said exemption notification came to be issued by the Customs Authorities in light of an international treaty and the Rules framed by the Government of India, called Rules of Origin, in furtherance of the treaty provisions. 3.3.1 The Government of India signed an agreement on Trade in Goods Under the Framework Agreement on Comprehensive Economic Co-operation between the Republic of India and the Association of Southeast Nations in the year 2009. Malaysia happens to be one of the members of Association of Southeast Nation ('ASEAN' as abbreviated). As per the said international agreement-the Agreement on Trade in G....
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....e ordinarily relegated the petitioners to such remedy. However, before the Bombay High Court, the writ petitions including the Writ Petition No. 2491 of 2018 by one Kothari Metals Ltd. was filed involving the identical dispute as raised in the present cases. The Customs authorities rejected the Certificate of Origin (COO) and denied the exemption benefit on the goods imported from Malaysia. The Bombay High Court by judgment and order dated 9.7.2021 rejected the petition on the ground availability of alternative remedy. The petitioners were directed to pursue the adjudicatory proceedings. 3.4.1 Civil Appeal No. 9010 of 2019 was preferred before the Supreme Court. The writ petitions were restored by the Supreme Court by order dated 25.11.2019. The Apex Court directed the Bombay High Court to decide the petitions on merits and in accordance with law in light of the fact that initiation of proceedings itself was called in question in view of Article 24 in Appendix D of the AIFTA. 3.4.2 The aforesaid petition is pending before the Bombay High Court, awaiting the decision. Before this High Court, the captioned petition came to be filed under Article 226 of the Constitution, challen....
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....st Asian Nations (ASEAN) and the Republic of India) Rules, 2009. These Rules are based on AIFTA Rules of Origin referred to in AIFTA Article 7. The 2009 Rules came to be notified by the Central Government by Notification No. 189/2009-Customs dated 31.12.2009. The Rules are described to as the 'DOGPTA Rules of Origin' or '2009 Rules'. They are referred to hereinafter accordingly, or as 'Rules of 2009'. 3.5.1 It may also be stated that by Notification dated 43/2011 dated 01.07.2011, the Customs Tariff (Determination of Origin of Goods under the Preferential Trade Agreement between the Governments of the Republic of India and Malaysia) Rules, 2011, are also framed. 3.5.2 Section 5 of the Customs Tariff Act, 1975, under which the aforementioned 2009 Rules are framed, provides for the levy of a lower rate of duty under a Trade Agreement. It says that whereunder a trade agreement between the Government of India and the Government of foreign country or territory, duty at a rate lower than specified in the First Schedule is to be charged on articles which are produced or manufactured in such foreign country or territory, as the case may be, the Central Governm....
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....stoms procedures. 3.7.2 Annexure 2 to AIFTA are the Rules of Origin, which deals with determining the origin of the products eligible for the preferential tariff treatment pursuant to Article 4 of the AIFTA. Appendix D to the AIFTA Agreement sets out Operational Certification Procedures for the AIFTA Rules of Origin. The AIFTA Rules of Origin and AIFTA Certification Procedures are not detailed hereby reproducing them, for the only reason that the aforementioned Customs Tariff DOGPTA Rules, 2009 have roots of their formations into the AIFTA Rules of Origin/Certification Procedure. These DOGPTA Rules, 2009, are extensively referred to and reproduced in the discussion to succeed. 3.7.3 Before adverting to elaboration of DOGPTA Rules, 2009, the comparative chart relating to AIFTA Articles and the provisions in DOGPTA Rules, 2009, would give a beforehand picture. Comparison between Rules of Origin for AIFTA and 2009 Rules framed by Government of India is as under, Title of the Rules Number under Rules of Origin for AIFTA Number under DOGPTA Rules, 2009 Short title and commencement -- 1 Definition 1 2 Origin Criteria 2 3 Wholly produced or obt....
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....ght and discuss on the relevant amongst the Rules of Origin, 2009, 'Originating products' are defined which would qualify as originating in accordance with the provisions of Rule 3. Rule 3 is about Origin Criteria extracted hereunder, Rule 3. Origin criteria.- The products imported by a party which are consigned directly under rule 8, shall be deemed to be originating and eligible for preferential tariff treatment if they conform to the origin requirements under any one of the following:- (a) products which are wholly obtained or produced in the exporting party as specified in rule 4; or, (b) products not wholly produced or obtained in the exporting party provided that the said products are eligible under rule 5 or 6. 3.8.1 Rule 4 is about Wholly produced or obtained products. Rule 5, which is again relevant, deals with Not wholly produced or obtained products, Rule 5. Not wholly produced or obtained products.- (1) For the purpose of clause (b) of rule 3, a product shall be deemed to be originating, if - (i) the AIFTA content is not less than 35 percent. of the FOB value; and (ii) the non-originating materials have un....
