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TMI Blog2021 (6) TMI 555X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be aware of the same, unless there is knowledge or awareness of issuance of such a Notification. The person to whom it is to apply cannot be affected by the consequence of such a Notification or have the benefit of such a Notification in the absence of having knowledge about the same - The two requirements are to be complied, namely, publication of the said Notification and offering of the same for sale by the Directorate of Publicity and Public Relations of the Board, New Delhi. This is to ensure that on the date the said Notification comes into force, the same is published and available to the persons to whom it would apply. The learned Single Judge was justified in holding that notification dated 17.09.2015 could not have been made applicable to the imported goods in question and the demand for payment of differential amount of duty was rightly quashed by the learned Single Judge - Appeal dismissed. Recovery of dues under IBC - dues are not part of the resolution plan approved by the adjudicating authority under Section 31 of the IBC - HELD THAT:- The provisions of Section 238 of IBC states that the provisions of IBC shall have effect, notwithstanding anyt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Judge, accepted the contentions of the respondent-importer and quashed Annexures W, X, Y and Z and held that the respondent herein was liable to pay duty only at 7.5% based on Notification No.12/2012-Cus. dated 17.03.2012. Consequently, the differential duty as per Notification No.46/2015-Cus. dated 17.09.2015 at the rate of 12.5% was not applicable to the respondent herein. 3. Succinctly stated, the facts are, the respondent herein is a public limited Company registered under the provisions of the Companies Act, 1956. According to the respondent, it entered into a contract on 27.07.2015 with M/s.Aavanti Industries Private Limited, Singapore, for import of 10,000 Metric Tons (MTs.) of Crude Palm Oil of Edible Grade in bulk, as per the terms and conditions stipulated in the contract. The vessel carrying the aforesaid imported item arrived at Mangalore Port on 17.09.2015 around 1600 hours. The respondent herein had filed four bills of entry bearing Nos.2619662, 2619678, 2619680 and 2619708, dated 16.09.2015, seeking clearance of the subject goods for home consumption. According to the respondent herein, as per Notification No.12/2012-Cus. dated 17.03.2012, it was liable to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the appeal were also heard. 7. Learned counsel for the appellants, Sri.Jeevan J.Neeralgi contended that the learned Single Judge was not right in declaring that the notification dated 17.09.2015 was not applicable to the subject goods on the premise that, clause (b) of sub-section (4) of Section 25 of the Act was not applicable. He submitted that the said stipulation in clause (b) is not a mandatory or compulsory stipulation. But, in the instant case, the notification was issued and published on 17.09.2015, the same was applicable to the subject goods, having regard to Section 15 of the Act. 8. Learned counsel for the appellants contended that, Section 15 of the Act deals with the date for determination of rate of duty and tariff valuation on the imported goods. The rate of duty and tariff valuation of imported goods, shall be the rate and valuation in force and in case of entry for home consumption under Section 46 of the Act, as in the instant case is, on the date on which a bill of entry in respect of such goods is presented under the Section. A proviso has been inserted to Section 15, with effect from 28.09.1996. The said proviso is a deeming fiction and it states t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.2015 and therefore, there was non-compliance of Section 25(4)(b) of the Act, as well as the higher rate of duty as per notification dated 17.09.2015 was not applicable to the respondent. He submitted that the impugned order may be set aside and the respondent be directed to pay the differential duty at the rate of 12.5% as per notification dated 17.09.2015. 12. Per contra, learned counsel for the respondent Sri.Rajesh Rawal, supported the order of the learned Single Judge and contended that the learned Single Judge has rightly relied on the judgment of the Hon ble Supreme Court in Param Industries Ltd. and has correctly held that the Notification dated 17.09.2015 was not applicable to the subject goods, as there was non-compliance of Section 25(4)(b) of the Act, in the instant case. The said Notification was available for sale only on 21.09.2015, which was later than the date of issuance of Notification and its publication in the Official Gazette. He contended that, when it is not otherwise provided in the Notification, the date of issuance of the Notification and the date of publication in the Official Gazette would coincide. In such an event, the publication must be offered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the fact that, such a notification is always available on the website of the Department. He contended that the said reasoning does not take into consideration the judgment of the Hon ble Supreme Court in Param Industries Ltd. Therefore, same cannot be a precedent in the instant case. 15. Learned counsel for the respondent drew our attention to the impugned order and submitted, in this case there was a specific reference made to the reply furnished by the Department under the provisions of The Right to Information Act, 2005 (RTI Act, 2005), which has been adverted to by the learned Single Judge to come to the conclusion that on 17.09.2015, the Notification was not available for sale and therefore, the learned Single Judge rightly applied the ratio of the judgment of the Hon ble Supreme Court in Param Industries Ltd. and granted the relief to the respondent herein, which would not call for any interference in this appeal. 