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2025 (6) TMI 1030
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.... For the Petitioner: Mr Vikram Nankani, Senior Advocate, with Mr Prithwiraj Choudhari i/b, Mr Prabhakar Shetty, in WP/2831/2018. For the Respondent in all matters: Mr Jitendra B Mishra, with Ms Sangeeta Yadav, & Mr Rupesh Dubey,. JUDGMENT : (PER M. S. SONAK, J.) 1. Heard learned Counsel for the parties and with their consent, the matters are taken up for final disposal. Since there is no clarity on the Rule, we formally issue the Rule, and with the consent of and at the request of the learned Counsel for the parties, make it returnable immediately. 2. By judgment and order dated July 9, 2019, these Petitions, along with two others, were dismissed, relegating the Petitioners to respond to the impugned show cause notices and participate in the proceedings initiated. 3. The Petitioners in Writ Petition No. 2491 of 2018 (Kothari Metals Ltd) and Writ Petition No. 2831 of 2018 (Purple Products Pvt Ltd) challenged the order dated 9 July 2019 vide Civil Appeal Nos. 9010 of 2019 and 3011 of 2019. By a common order dated 25 November 2019, the Hon'ble Supreme Court set aside the order dated 9 July 2019 and restored the two Writ Petitions to their original numbers, to be dec....
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....n'ble Supreme Court accepted this contention, and this Court's order dated 9 July 2019 was set aside, and these Petitions were restored to this Court's file. 8. The above is evident from the Hon'ble Supreme Court's order dated 25 November 2019 disposing of Civil Appeal Nos. 9010 of 2019 and 9011 of 2019, which is now transcribed below for the convenience of reference: - ORDER 1. Leave granted. 2. These appeals take exception to the judgment and order dated 09th July, 2019 passed by the High Court of Judicature at Bombay in Writ Petition Nos.2491 of 2018 and 2831 of 2018 respectively. 3. The appellant(s) by way of writ petition(s) challenged the show cause-cum-demand notices issued by the Officers of Customs under Section 28 of the Customs Act, 1962 concerning Mumbai, Delhi and other ports. 4. As regards appeal by Kothari Metals Limited, the notices pertain to more than one port. The show cause notice issued in respect of imports concerning Delhi port has since been dropped by the Department. However, the show cause notice(s) regarding Mumbai and other ports against the said appellant(s) still continue. 5. The appellant(s) had....
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....o the other parties. However, if no mutually satisfactory solution to the dispute is reached through the consultations, the party concerned may invoke the dispute settlement procedures under the ASEAN-India DSM Agreement. He submitted that in this case, a dispute as contemplated by Article 24 had arisen between the Republic of India and Malaysia, the contracting parties to the treaty. Efforts to resolve such disputes mutually were attempted but had failed. Therefore, the only option permissible to the Indian authorities was to seek a resolution of the dispute under the ASEAN-India DSM Agreement, a specialized dispute resolution mechanism agreed upon between the contracting parties. Without resorting to such a mechanism, the customs authorities lacked jurisdiction to issue the impugned show cause notices or to allege that there was some issue with the Certificate of Origin ("COO") concerning the imported Tin Ingots for the Regional Value Content of the imported Tin Ingots. 11. Mr Nankani submitted that since there was no contrary provision in the Customs Act or Rules, the provisions of the treaty, including Article 24 must prevail and had to be adhered to. He submitted that in su....
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.... includes Section 28DA. He pointed out that this was a special provision relating to disputes concerning the Country-of-Origin Criteria/Certificate. He submitted that after the introduction of this Chapter, the customs authorities might have jurisdiction to adjudicate disputes regarding Country of Origin, etc. However, these provisions have not been given any retrospective effect, and furthermore, they indicate that prior to the introduction of this Chapter, the customs authorities lacked jurisdiction to adjudicate such disputes. He submitted that even this aspect was never considered by the Gujarat High Court in the Trafigura (supra). 16. For all these reasons, Mr Nankani submitted that we should place no reliance on the decision of the Gujarat High court in the case of Trafigura (supra). He pointed out that in any event, the said decision was already challenged before the Supreme Court and a notice has been issued in the special leave petition already instituted. 17. Mr Nankani finally submitted that as long as the COOs were not rescinded or withdrawn by the Malaysian counterparts, the Petitioners were entitled to the benefits under the Customs Notification No. 46 of 2011 d....
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....risdiction, or otherwise legally infirm. He submitted that the Petitioners can always urge during the adjudication proceedings how none of the prima facie issues flagged in the impugned show cause notices apply and there was no misrepresentation, etc. However, he submitted that by relying on the treaty provisions, there was no case to interdict the proceedings or stall the adjudication. 23. Mr Mishra pointed out that there were 10 to 12 cases involving the import of Tin Ingots from Malaysia. In all such matters, upon adjudication, it was found that there was suppression, collusion, and fraud, particularly in the context of Regional Value Content. He pointed out that the local traders had filed complaints based upon which investigations were carried out, and such investigations revealed that the RVC of Tin Ingots was not more than 35%. Still, the benefits under the Customs Exemption Notification No.46 of 2011 were obtained. He submitted that to the best of his knowledge, in none of these matters, the orders made by the adjudicating authorities were interfered with by the Courts of law. He, therefore, submitted that the Petitioners may not be allowed to interdict the adjudication ....
