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2018 (8) TMI 373 - AT - CustomsRefund of duty paid under protest - Doctrine of promissory estoppel - rejection on the grounds that the Bill of Entry was filed on 1.5.2008 and duty paid under protest on 7.5.2008, whereas the N/N. 64/2008-Cus. was issued on 09.05.2008 and further the said Bill of Entry was not reassessed - N/N. 64/2008-Cus. - Held that - In the instant case, the Bill of Entry was admittedly filed by the respondent only on 1.5.2008. Applying the provisions of Section 15 (1) of the Act and the ratio of Dimexon judgment 2009 (8) TMI 76 - BOMBAY HIGH COURT , the respondent-importer can then lay claim for exemption from customs duty on the basis of a customs notification, issued under the Customs Act, which was in force on 1.5.2008. As per the facts of this case, the notification in force was EPCG N/N. 97/2004-Cus. This being so, the respondents cannot then get the rate of Customs duty which was actualized by Customs N/N. 64/2008-Cus. only on 9.5.2008. The Hon ble Apex Court in the case of Sun Exports case 1997 (7) TMI 117 - SUPREME COURT OF INDIA also held that there is no implied power of taxation and that tax power must be specifically conferred and it should be strictly in accordance with the power so endowed by the Constitution itself. Appeal allowed - decided in favor of Revenue.
Issues Involved:
1. Application of Doctrine of Promissory Estoppel and Retrospective Effect of Exemption Notification. 2. Validity of Claim for Reduced Customs Duty Rate under Amended Notification. 3. Prospective vs. Retrospective Effect of Notifications. 4. Interpretation of Foreign Trade Policy (FTP) vs. Customs Act. 5. Legal Precedents and Relevant Case Laws. Detailed Analysis: 1. Application of Doctrine of Promissory Estoppel and Retrospective Effect of Exemption Notification: The respondents filed a Bill of Entry on 1.5.2008 and paid duty under protest on 7.5.2008, claiming a refund based on a subsequent notification (No.64/2008-Cus. dt. 09.05.2008) that reduced the duty rate from 5% to 3%. The Commissioner (Appeals) allowed the appeal based on the doctrine of promissory estoppel, referencing the High Court of Karnataka's decision in UOI Vs Yokogawa Blue Star Ltd. However, the Hon'ble Apex Court did not address the question of law and left it open. 2. Validity of Claim for Reduced Customs Duty Rate under Amended Notification: The respondents argued that the change in policy effective from 1.4.2008 should apply, supported by DGFT Policy Circular No.6 (RE-2008) 2004-09, which clarified that EPCG authorizations issued from 1.4.2008 to 11.4.2008 should be deemed at 3% Customs Duty. However, the Revenue contended that the reduction in Customs Duty was effective only from 9.5.2008 and thus could not be claimed for entries made before this date. 3. Prospective vs. Retrospective Effect of Notifications: The Revenue argued that any notification issued will have prospective effect unless otherwise specified. They cited the Apex Court's ruling in Colgate Palmolive (India) Ltd. Vs CC Patna, which held that exemption notifications are intended to be applied prospectively and not retrospectively. This was further supported by the Dimexon Vs UOI case, which clarified that only a notification issued under Section 25 of the Customs Act governs the exemption of Customs duty. 4. Interpretation of Foreign Trade Policy (FTP) vs. Customs Act: The respondents claimed that procedural norms conflicting with policy should defer to the policy itself, supported by the High Court of Bombay in Narendra Udeshi Vs UOI. However, the Revenue argued, supported by the Dimexon judgment, that the Customs Act specifically governs the imposition and exemption of duties, and the FTP cannot override the Customs Act. The relevant law for exemption would be the notification in force at the time of filing the Bill of Entry. 5. Legal Precedents and Relevant Case Laws: The Tribunal reviewed various judgments, including the High Court of Karnataka in Yokogawa Blue Star Ltd., the High Court of Bombay in Dimexon, and the Apex Court in Colgate Palmolive (India) Ltd. and Dilip Kumar and Company. The latter clarified that ambiguity in tax exemption notifications should favor the Revenue, not the assessee. Conclusion: The Tribunal concluded that the respondents could not claim the reduced duty rate based on a notification issued after the filing of their Bill of Entry. The relevant notification in force on 1.5.2008 was No.97/2004-Cus., and the subsequent notification No.64/2008-Cus. issued on 9.5.2008 could not be applied retrospectively. The Tribunal set aside the Commissioner (Appeals) order and restored the original order by the Deputy Commissioner of Customs (Refunds), thereby allowing the Revenue's appeal. Order: The impugned order is set aside, and the original order by the Deputy Commissioner of Customs (Refunds) is restored. The Revenue's appeal is allowed. (Pronounced in court on 06.08.2018)
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