2015 (6) TMI 332 - HC - Customs

Import of metallurgical coke or the coke breeze - According to the Customs Authority, the import of metallurgical coke or the coke breeze is permissible against the export of hot metal/pig iron - The department says that the metallurgical coke or coke breeze are two distinct and separate items and have been put into different categories. - Held that - Regulation provides the manner of discretion to be exercised by the proper officer and to be regulated in a particular mode. This Court does not find that such provision offends the substantive power conferred under sub-section (1) of Section 18 of the said Act. Had it been a case that the power conferred under the statute upon the proper officer have been negated and/or taken away by framing the regulations, the regulation cannot have a paramount impact upon the substantive statute. It would be a different thing where the power is circumscribed to be exercised in the manner to be provided in the subordinate legislation. It is clearly discernible from Regulation 2 thereof that where the provisional assessment made by the proper officer, the importer is required to pay maximum 20% of such provisional duty as assessed together with certain conditions as to the surety and/or security provided under Regulation 4 thereof. Regulations have its applicability at the pre-stage of provisional assessment and not at the stage of provisional assessment. Such interpretation in my view shall render the entire Regulations unworkable and meaningless. The decision of the authority in directing the petitioner to pay the entire amount of provisional duty so assessed and the surety of equal amount in the absence of P.D. Bond is contrary to the aforesaid Regulations and, therefore, cannot be sustained. - Matter remanded back - Decided in favour of assessee.

Summary

Issues involved:
1. Acceptance of bill of entry for import of coke breeze by Customs Authority.
2. Uncertainty over the description of imported goods - metallurgical coke or coke breeze.
3. Provisional assessment and communication by the authority under Section 18 of the Customs Act.
4. Exercise of discretion by the authority under Section 18 of the Customs Act.
5. Interpretation and application of Customs (Provisional Duty Assessment) Regulation, 2011.
6. Judicial review of the authority's exercise of discretion.
7. Compliance with substantive provisions of the statute and delegated legislation.
8. Applicability and interpretation of Regulations for provisional duty assessment.
9. Validity of directing importer to pay entire amount of provisional duty assessed and surety.

Detailed Analysis:
1. The petitioner submitted a bill of entry for importing coke breeze, which the Customs Authority did not accept, citing the need for testing to determine if the goods were metallurgical coke or coke breeze, with different import permissions. The uncertainty arose as the laboratory report was pending, leading to the importer requesting provisional assessment and release under Section 18 of the Customs Act.

2. The petitioner argued that the authority's discretion under Section 18 must align with Customs (Provisional Duty Assessment) Regulation, 2011, which requires a deposit of 20% of differential duty initially. The Customs Authority contended that the imported goods were coke breeze, not metallurgical coke, justifying the provisional assessment.

3. The Court noted Gujarat High Court's judgment emphasizing limited judicial review of the authority's discretion under Section 18. It acknowledged the authority's power to provisionally assess duty and demand security, ensuring compliance with the Customs Act and related Regulations.

4. The Court highlighted the importance of harmonizing substantive statutes and delegated regulations, ensuring the proper exercise of discretion by the authority. The judgment from Gujarat High Court was quoted to support the limited scope of judicial intervention in such matters.

5. Analyzing the provisions of Customs (Provisional Duty Assessment) Regulation, 2011, the Court found that the authority's directive for full payment of provisional duty and surety without a P.D. Bond contradicted the Regulations, rendering it unsustainable.

6. Consequently, the Court directed the proper officer to reconsider the matter within a specified timeline, emphasizing the need for compliance with the Regulations and proper exercise of discretion under Section 18. The writ petition was disposed of with no costs awarded.