2021 (9) TMI 156 - HC - Customs

Import of the vessel Jag Arnav , retrospectively amenable to customs duty or not - Levy of duty w.e.f. Retrospective effect - Constitutional validity of condition No.82 of Sl. No.462 of Notification No.12/2012 Cus. dated 17 th March, 2012 issued by the Department of Revenue, Ministry of Finance, Government of India - permission to convert the vessel Jag Arnav to coastal status and not to charge customs duty - withholding permission to convert the foreign going vessels of Petitioner No.1 to coastal run and from demanding any customs duty on all of the vessels imported into India prior to 17th March, 2012. HELD THAT - Since the central plank of the submission of the Opposite Parties to justify the insistence on payment of customs duty on the vessel in question at the time of its conversion from foreign going vessel to coastal run vessel. Notwithstanding that it was imported which was in fact imported way back on 13th April, 2003, no customs duty was payable thereon and in support thereof reliance has been placed on the Notification 16/2012-Cus dated 13th June, 2012, the Court proposed to legally by examining that circular in some due date. The subject matter of the said circular issued by the CBEC procedure followed for import of Indian vessels and filing of import general manifest, bill of entry-regarding - The circular explains in detailed that the context in which it is being issued since the difficulties was brought to the notice of the CBEC by the INSA stating that the customs field formations are insisting on filing of Import General Manifest (IGM) and BOE even in respect of those vessels that were imported in the past and which were exempt from payment of import duty. Interestingly it is not in dispute that the Jag Arnav has, after its import into India, undertaken several journeys both to ports out outside India as also those within India. It is only after the impugned notification that permission for conversion into a coastal run vessel was sought by the Petitioner. However, that by itself would not attract the liability to pay customs duty on the entire value of the vessel since the import took place much earlier on 30 th April, 2003 at which point in time it was fully exempted from payment of any customs duty. In the present case since vessel Jag Arnav called in Indian port for the first time at Paradeep on 30th April, 2003, and at that relevant date it was exempt from payment of customs duty it cannot be made amenable to such duty nine years later by virtue of a condition in another exemption notification of March 2012. This Court concludes that in the present case exemption notification dated 17th March, 2012 is only prospective in its application and that in respect of the import of the three vessels i.e. Jag Arnav , Jag Ratan and Jag Rani which were imported into India first on 30th April 2003, 13th November, 2007 and 26th August, 2011 respectively, Entry 462 read with Condition No.82 of the notification dated 17th March, 2012 will not apply - it is not necessary for this Court to strike down the said entry or condition of the notification. It is held that the Opposite Parties would not be justified in insisting on payment of CVD by Petitioner No.1 for grant of conversion of the vessels from foreign going to coastal run since the vessels stand imported prior to the notification dated 17th March, 2012. The sum of ₹ 5,00,000/- deposited by Petitioner to this Court together with the interest accrued thereon will be released in favour of Petitioner No.1 by the Registry within four weeks - Petition allowed.

Summary

Issues Involved:

1. Validity of Condition No. 82 of Serial No. 462 of Notification No. 12/2012-Cus.
2. Denial of permission to convert the vessel 'Jag Arnav' to 'coastal status' and charging customs duty.
3. Withholding permission for conversion of foreign-going vessels to 'coastal run' and demanding customs duty retrospectively.

Issue-wise Detailed Analysis:

1. Validity of Condition No. 82 of Serial No. 462 of Notification No. 12/2012-Cus:

The petitioners sought a declaration that Condition No. 82 of Serial No. 462 of Notification No. 12/2012-Cus dated 17th March 2012, which retrospectively made the import of the vessel 'Jag Arnav' amenable to customs duty, is ultra vires under Sections 12, 25, and 46 of the Customs Act, 1962, and Articles 14, 19(1)(g), 265, and 300A of the Constitution of India.

The court noted that the vessel 'Jag Arnav' was imported on 30th April 2003 when it was exempt from customs duty under Notification No. 21/2002-Cus. The court held that Notification No. 12/2012-Cus dated 17th March 2012 is prospective and cannot be applied retrospectively to the vessel imported prior to this date. The court referenced several judgments, including State of Madhya Pradesh v. G.S. Flour Mills and Thirumalai Chemicals Ltd. v. Union of India, which established that an exemption notification cannot have retrospective application unless explicitly stated. The court concluded that Condition No. 82 could not be applied to 'Jag Arnav' as it was imported before the notification date.

2. Denial of Permission to Convert the Vessel 'Jag Arnav' to 'Coastal Status' and Charging Customs Duty:

The petitioners sought a direction to the customs authorities not to deny permission to convert 'Jag Arnav' to 'coastal status' and not to charge customs duty. The court observed that the vessel had been operating as a foreign-going vessel since its import in 2003 and had undertaken several voyages, both international and coastal, without filing a Bill of Entry (BOE) as it was exempt from duty at the time of import.

The court held that the customs authorities could not insist on the payment of customs duty at the time of conversion from foreign-going to coastal run status, as the vessel was imported when it was exempt from such duty. The court cited the decision in SEAMEC Ltd. v. Union of India, which supported the view that customs duty cannot be levied at a later stage if the vessel was exempt at the time of its first arrival.

3. Withholding Permission for Conversion of Foreign-Going Vessels to 'Coastal Run' and Demanding Customs Duty Retrospectively:

The petitioners sought to prohibit the customs authorities from withholding permission to convert their foreign-going vessels to 'coastal run' and from demanding customs duty on vessels imported before 17th March 2012. The court reiterated that the notification dated 17th March 2012 is prospective and cannot be applied to vessels imported before this date.

The court referenced Circular No. 16/2012-Cus dated 13th June 2012, which clarified that there is no requirement for filing an Import General Manifest (IGM) and BOE for vessels imported before 17th March 2012. The court emphasized that the customs duty applicable at the time of import is the relevant duty, and subsequent notifications cannot impose new duties retrospectively.

Conclusion:

The court concluded that the exemption notification dated 17th March 2012 is only prospective and does not apply to the import of the vessels 'Jag Arnav', 'Jag Ratan', and 'Jag Rani', which were imported before this date. The customs authorities were not justified in insisting on the payment of Countervailing Duty (CVD) for the conversion of these vessels from foreign-going to coastal run status. The court ordered the release of the sum of ?5,00,000 deposited by the petitioner with interest and allowed the writ petition with no order as to costs.