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2018 (7) TMI 1543 - HC - CustomsJurisdiction - power of Finance Ministry u/s 25(2) of Customs Act to consider the issue of exemption of the differential duty - Import of restricted item - Garlic - Special licences to import 5000 mt during the period of shortage - increased rate of customs duty from 30% to 100%. Held that - It is quite apparent that when the Central Government exercises a power under Section 25 of the Act. It does so as a delegate of Parliament; the rate and the conditions applicable have the effect of altering the customs duty prescribed in the Customs Tariff Act, 1975. This power is relatable and is exercised concurrently with Section 8 of the Customs Tariff Act. Therefore, there is certain amount of deliberation and exclusive consideration based upon the economic factors variant. Section 25(2) of the Customs Act which seems to suggest an exception to Section 25(1) of the Act i.e. enabling the Central Government to make and issue a special order in each case exempting from the payment of duty, in the circumstances under which such exemption is to be granted . The placement of Section 25(2) of the Act leaves one in no doubt that this power is an extension and amplification of general power under Section 25(1) of the Act. It would not be appropriate to direct the Central Government, at this stage, and after this lapse of time to consider the petitioner s case on the ground of special or exceptional circumstances. It is not disputed that the petitioner also trades in garlic and presumably had its own retail outlet chains. The law prevailing i.e. the rate of duty as on the date of import (Section 15 of the Act) covers petitioner s case - petition dismissed - decided against petitioner.
Issues Involved:
1. Condonation of delay in filing the application for restoration. 2. Restoration of the writ petition. 3. Dispute over the applicable rate of customs duty on imported garlic. 4. Application of Section 25(2) of the Customs Act, 1962 for exemption from increased customs duty. Issue-wise Detailed Analysis: 1. Condonation of Delay in Filing the Application for Restoration: For the reasons mentioned in the application, the delay of 75 days in filing the application seeking restoration is hereby condoned. Application stands disposed of accordingly. 2. Restoration of the Writ Petition:In view of the orders passed in CM No.31542/2017, this application is also allowed. The writ petition is restored to its original position in the file of this Court. Application stands disposed of accordingly. 3. Dispute Over the Applicable Rate of Customs Duty on Imported Garlic:The petitioner, National Cooperative Consumers Federation of India Ltd., imported 5000 metric tons (mt) of garlic under special licenses issued by the Director General of Foreign Trade (D.G.F.T.). Initially, the customs duty was 30%, but it was increased to 100% by Customs Notification No.11/2003 issued on 15.01.2003. The petitioner had cleared 3000 mt of garlic before the new rate was applied. For the remaining 2000 mt, the Customs authorities demanded 100% duty, leading the petitioner to approach the Court. The petitioner argued that the increased duty should not apply to their consignment since the balance goods had arrived at the port before the new duty rate was implemented. The Court had previously suggested that the dispute be examined by the Committee of Disputes headed by the Cabinet Secretary. However, the Customs Authorities did not grant relief, and the petitioner highlighted the differential rate of duty (70%) in these proceedings. 4. Application of Section 25(2) of the Customs Act, 1962 for Exemption from Increased Customs Duty:The petitioner argued that under Section 25(2) of the Customs Act, 1962, the Central Government has the power to exempt specific consignments from customs duty under special circumstances. The petitioner cited the case "Kodali Sathyanarayana Vs. Union of India, 1994 (70) ELT 194" to support their claim for exemption. The Madras High Court had quashed orders that failed to consider requests for ad hoc exemption under Section 25(2) and directed the authorities to reconsider such requests. The petitioner also stated that the Department of Agriculture, Department of Consumer Affairs, and the Ministry of Commerce had recommended applying the old customs duty rate of 30% to the imported garlic. These Ministries emphasized that it would be unfair to subject the petitioner to a higher duty rate since the garlic was imported for public distribution. The Central Government, in its counter affidavit, argued that the rate of customs duty is a policy matter and that the exemption under Section 25(2) is discretionary. The Supreme Court rulings in "Manglam Organics Ltd. vs. Union of India, (2017) 7 SCC 221," "Union of India and Ors. vs. Apar Private Ltd. and Ors., (1999) 6 SCC," and "Garden Silk Mills vs. Union of India, (1999) 8 SCC 744" were cited to support the position that the applicable duty rate is the one prevailing at the time of clearance of goods. Section 25(1) & (2) of the Customs Act reads as follows: “25. Power to grant exemption from duty.-(1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon. (2) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case, exempt from the payment of duty, under circumstances of an exceptional nature to be stated in such order, any goods on which duty is leviable.” The Court noted that the power under Section 25(2) is an extension of the general power under Section 25(1) and that the Nodal Ministries' recommendations indicated a view within the Government that the exemption should be considered. However, this did not entitle the petitioner to a mandamus directing the Central Government to grant the exemption. The Central Government explained that the increased customs duty rate was necessary due to the trading of import licenses at unjustified premiums and the high retail prices of garlic. The Ministry of Agriculture suggested raising the duty to 100% to protect Indian farmers before removing garlic from the restricted list. This notification was approved by both Houses of Parliament, giving it the same effect as the Finance Act. The Court concluded that the petitioner’s case did not fall within the category of "exceptional circumstances" and that the prevailing duty rate at the time of import (Section 15 of the Act) applied to the petitioner’s case. For the above reasons, the writ petition has to fail and is accordingly dismissed. Interim order is hereby vacated.
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