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....arty. The said paragraph and paragraphs no. 3, 4 and 5 corresponds to Articles 1 to 5 of the AIFTA Rules. Paragraph 6 is regarding pre-exportation examination, which corresponds to Article 6. Similarly, paragraph 7 of the certification procedure is about issuance of AIFTA Certificate of Origin, which is same as Article 7 of the AIFTA Rules. 3.8.6 Paragraph 6 of the Certification Procedure is reproduced, "6. Pre-Exportation Examination (a) The Issuing Authority shall, to the best of their competence and ability, carry out proper examination upon each application for the AIFTA Certificate of Origin to ensure that- (i) the application and the AIFTA Certificate of Origin are duly completed and signed by the authorised signatory; (ii) the origin of the product is inconformity with the Rules. (iii) other statements of the AIFTA Certificate of Origin correspond to supporting documentary evidence submitted; and (iv) description, quantity and weight of goods, marks and numbers on packages, and number and type of packages, as specified, conform to the products to be exported. (b) Multiple items declared on a single invoice and....
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....n is found satisfactory, then only the customs authority of the importing party may accept AIFTA Certificate. Return of the AIFTA Certificate by the importing party is contemplated within a period of two months as per sub-clause (c). 3.8.9 While paragraph 13 deals with the presentation of AIFTA Certificate to the Customs Authority at the time of lodging of the import entry for the products concerned, prescribing the procedure therefor, paragraphs 16 and 17 of the certification process are important to be noticed. Paragraph 16 of the AIFTA Rules is reproduced from the Certification Procedure as under, VERIFICATION: 16. (a) The importing party may request a retroactive check at random and/or when it has reasonable doubt as to the authenticity of the document or as to the accuracy of the information regarding the true origin of the good in question or of certain parts thereof. The Issuing Authority shall conduct a retroactive check on the producer/exporter's cost statement based on the current cost and prices within a six-months time frame prior to the date of exportation subject to the following procedures: (i) the request for a retroactive check shall be accompa....
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....include: 1. the name of the competent authority issuing the notification; 2. the name of the producer/exporter whose premises are to be visited; 3. the proposed date of the verification visit; 4. the coverage scope or purpose of the proposed verification visit, including reference to the goods subject to the verification; and 5. the names and designation of the officials performing the verification visit; (iii) an importing party shall obtain the written consent of the producer/exporter whose premises are to be visited; (iv) when a written consent from the producer/exporter is not obtained within thirty days from the date of receipt of the notification pursuant to sub-paragraph (i), the notifying party may deny preferential tariff treatment to the goods referred to in the said AIFTA Certificate of Origin that would have been subject to the verification visit; and (v) the Issuing Authority receiving the notification may postpone the proposed verification visit and notify the importing party of such intention within fifteen days from the date of receipt of the notification. Notwithstanding any postponement, any v....
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....5%. The authorities referred to Rule 3 and Rule 5 of the Rules of Origin to further mention that the Tin Ingots has to have RVC of 35% or above to be termed as goods 'deemed originating'. 3.9.1 The issue was therefore taken up for investigation by the Director of Revenue Intelligence (DRI), Mumbai Zonal Unit. The DRI initiated the process of 'retroactive check'. In accordance with paragraph 16 of Annexure III of the Rules of Origin, (DOGPTA Rules, 2009), request was made to the Board by DRI by letter dated 06.04.2017 on sample basis by sending Origin Certificates (Form AI) by India to Malaysia. It was recorded by the authorities that there was lack of response from Malaysia to the request for retroactive checks. Therefore, a team of DRI Mumbai, visited the unit of MSC Malaysia to examine the value addition and in order to ascertain the originating criteria for Tin Ingots exported. This exercise was undertaken in terms of paragraph 17 of Annexure III of the Rules of Origin read with paragraph 10 of Annexure III of the India Malaysia Preferential Trade Agreement Rules. 3.9.2 It was revealed pursuant to the DRI investigation that for calculating the Free on Board....
