Yesterday the Supreme Court in its Latest Judgment on Customs Duty, decided the question of law with reference to the interpretation of the effect of Publication of a Notification imposing 200% Custom Duty on Goods Imported from Pakistan in aftermath of Pulwama Attack. The Judgment has been delivered by the three Judges Bench of Justice D.Y. Chandrachud, Justice Indu Malhotra and Justice Kurian Joseph.
Bunch of Appeals were filed before the Supreme Court, however, for understanding the case the Brief Facts of the case Union of India and Others vs M/S G.C Chatha Rice Mill and Another are as follows:
A terrorist attack took place at Pulwama on 14 February 2019. On 16 February 2019, the Union Government issued a notification under Section 8A of the Customs Tariff Act 1975.
By means of the said Notification an enhanced custom duty of 200% was imposed on all goods originating in or exported from Pakistan.
The specific time at which the Notification was uploaded on the e-Gazette was 20:46:58 hours. Customs authorities at the land customs station at Attari sought to enforce the enhanced rate of duty on importers who had already presented bills of entry for home consumption before the enhanced rate was notified in the e-Gazette. This led to a challenge before the High Court of Punjab and Haryana. The consignments of import covered a diverse range of goods, ranging from dry dates to cement.
On 26 August 2019, a Division Bench of the High Court of Punjab and Haryana allowed the bunch of writ petitions filed under Article 226 of the Constitution. The High Court held that the enhanced rate of duty will not be applicable, as the importers, who imported goods from Pakistan, has submitted their bills electornically before the issuance of Notification enhancing duty to 200%.
Punjab and Haryana High Court interpreted and referred to Sections 8A and 11A of the Customs Tariff Act, 1975 and Sections 12, 15, 17, 46 and 47 of the Customs Act,1962.
The High Court held that the importers were liable to pay the duty applicable at the time when the bills of entry for home consumption were filed under Section 46 of the Customs Act, 1962. The Union of India was ordered to release the goods within seven days on the payment of duty ‘as declared and assessed’ without applying the Notification enhancing the rate of duty on goods originating in Pakistan.
Feeling Aggrieved the Union of India filed an appeal before the Supreme Court of India.
Issue before the Supreme Court:
Whether the amendment to the First Schedule of the Customs Tariff Act, 1975 takes effect from the time at which it is uploaded/notified in the gazette or from the first moment of the day/date on which it was issued/ published in the gazette.
Submission of Union of India (Appellant)
- Under Section 15 of the Customs Act, the expression “on the date” comprehends the entire period of 24 hours, in this case beginning at midnight on 16 February 2019.
- It was submitted by ASG that Section 15 does not talks about time, thereofre by a legal fiction the rate prevalant on the date of presentaion of bill of entry is applicable and it is immaterial that at what time the notification was uploaded.
- Section 15 should be interpreted in light of the rule of literal construction, and the law has to be applied as it is; and
- This case is not about the prospective or retrospective application of the Notification at issue. Rather, it is the simple intent of Parliament to consciously make the date on which the Notification is issued as the date for determination of the rate of duty (as applicable), which this court must uphold.
- Section 3(7) of the General Clauses Act defines the expression ‘Central Act’ to mean an Act of Parliament while Section 3(13) defines ‘commencement’ to mean the day on which an Act or Regulation comes into force;
- Under Section 5(3) of the General Clauses Act, a Central Act or Regulation, unless the contrary is expressed, comes into force immediately on the expiration of the day preceding its commencement;
- ‘Commencement’ can only be from a day which takes within its fold the entire period of 24 hours from midnight of the day before the issuance of the Notification.
Submission of Respondents
- Under Section 15 of the Customs Act, the rate of duty is the rate prevalent on the date of the presentation of the bill of entry under section 46 of the Customs Act, where goods are cleared for home consumption;
- The importers fulfilled the twin requirements of the goods having entered on 16 February 2019 and the bill of entry having been filed before 20:46 hours when notification 5/2019 was issued.
- Notification 5/2019 having been published at 20:46:58 hours on 16 February 2019 it was never updated on the EDI portal
- Notification 5/2019 would apply only to bills of entry for home consumption presented after 20:46:58 hours on 16 February 2019 or upon amendment in the online EDI portal of ICEGATE
- A notification issued under the provisions of Section 8A (1) of the Customs Tariff Act cannot have a retrospective character.
- Subordinate legislation is not retrospective unless the statute under which it has been framed, expressly or by necessary implication, imports retrospectivity.
- Once the bills of entry were filed and self-assessment was complete, the subsequent issuance of Notification 5/2019 at 20:46:58 hours would have no application to the present batch of cases
- Bills of entry, once presented, can be re-assessed under Section 17(4) only in instances when the assessment has “not been done correctly” upon verification, examination or testing of the goods by the proper officer.
Analysis of Submissions:
- Section 12 specifies that the rates of duty on goods imported and exported are those which are provided in the Customs Tariff Act or in any other law. Section 12 does not indicate when the duties under those enactments will come into being or force.
- Section 46 requires an importer of goods to make an entry in the electronic form of a bill of entry for home consumption or, as the case may be, for warehousing, on the customs automated system.
- The Court referred to the Judgments of Supreme Court in the case of Raj Kumar Yadav vs. Samir Kumar Mahaseth [(2005) 3 SCC 601], New India Assurance Co. Ltd. vs. Ram Dayal [(1990) 2 SCC 680], National Insurance Company Limited vs. Geeta Devi [(2010) 15 SCC 670] and Pashupati Nath Singh vs. Harihar Prasad Singhm for interpreting the term “on the date”.
- Judges negated the submission of Union of India, to this effect that the notification/amendment shall be deemed to have come for that whole day, not from that particular point of time.
- Supreme Court held that in the present case both conditions of Section 15 were fulfilled prior to the issuance of Notification on 16.02.2019 at 20:46:58 hours.The rate of duty was determined by the presentation of the bills of entry for home consumption in the electronic form under Section 46.
- The duty was correctly assessed at the time of self-assessment in terms of the duty which was in force on that date and at the time. The subsequent publication of the Notification bearing 5/2019 did not furnish a valid basis for re-assessment.
Justice Kurian Joseph delivered a separate but concurring Judgment and observed that:
Notification issued under Section 8A of the Tariff Act partakes the character of legislation, is clearly untenable, if it is intended to convey that the Notification issued under Section 8A of the Tariff Act is made by the legislature itself.
The scheme of the Customs Act and the Tariff Act and Regulation 4(2) of the 2018 Regulations rule out the tenability of applying the Notification in the manner sought by the appellants.
Ultimately the Court Dismissed the Appeals filed by the Union of India
Case Title: Union of India and Others vs M/S G.C Chatha Rice Mill
Case No.: Civil Appeal 3249 of 2020
Date of Order: 23.09.2020
Quorum: Hon’ble Mr. Justice D.Y. Chandrachud, Hon’ble Mr. Justice Indu Malhotra and Hon’ble Mr. Justice Kurian Joseph.
Appearance: Mr. K.M Natraj, A.S.G for Union of India, Mr. P.S. Narsimha for Respondents