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....se imported Ingots were accompanied by a valid Certificate of Origin (COO) issued by the Ministry of International Trade and Industry, Malaysia (MITI). Based on such certification, the Petitioners have claimed and availed themselves of the benefits under Customs Exemption Notification No. 46 of 2011, dated June 1, 2011, from time to time. 31. Several domestic industries filed complaints or made representations regarding the import of Tin Ingots from Malaysia, alleging that they had been wrongly availing themselves of the benefits under Exemption Notification No. 46 of 2011. The complaints alleged fraud, inter alia, by misrepresenting the RVC as being above 35%, when in fact it was significantly below 35%. The complaints and representations pointed out that this was in breach of the rules and conditions outlined in the Exemption Notification. 32. This issue was therefore taken up for investigation by the Director of Revenue Intelligence (DRI) of the Mumbai Zonal Unit. The DRI initiated the process of "Retroactive Check" and noted that there was no cooperation from the Malaysian authorities. Finally, a team from DRI visited Malaysia to examine the status of RVC and ascertain th....
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....stinction between 'direct application' of treaties in domestic law, and national legal systems that mandate and require 'act of transformation' for an international treaty to apply and be a part of domestic law. 'Direct application' means and mandates that the treaty norms, either wholly or to some extent, are directly treated as norms of domestic law and enjoy the statutory law status by default in the domestic legal system. The term 'direct application' will also cover situations in which government or different levels of government utilise treaty norms as part of domestic jurisprudence and is not limited to situations in which private parties can sue based on the treaty norms. 36. As explained below, there is a distinction between direct application and 'invocability'. 'Act of transformation' principle means and implies that an international treaty is not directly applicable in the domestic law system and requires provision in the domestic rules before it is applied. 'Transformation' is a word of wide amplitude and does not refer to mere implementation as it includes the right of the country to adopt, amend or modify the treaty language into do....
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....he Hon'ble Supreme Court also referred to and explained the principle of invocation or invocability. The Court explained that, in simple terms invocability refers to justiciability, admissibility of a claim before the national Courts. It is not connected with the defence or merits of the defence. In cases where an 'act of transformation' is required, treaties may be partially or entirely incorporated into domestic law. Where the treaty or portion thereof becomes a part of the domestic law by 'act of transformation', it is obvious that only the part incorporated or transformed into domestic law is invocable and justiciable and not the parts that are not codified into domestic law. 41. However, invocability can embrace several ideas which are intertwined and are of specific concern in cases of constitutions allowing direct application. Here, 'invocability' is a generic term which means to embrace a small inventory of means of judicial control over the use in a particular lawsuit of the direct applicability of the treaty. As in the case of 'act of transformation', even in direct application cases, some jurisdictions accept the principle of partial di....
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....h an international treaty. National Courts cannot say yes if the Parliament has said no to a principle of international law. National Courts will endorse international law but not if it conflicts with national law. National courts, being organs of the National State and not organs of international law, must perforce apply national law if it conflicts with international law. 46. The Hon'ble Supreme Court held that the above-quoted decisions are on the legal effect of international treaties in domestic law in India. The ratio of these decisions primarily relates to and is confined to the requirement and mandate of the need for 'act of transformation' to be a part and parcel of domestic law, which confers a right to invocability. Most crucially, the Hon'ble Supreme Court noted in paragraph 40 that "the ratio of the above decisions has to be distinguished from decisions interpreting domestic law after the 'act of transformation' consequent to which the portions of GATT-1994 stand enacted thereby conferring right of invocability to parties. The decisions referred to in paragraphs 41 to 44 and relied upon by the importers fall in the second category." 47. In paras 41 to 44, the Hon....
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....ffect to the provisions of AIFTA. However, these rules provide no statutory recognition to Article 24, which, according to the Petitioner, contains a specialised dispute resolution mechanism intended to displace the municipal or domestic laws already in force. Therefore, the provisions of Article 24 of AIFTA cannot be said to have formed a part of the domestic or municipal laws or transformed into domestic or municipal laws to seek their enforcement before a domestic or municipal Court. 52. A Division Bench in the Gujarat High Court in Trafigura (supra) has summarised the legal position precisely in the context of the invocability of Article 24 of AIFTA by detailed reference to the DOGPTA Rules of 2009. This decision affords answers to most of the issues raised by the petitioners. Even the factual base in the two matters does not differ significantly. In the Gujarat case, the challenge was to the orders holding that there was fraud, suppression and misrepresentation in availing the benefits of the Customs exemption notification in respect of tin ingots imported from Malaysia. Since there was ample material and the show cause notices suffered from no infirmities, the orders were ....
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....ction of the customs authorities cannot be questioned as being without jurisdiction. Based on a treaty provision that is not transformed or incorporated into the national law or statute, the provisions of the existing Customs Act cannot be undermined, or the powers and jurisdiction of the customs authorities questioned. 56. Section 28 of the Customs Act confers ample powers upon the Customs authorities to investigate into and adjudicate upon violations due to misrepresentation, suppression or fraud. Based on the material collected by the Customs authorities, a show cause notice has been issued to the Petitioners giving them full opportunity to explain how there was misrepresentation, suppression or fraud on the issue of RCV. There is no legal or jurisdictional infirmity in the issue of such show cause notices. The provisions of Article 24 of AIFTA do not deprive the customs authorities of their powers or jurisdiction to issue such show cause notices. The Petitioners virtually insist that the treaty provisions prevail over national laws, even though the treaty provisions on which they rely have not been incorporated into any national law. This is clearly impermissible, and the ch....