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....ed by MSC to obtain COO over a long period of time. This cost sheet reflects a particular sourcing mix for a specific period. This sheet applicable for a three month period in 2013 cannot be used to compute the Regional Value Content (RVC) for prospective periods." 3.9.5 The petitioners filed reply dated 28.08.2019 to the show-cause notice. The thrust of the reply was that the goods were imported from Malaysia and the Malaysia Smelting Corporation were the manufacturer and that the goods were supported by the Certificate of Origin as issued by the exporting country and that the petitioners as importers or purchasers of the goods, were entitled to rely on the certificate and the contents thereof. 3.9.6 The Customs Authorities found on facts and upon DRI investigation that the petitioners had wrongly availed the benefit on the basis of Origin Certificate, which was fraudulent and that the petitioners were guilty of suppression of material fact to be liable to be subjected to the proceedings under section 28 (4) of the Customs Act. As per the impugned order, as stated, the competent authority confirmed the duty demand and also proceeded to impose the penalty. 3.9.7 The follow....
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....n/manufacture of tin ingots during the period of 2013 (July-September) has been used by MSC to obtain COO over a long period of time. This cost sheet reflects a particular sourcing mix for a specific period. This sheet applicable for a three month period in 2013 cannot be used to compute the Regional Value Content (RVC) for prospective periods. (b) Further, it was also found by the officers that Tin ingots were being exported to Indian importers on the basis of job work/works contract basis by MSC, on behalf of other traders/suppliers. In such cases, MSC raised invoices only for smelting charges. The conversion charges alone cannot fulfill the required value addition under AIFTA. (c) Thus, it is evidenced that the cost sheet submitted by MSC to MITI does not accurately reflect the contemporaneous RVC and the FOB of the exported Tin ingots as per the originating criteria mandated under the Rules of Origin of AIFTA." 3.9.10 The findings recorded as above are the findings of fact. As stated, the Directorate of Revenue Intelligence investigated and having regard to the material collected, the factual conclusions were drawn. Case and Submissions of the Petitioner....
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....claration in the Bill of Entry or Warehousing filed by the petitioner under Section 46(4) of the Act. According to the petitioners, the requirement under section 46(4) was duly fulfilled and that the supporting documents provided by the supplier or exporter were produced by the importer. According to the petitioners, the declaration as to truth of contents in the Bills of Entry with copy of invoice was duly filed and subscribed to. It was submitted that in any case, the allegation about the Regional Value Content to be less than 35% was baseless and that there was certification of RVC to 47.85% Certificate of Origin. 4.2 Learned senior advocate Mr. Mihir Joshi with learned advocate Mr. Hardik Modh for the petitioners raised following submissions, (i) There is no provision in the entire legal framework as above, to recall or cancel preferential tariff concession once it is granted. The customs authority may at the best suspend the provision for preferential tariff in terms of Article 16(a)(iii) of the Rules of Origin, 2009. (ii) Paragraph 16(a)(iii) would apply when the process of verification is undertaken. (iii) The certificate of Country of Origin gi....
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....t of documents which established the genuineness of the importer goods and the declarations on the invoice and supporting documents with the Bill of Entry which also substantiated that the goods of Malaysian Origin had been imported from Malaysia only. (xiv) The COO also bore a specific-certification from the concerned statutory authorities in Malaysia to the effect that the declaration made by the exporter that the goods are of Malaysian Origin is correct. Notwithstanding that the above certificates were produced, the investigation team from DRI, MZU, Mumbai to the unit of MSC, was sent. Submissions about AIFTA Article 24 4.2.1 With his usual vehement yet calm assertiveness, learned senior advocate for the petitioner harped to submit that the matter ought to have been resolved through the dispute resolutions as provided under Article 24 of the AIFTA read with ASEAN-India DSM Agreement. On this score, the following submissions were advanced, (a) AIFTA is a complete code in itself and in case of any dispute with regard to origin determination, classification or other related matters, Appendix D - Article 24 of the AIFTA provides that the governmental authorit....
