2018 (7) TMI 36 - HC - Customs

Re-export of sugar imported against advance authorization - Collection of export duty on the petitioners re-export of such imported raw sugar during the period between 16-6-2016 and 5-7-2016 - benefit of notification dated 1-3-2011 - Held that - The export duty was introduced on export of sugar raw, white or refined with effect from 1-3-2011. Some two years later with effect from 1-3-2013 by virtue of amendment in the exemption notification dated 1-3-2011, export of sugar was exempt from payment of duty. This exemption notification made no distinction between export of sugar from local market or re-export of sugar imported against advance authorization. The Government of India withdrew the exemption from payment of duty on export of sugar with the objective of controlling the domestic sugar prices - Held that - This had nothing to do with the exporters such as the petitioners. Raw sugar imported against advance authorization on the condition of re-export had no impact on domestic sugar price. Impounding export duty on such exports would not serve the purpose of controlling local sugar prices. Apparently since inadvertently the withdrawal of exemption also hit the exports of sugar against advance authorization, the Government of India on the representations made by the trade, quickly reintroduced the exemption limited to such class - the Government of India was correcting an inadvertent error or an unintentional withdrawal of the exemption. If that be so, the exemption notification dated 6-7-2016 must be viewed as clarificatory or curative in nature. Petition allowed in part.

Issues Involved:

1. Collection of export duty on re-export of imported raw sugar during the period between 16-6-2016 and 5-7-2016.
2. Withdrawal and subsequent reintroduction of exemption from export duty on sugar.
3. Applicability of exemption notification dated 6-7-2016 to the period between 16-6-2016 and 5-7-2016.
4. Legal interpretation of exemption notifications and their retrospective effect.

Detailed Analysis:

Issue 1: Collection of export duty on re-export of imported raw sugar during the period between 16-6-2016 and 5-7-2016.

The petitioners, engaged in the business of manufacturing, marketing, and selling white refined sugar, imported raw sugar against advance authorization without payment of duty, with the condition of re-exporting the refined sugar within a stipulated time. The issue arose when the Government of India withdrew the exemption of duty on export of sugar through a notification dated 16-6-2016, thus making export of sugar liable to duty during the period between 16-6-2016 and 5-7-2016.

Issue 2: Withdrawal and subsequent reintroduction of exemption from export duty on sugar.

Initially, raw sugar, white sugar, or refined sugar were subject to 20% export duty as per the Second Schedule to the Customs Tariff Act. An exemption notification dated 1-3-2011 did not include these sugars. However, a subsequent notification dated 1-3-2013 amended the exemption notification to include these sugars, making them exempt from export duty. Due to a shortage in the domestic market and rising local sugar prices, the Government decided to withdraw this exemption on 16-6-2016, which was later reintroduced on 6-7-2016 following representations from the petitioners.

Issue 3: Applicability of exemption notification dated 6-7-2016 to the period between 16-6-2016 and 5-7-2016.

The petitioners argued that the withdrawal of exemption was aimed at controlling domestic sugar prices and had no connection with re-export of sugar imported against advance authorization. They contended that the reintroduction of the exemption on 6-7-2016 was a corrective measure for an inadvertent error, suggesting that the exemption should apply retrospectively to cover the period between 16-6-2016 and 5-7-2016. The court noted that the Government's intention was not to impose export duty on re-exported sugar, as evidenced by the prompt issuance of the new exemption notification.

Issue 4: Legal interpretation of exemption notifications and their retrospective effect.

The court relied on precedents where the Supreme Court and other courts had treated similar exemption notifications as clarificatory or curative in nature, thus applying them retrospectively. In cases like W.P.I.L. Ltd. v. Commr. of C. Ex., Meerut and Ralson (India) Ltd. v. Commr. of C. Ex., Chandigarh-I, the courts held that subsequent exemption notifications should apply to the interim period between withdrawal and reintroduction of exemptions.

Conclusion:

The court declared that the exemption notification dated 6-7-2016 should apply retrospectively to the period between 16-6-2016 and 5-7-2016. Consequently, the export of sugar made by the petitioners and other similarly situated exporters would continue to enjoy exemption from payment of export duty during this period, subject to the fulfilment of conditions in the notification. The competent authority was directed to adjudicate the show cause notice based on this declaration. The petition was disposed of accordingly.

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