2016 (6) TMI 1200 - HC - Customs

Refusal of clearance of goods - import of alloy steel deformed bars - When the goods reached to Mumbai airport clearance were refused by the department on the ground that the consignment did not have a prior BIS Certification, which was necessary - Held that - It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended. In the absence of clear words indicating that the amending Act is declaratory, it would not be so construed when the pre-amended provision was clear and unamiguous and amending Act may be purely clarificatory to clear an amendment of the provision of the Principal Act, which was also implicit. Clarification amendment of this nature will have retrospective effect, and therefore, if Principal Act was existing law, when the Constitution came into force, amending Act also will be part of the existing law. If we go through the notification/instruction dated 7-11-2014, it cannot be said that the same is clarificatory and apply retrospectively. The application is allowed for amendment in the writ petition as prayed by Respondent No. 1 and are of the view that the learned Writ Court has not committed any legal error in entertaining the writ petitions and partly allowing it. Appeal allowed - decided partly in favor of appellant.

Summary

Issues Involved:
1. Constitutionality and legality of Circular No. 450/176/2014-Cus-IV dated 7-11-2014.
2. Jurisdiction of the High Court of Madhya Pradesh to entertain the writ petition.
3. Retrospective application of the Circular dated 7-11-2014.
4. Compliance with Bureau of Indian Standards (BIS) for imported Alloy Steel Deformed Bars.

Detailed Analysis:

1. Constitutionality and Legality of the Circular:
The petitioner challenged the Circular No. 450/176/2014-Cus-IV dated 7-11-2014, arguing it was arbitrary, unreasonable, and violative of Article 14 of the Constitution. The petitioner contended that the circular was issued with mala fide intentions to favor certain manufacturers and discriminate against others, thus violating Article 19(1)(g) of the Constitution. The respondent argued that the circular was not ultra vires and did not prohibit the import of goods. The court concluded that the circular was not unconstitutional but did not prohibit the import of goods, aligning with the Bombay High Court's judgment in Global Tradex Limited.

2. Jurisdiction of the High Court of Madhya Pradesh:
The respondents raised a preliminary objection regarding the jurisdiction of the Madhya Pradesh High Court, arguing that the goods were lying at Mumbai and Chennai ports, and the circular was issued in Delhi. The petitioner countered that their corporate office was in Indore, the order was placed from Indore, and the letter of credit was opened by the Indore Branch of IDBI Bank. The court relied on the Supreme Court's judgment in Naval Kishore Sharma v. Union of India, which held that a High Court could issue a writ if the cause of action wholly or partly arose within its territorial jurisdiction. The court concluded that part of the cause of action had arisen within the jurisdiction of the Indore Bench, thus it had the jurisdiction to entertain the petition.

3. Retrospective Application of the Circular:
The petitioner argued that the circular could not be applied retrospectively to their consignment, which was shipped before the circular was issued. The court agreed, stating that no clarificatory circular could apply retrospectively to actions already completed. The court cited the Supreme Court's judgment in Union of India v. Inter Continental (India), which held that new conditions could not be added to a parent notification through a subsequent circular. The court concluded that the circular dated 7-11-2014 could not be applied retrospectively to the petitioner's consignment.

4. Compliance with BIS Standards:
The petitioner contended that their goods complied with British Standards and were not covered under the BIS standards mentioned in the circular. The court noted that the Steel Products (Quality Control) Order, 2012, and its amendments did not explicitly include alloy steel deformed bars. The court observed that the Ministry of Steel and Bureau of Indian Standards had confirmed that re-bar/TMT bar containing 0.0008% or more Boron fell under the Indian Standards IS 1786, regardless of the ITC (HS) Code. However, the court found that the petitioner's consignment did not require BIS certification as it was shipped before the circular's issuance. The court directed the respondent to allow the clearance of the goods while permitting the department to take further action if necessary.

Conclusion:
The court partly allowed the petition, directing the respondent to clear the goods covered by the commercial invoice dated 4-9-2014 and the consignments of Alloy Steel Deformed Bars lying at Chennai and Mumbai ports. The court clarified that it was not making any observations regarding the application of BIS standards per the impugned circular. The court held that the circular could not be applied retrospectively and that the Indore Bench had jurisdiction to entertain the petition. The petition was allowed to the extent indicated, with no order as to costs.