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....G.M. Exports [(2016) 1 SCC 91: 2015 (324) ELT 2090], "(3) In a situation where India is a signatory nation to an international treaty, and a statute is made in furtherance of such treaty, a purposive rather than a narrow literal construction of such statute is preferred. The interpretation of such a statute should be construed on broad principles of general acceptance rather than earlier domestic precedents, being intended to carry out treaty obligations, and not to be inconsistent with them. (4) In a situation in which India is a signatory nation to an international treaty, and a statute is made to enforce a treaty obligation, and if there be any difference between the language of such statute and a corresponding provision of the treaty, the statutory language should be construed in the same sense as that of the treaty. This is for the reason that in such cases what is sought to be achieved by the international treaty is a uniform international code of law which is to be applied by the courts of all the signatory nations in a manner that leads to the same result in all the signatory nations." (para 24) 4.2.4 Next relied on was decision also of the Apex Cour....
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....he facts of the case. 4.2.7 It was submitted that on a bare perusal of the Rules of Origin under AIFTA qua DOGPTA Rules 2009, it is revealed that there is a gap in domestic law to the extent that dispute resolution clause is not provided whereas the Rules of Origin under AIFTA read with ASEAN-India DSM Agreement clearly provides dispute settlement procedure and therefore, the India being a signatory to AIFTA is bound to follow and implement the mechanisms provided under the international treaty. 4.2.8 It was next submitted that considering the above principles laid down by the Apex Court, the dispute on the validity of the COO ought to have been resolved between the Government of India and Malaysia following the process as agreed in the AIFTA and that no proceedings before the conclusion of process, said could have been taken out against the petitioners. Even if there was any mis-declaration by MSC, no role was played by the petitioner-importers in issuance of the COO by MITI to allege any foul play against the petitioners. Stand of Respondents 4.3 On behalf of the respondents, detailed affidavit-in-reply was filed to contest the petition, oppose the prayers and answer ....
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....f preferential benefits in respect of all the certificates of origin issued by MSC was communicated by the Board to the issuing authority, that is, Ministry of International Trade and Industry, Malaysia by letter dated 10.05.2018. 4.3.3 The respondents contended that there was suppression of facts by the petitioners and when the investigation or verification as above disclosed the short levy of duty and as the goods of petitioners were to claim duty exemption, extended period of demand under section 28(4) of the Customs Act was applied. It was submitted that there was a wrong declaration in the Origin Certificate. It was pointed out that under section 46(4) of the Customs Act, 1962, the importer while presenting the Bill of Entry will have to make necessary declaration as to the truth of the content. 4.4 Learned Additional Solicitor General Mr. Devang Vyas with learned advocate Mr. Priyank Lodha with learned advocate Mr. Utkarsh Sharma for the respective respondents submitted, (i) There is no conflict between the Articles of AIFTA and the Rules of Origin and Customs Tariff (DOGPTA between ASEAN & India) Rules, 2009. (ii) The Articles of Agreement and provisi....
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....ther on that count the proceedings under the Customs Act, 1962, were rendered without jurisdiction or bad in law. (iii) whether the customs authorities in India had the jurisdiction to proceed against the petitioners in wake of provisions of AIFTA provisions and the Rules of Origin transformed as 2009 Rules; (iv) whether the respondents were justified in denying the benefit of exemption in duty to the petitioners availed under the Notification No. 46/2011 dated 01.06.2011 (v) Whether the respondent authorities could properly proceed under Section 28(4) of the Customs Act, 1962 and whether the invocation of extended period under sub-section (4) of section 28 of the Act was proper; (vi) Whether the alleged breach of time limit of procedural part of Operational Certification Procedures rendered the action under the Customs Act, 1962, to be bad in law. (vii) Whether or not the substantive provisions of Customs Act, 1962, have dominion effect over procedural aspect of Rules of Origin. International versus State Laws 5. In order to appreciate the dimensions of the above questions and so as to address them resolution bound, it is quite ne....
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....s of the member country. The rights and obligations of citizens of member country arise not because of treaty provisions but by virtue of State laws enacted pursuant to international treaty provisions. 5.5 Stated Oppenheim's in his International Law, 8th Edition, thus, "...Such treaties as affect private rights and, generally, as required for their enforcement by English Courts a modification of common law or of a statute must receive parliamentary assent through an enabling Act of Parliament. To that extent binding treaties which are part of International Law do not form part of the law of the land unless expressly made so by the Legislature." 5.5.1 It was further stated, "The binding force of a treaty concerns in principle the contracting States only, and not their subjects. As International Law is primarily a law between States only and exclusively, treaties can normally have effect upon States only. This rule can, as has been pointed out by the Permanent Court of International Justice, be altered by the express or implied terms of the treaty, in which case its provisions become self-executory. Otherwise, if treaties contain provisions with regard to righ....
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....theory does not endorse to the doctrine of incorporation. In order to apply and implement the international law in the State or at domestic level, the international provisions will have to be transformed into domestic legislation or municipal laws. This transformation takes place in accordance with the Constitutional provisions of the State concerned. The dualistic theory accords primacy to State laws to operate against the international law provision. 6.5 The dualistic theory and the monistic theory differ in their content perceptions in several ways. First is the sources. The source of State law is sovereign enactment, which may be based on the customs developed in the politico-cultural climate of particular State. The source of international law is either customary international law or the treaty provisions. 6.6 The other distinguishing factor is the subjects governed by the both. The state law is a sovereign law governing the individuals whereas the international law defines the relationship between the two States. In terms of principle also, the two theories differ as the State law has legal sanctity whereas the international law obligations are guided by international p....
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....rt of English law, a similar principle does not apply to treaty rules. Although a treaty duly ratified by the Crown will be binding under the international law, if the treaty is to have internal effect in the sense of changing legal rights, it will require enabling legislation by the Parliament." 7.4 The British practises in this sphere lean towards this approach. Where a state contains provision which is not consistent to the treaty provision, the British Court would prefer to apply the statute over the treaty provision. The American practice is entirely different. Article VI, clause 2 of the Constitution of United States provides that "....all treaties, made or which shall be made under the authority of United States shall be the supreme law of the land". Thus, the constitution of United State expressly recognises the dominance of international law to become law of the land. 7.5 It could be said that our Constitutional scheme is nearer to, and stands to recognise the doctrine of transformation known to dualistic approach. Constitutional Framework 8. In India, though the general principle is accepted that the implementation of the international law provisions shall be ....
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....ereat. The aforesaid entries are required to be read with entry no. 14, which is about entering into treaties and agreements with foreign countries and implementing of treaties, agreements and conventions with foreign countries. 8.5 In view of Entry 14 in List I, the Parliament is competent to enact law entering into treaties and agreements with foreign countries. No such law is made by the Parliament, therefore, the power of the President to enter into treaties is unfettered, however, as discussed hereinafter, making of treaty is different from implementing the provisions of treaty and in order to implement the treaty provisions, the law will have to be enacted which will have the jurisdictional force in the country to govern the rights of the subjects in relation to and with reference to the treaty provisions. 8.6 Article 53 of the Constitution vests the Executive Power of the Union in the President of India. It provides that the executive power of the Union shall be vested in the President and shall be exercised by him either directly or through officers subordinate to him in accordance with this Constitution. 8.7 Under Article 73 of the Constitution, the Executive powe....
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....ormation of international treaty and its implementation are different stages. The two exercise are entirely different in their nature and kind. Making of treaty or entering into international covenant is an executive act. On the other hand, the performance of obligations flowing from such treaty would necessitate the legal enactment and/or alteration of domestic laws. The implementation of treaty provisions at the State level requires legislative action. This legislative action is a sovereign exercise. The Supreme Court has already ruled that entering into a treaty is merely an executive act. 9.1 In Maganbhai Ishwarbhai Patel vs Union Of India And Anr. [(1970) 3 SCC 400], also known as Kutch case, the facts inter alia were that the petitioners sought to restrain the Union of India from ceding without approval of the Parliament, the areas of Rann of Kutch to Pakistan in accordance with Indo-Pakistan Western Boundary case award dated 19.02.1968, whereby it was held that cessation of the territory could take place without Constitutional amendment. In that case, the decision of the Supreme Court was on the basis of noticing the distinction between the formation of treaty on one hand....
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....ndia in default. (iii) Though the applications under such treaties/agreements/conventions are binding upon the Union of India (referred to as "the State" in Maganbhai's case) these treaties/agreements/ conventions "are not by their own force binding upon Indian nationals". (iv) The making of law by Parliament in respect of such treaties/agreements/conventions is necessary when the treaty or agreement restricts or affects the rights of citizens or others or modifies the law of India, (v) If the rights of citizens or others are not affected or the laws of India are not modified then no legislative measure is needed to give effect to such treaties/agreements/conventions." (para 37) Treaty Not Law per se For the State 10. Until and unless the international treaty or covenant therein is translated into municipal legislation or State laws, it remains not only executive in nature but stands confined to operate accordingly only. Unless the law is enacted in terms of and in order to implement the treaty, private individual rights are not readily affected by virtue of existence of international treaty. The international treaties are of internatio....
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.....3.1 It was further expressed, "The binding force of a treaty concerns in principle the contracting States only, and not their subjects. As International Law is primarily a law between States only and exclusively, treaties can normally have effect upon States only. This rule can, as has been pointed out by the Permanent Court of International Justice, be altered by the express or implied terms of the treaty, in which case its provisions become self-executory. Otherwise, if treaties contain provisions with regard to rights and duties of the subjects of the contracting States, their Courts, officials, and the like, these States must take steps as are necessary according to their Municipal Law, to make these provisions binding upon their subjects, Courts, officials, and the like." (page 924) 10.4 The proposition was made clear by the Supreme Court in Maganbhai Ishwarbhai Patel (supra), observing thus, "By Article 73, subject to the provisions of the Constitution, the executive power of the Union extends to the matters with respect to which the Parliament has power to make laws. Our Constitution makes no provision making legislation a condition of the entry into....
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....o be enacted pursuant to the treaty provisions is not to be mandated by the treaty provisions. In ultimate analysis, the extent of transforming the international treaty provisions into State laws will be decided by the sovereign legislature. It is for the Sovereign State legislature to decide in what manner, to what extent and in what fashion, the international law or treaty provision should be adopted to operate to regulate the rights and obligations of subjects and citizens. Sovereign Dominates When In Conflict 12. It is held trite that when international law and State law stand in conflict with each other and become irrconcilable, it is the State law or municipal law, that would prevail. The philosphy behind this proposition is same, namely that the international law has no force of its own unless drawn as State law by the sovereign legislation. Therefore, in case of conflict, it is natural that the State law would override. The logical corolory of this position of international law vis-a-vis State law is that when there is an omission of international law rule or treaty provision in the State law, it is provided in the State law only would prevail to become implementable.....
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....e jurisdiction which goes beyond the limits established by the common consent of nations and statutes are to be interpreted provided, that their language permits, so as not to be inconsistent with the comity of nations or with the established principles of international law. But this principle applies only where there is an ambiguity and must give way before a clearly expressed intention. If statutory enactments are clear in meaning, they must be construed according to their meaning even though they are contrary to the comity of nations or international law". (para 15) Without Law, No Implementation 13. Unless the international treaty provision has backing of legislation enacted by the member country, the provisions of treaty would have no enforcibility for rights and obligations in relation to which the treaty operates. The Supreme Court in Jolly George Verghese Vs. Bank of Cochin [1980 AIR 470] was considering the provision of Section 51 read with Order XXI Rule 37 of the CPC, in respect of arrest and detention in civil prison of judgment debtor unable to satisfy the decree, which provision was found to be violative of the Article 11 of the International Covenant o....
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....law, it was held, courts cannot also enforce obedience of Government of India to its treaty obligations. 13.4 The facts of Karnataka decision to be noted with interest were inter alia that two English cricketers named Geof Boycott and Geof Cook who were the citizens of United Kingdom were included by the Marylbourne Cricket Club (MCC) in its team which was to visit India between November, 1981 and February, 1982 to play six test matches and other matches at different places in India. 13.5 In those times different countries of the world had been showing solidarity against the evil of apartheid practised especially in the South Africa. The Government of India was a party to Gleaneagles Accord of June, 12, 1977 which was entered into by the member countries of Commonwealth wherein the members reaffirmed their support for international campaign against apartheid. The efforts taken by United Nations in relation to the sporting contacts with South Africa was endorsed to. 13.6 The two cricket players, Boycott and Cookwere amongst the sportsmen blacklisted by the United Nations on account of their participation in sports events in South Africa between 1.12.1980 and 31.3.1981. In v....
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....he provisions of the Constitution, all the laws in force in the territory of India immediately before the commencement of the Constitution shall continue to be in force therein until altered, repealed or amended by a competent legislature or other competent legislature or other competent authority. According to him, as under the common law rule in England, international treaties entered into by that country with other countries, become enforceable as part of its Municipal law unless such treaty obligations conflict with its own statute law or principles of, common law and that further as the common law of England was applicable in India before the coming into force of the Constitution, international treaties entered into by this country with foreign countries are to be regarded as part of the Municipal law of this country and enforced by Courts of this country as was done by courts in England." 13.7.3 The Court held, extracting para 18, "We are, therefore, of the opinion that the Government of India's obligations under the Gleneagles Accord and obligations attached to its membership of United Nations, cannot be enforced at the instance of citizens of this country or....
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....es of international laws would not override, unless the international principle laws are expressly adopted, incorporated and in-taken in the sovereign State laws. The sovereign laws will have an dominion effect. 14.3 Referring to Jolly George Varghese (supra), the Apex Court in Agricas LLP (supra), made reiterative observations, "...the remedy for breaches of International Law in general is not to be found in the law courts of the State because International Law per se or proprio vigore has not the force or authority of civil law, till under its inspirational impact actual legislation is undertaken. The individual citizens, therefore, cannot complain about their breach in the municipal courts even if the country concerned has adopted the covenants and ratified the operational protocol." (para 39) 14.4 'Lauterpacht in International Law (General Works)' summarise the principles, extracting from paragraph 4 of Gramaphone Company of India Ltd. (supra), "While it, is clear that international law may and does act directly within the State, it is equally clear that as a rule that direct operation of international law is, within the State subject to....
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....override in the municipal courts, "The language of the Indian Statutes is clear enough: in the interests of India, they seek to put restrictions in the way of trade between India and other countries. If that language be in conflict with any principle of international law as is said to be deducible from the implied provisions of the Anglo-Tibet Trade Regulations of 1914, municipal Courts of India have got to obey the laws passed by the Legislature of the country to which they owe their allegiance. In interpreting and applying municipal law, these Courts will try to adopt such a construction as will not bring it into conflict with rights and obligations deducible from rules of international law. If such rules, or rights and obligations are inconsistent with the positive regulations of municipal law, municipal Courts cannot override the latter. It is futile in such circumstances to seek to reconcile, by strained construction, what are really irreconcilable." AIFTA Article 24 Not Invocable 15. Article 24 is reproduced in paragraph 3.7.6 above. Looking to the language of Article 24 juxtaposed with the aspects of the present dispute and the controversy about the contents o....
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....tion mechanism provided therein stand excluded, once it is not part of State enacted law. 15.4 The submission was sought to be canvassed on behalf of the petitioners on the basis G.M. Exports (supra), that the treaty provisions would be respected in respect of international treaty in which India is signatory and treaty obligation will have to be enforced. The principle is that "if there be any difference between the language of such statute and the corresponding provision of the treaty, the statutory language to be construed in the same sense as that of treaty". 15.5 Therefore, what is required is to interpret the statutory law by respecting and duly interpreting the treaty provisions. However, when particular provision in the treaty does not form part of statute law, the question of giving effect to such treaty provision does not arise. 15.6 It is only for the purpose of interpretation of statute law that the treaty provisions will have to be taken into consideration to be applied to make existing State law enacted pursuant to the treaty to be in uniformity with the treaty provisions and their intent. However, the situation is entirely different where a particular treaty ....
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.... short levied or short paid. As per sub-section (1) of section 28, if the non-payment or short-payment is on account of reasons other than collusion or willful misstatement or suppression of facts, the proper officer may act within two years to exercise is powers. It is sub-section (4) of Section 24 which is invoked in the present case wherein exercise of powers by the competent authority is permissible within 5 years if the duty is not paid or is short-levied on the ground of collusion or any willful misstatement or suppression of facts. 16.1 Before looking at the relevant substantive provisions of Section 28 (4) of the Act applied in the present case, noticing other attendant provisions, Chapter VII of the Customs Act relate to clearance of imported goods and export goods. Section 45 is in respect of restrictions on custody and removal of imported goods. Section 46 is in respect of entry of goods on importation whereunder, declaration is required to be subscribed to. Section 47, clearance of goods for home consumption is granted where proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty. In U....
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....yee of the importer or the exporter, to whom a notice has been served under sub- section(4)by the proper officer, such person may pay the duty in full or in part, as may be accepted by him, and the interest payable thereon under section 28AA and the penalty equal to fifteen per cent of the duty specified in the notice or the duty so accepted by that person, within thirty days of the receipt of the notice and inform the proper officer of such payment in writing. (6) Where the importer or the exporter or the agent or the employee of the importer or the exporter, as the case may be, has paid duty with interest and penalty under sub-section(5), the proper officer shall determine the amount of duty or interest and on determination, if the proper officer is of the opinion - (i) that the duty with interest and penalty has been paid in full, then, the proceedings in respect of such person or other persons to whom the notice is served under sub-section (1) or sub- section (4), shall, without prejudice to the provisions of sections 135, 135A and 140 be deemed to be conclusive as to the matters stated therein; or (ii) that the duty with interest and penalty that has....
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....at the word 'fraud' and words 'with intent to evade payment of duty' occurring in Proviso 2 Section 11A of the Central Excise Act are missing in Section 28(1) of the Customs Act and the Proviso in particular. It was further observed by the Apex Court that Proviso of Section 28 can be invoked where the payment of duty has escaped by reason of collusion or any willful misstatement or suppression of facts, the Supreme Court stated that, 'so far as misstatement or suppression of facts are concerned, they are qualified by the words 'willful'. The 'willful' preceding the words 'misstatement or suppression of facts' clearly spells out that there has to be an intention on part of the assessee to evade the duty'. 16.6 The newly substituted Section 28 of the Customs Act by Act 8 of 11, when closely read brings out different situation. In Sub section (1) of Section 28 it is provided that recovery of duty would be in respect of duties not levied or not paid etc. for any reason other than the reasons of collusion or any willful misstatement of suppression of facts. Therefore the action of recovery under Section 28 will be in respect of duties not levied or not paid or short levied or short p....
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....ge that on factual calculation and the criteria adopted, the RVC was wrongly stated. The petitioners were importers engaged in similar import business, were well aware and conversant with the affairs. When the RVC content was calculated on the basis of few months of 2013 cost-sheet, the calculation was evidently erroneous and misapplied, to which the petitioners could not have disclaimed the knowledge. The petitioners were well aware about the nature of details given in relation to RVC, which were wrong. Still however, they suppressed the fact and claimed the benefit of preferential duty treatment under the Exemption Notification. It could be said that while presenting the documents including the RVC content in the Origin Certificate, there was suppression of facts. Solid Base, Factual Finding 17. The extended period of five years under subsection (4) of Section 28 could indeed be invoked by the authorities since the petitioners were found guilty of suppression of facts regarding RVC content in the Origin Certificate. The suppression is not always concealment of facts. The suppression can take form of suggesting wrong facts and to obtain some advantage, which may not be avail....
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....to be raised on behalf of the petitioners paled into insignificance. The substantive provisions of the Customs Act, when could be properly invoked and applied, even otherwise the Operational Certification Procedure provisions which were procedural, would stand subordinated. Non-observance of a particular procedural time limit thereunder cannot negate operation of substantive law, and effect and consequences of substantive provisions. 17.4 Procedural provisions cannot override the substantial statutory provisions of the Customs Act. It is trite that non-compliance of procedural law would not automatically vitiate the legally permissible action taken under the substantive legal provisions. When the procedural aspects and time limit for certain stages mentioned in the Operational Certification Procedure, are pitted against the provisions of Customs Act, the procedural requirements shall stand subordinated and subjugated. It is the substantive law which would govern and override. 17.5 The Orders-in-Original passed by the Customs authority challenged in this petitions are so founded. This Court is exercising jurisdiction under Article 226 of the Constitution. In that view, the fin....
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....lie. (x) Non-observance of mechanism for dispute resolution as per AIFTA Article 24 cannot have the effect and consequence of invalidating the action taken by the Customs authorities under the provisions of the Customs Act. The exercise of powers by them would not render without jurisdiction on such score. (xi)The petitioners were found upon investigation, to have imported the goods Tin Ingots by producing misleading Certificate of Country Origin, by misrepresenting and suppressing the Regional Value Content, thereby wrongfully claiming preferential treatment in payment of basic Customs duty (0%). (xii) In the facts of the case, the petitioners could be lawfully subjected to proceedings under Section 28 (4) read with Section 46 (4) of the Customs Act on the ground of non-levy and/or short-levy of basic customs duty in respect of goods imported by them. Extended period of limitation under Section 28(4) of the Act could be rightly invoked on the ground of suppression. (xiii) The proceedings taken out resulting into interim orders against the petitioners were under the substantive law which were the applicable statutory customs provisions under the ....