16. Learned counsel further submitted that the aforesaid distinguishing aspect of the matter did not arise either before the Calcutta High Court or the Madras High Court and therefore, for this reason also, those judgments could be distinguished. 17. Lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the respondent contended that the appellants have not produced any evidence to establish the fact that the dues to the Department are part of the resolution plan. He submitted that the application IA No.1/2021 was filed as early as on 01.04.2021. In the circumstances, the application filed by the respondent may be allowed. 22. The detailed narration of facts and contentions would not call for reiteration. Before we consider the application filed by the respondent herein, we would consider the appeal on its merits. 23. It is not in dispute that the respondent had imported 10,000 metric tons of Crude Palm Oil of Edible Grade in bulk from its foreign supplier. The goods arrived at Mangalore Port on 17.09.2015 and on the previous date i.e. on 16.09.2015, four bills of entry were presented for clearance and the same were cleared. However, the vessel was permitted entry into the Port only on 17.09.2015. Coincidentally, on the very same day the Notification was issued enhancing the customs duty from 7.5% to 12.5%. In the circumstances, the appellants - Department sought for payment of differential duty on the subject goods on the basis of Section 15 of the Act. 24. Section 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o date of such presentation (proviso to section 46(3) of Customs Act, as amended w.e.f. 6.8.2014). However, even if Bill of Entry is submitted earlier, relevant date for purpose of assessment (valuation and rate of customs duty) will be (a) date of grant of entry inward to vessel or (b) date of submission of Bill of Entry whichever is later. (Source: Customs Law and Foreign Trade Policy, by V.S.Datey, 22nd Edition, 2020) 27. A reading of the same would indicate that the said provision deals with date for determination of right of duty of imported goods, which is, in the case of goods cleared for home consumption, on the date of which the bill of entry in respect of such goods is presented under the said Section. 28. A reading of the proviso would indicate that, if a bill of entry has been presented before the date of entry inwards of the vessel by which the goods are imported, the bill of entry shall be deemed to have been presented on the date of such entry inwards. In other words, by a deeming fiction, the date of entry inwards of the vessel is construed to be the date of presentment of the bill of entry even in a case where the bill of entry may have been presented bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (2A) The Central Government may, if it considers it necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1) or order issued under subsection (2) insert an explanation in such notification or order, as the case may be, by notification in the Official Gazette, at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be. (3) An exemption under sub-section (1) or sub-section (2) in respect of any goods from any part of the duty of customs leviable thereon (the duty of customs leviable thereon being here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... published on the same day in the Official Gazette was not made available to the respondent, inasmuch as it was not offered for sale on the date of its issuance i.e. on 17.09.2015 itself and therefore, the said mandate not having been complied with, the ratio of the judgment of the Hon ble Supreme Court in Param Industries Ltd. would squarely apply. Hence, the enhanced rate of customs duty as stipulated in the said Notification, cannot be applied to the imported goods. 37. In this regard, learned counsel for the respondent submitted that, the learned Single Judge rightly relied on the said judgment to grant the relief to the respondent herein. In Param Industries Ltd., it was observed that the two conditions namely, (i) Notification should be duly published in the official gazette and (ii) it should be offered for sale on the date of its issue by the Directorate of Publicity and Public Relations of the Board, New Delhi, are mandatory in nature. If both the conditions are not complied with, then the Notification cannot be made applicable on the date of its issuance. In that regard, reliance was placed on Harla vs. State of Rajasthan [AIR 1951 SC 467], wherein the modes of publica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uncontroverted by the respondent herein. In that regard, it was contended by learned counsel for the respondent that, firstly, there was no opportunity to controvert the said affidavit and secondly, in the instant case, before this Court the learned Single Judge has categorically accepted the reply given by the Department under the RTI Act, 2005, which is totally contrary to the contents of the affidavit filed by the Department before the Calcutta High Court. 42. We have pondered over the contentions of learned counsel for the respondent and we find that the same require consideration and acceptance. 43. One of the legislative controls over delegated legislation is Publication . The other two being Laying Procedure and Consultation of Interests . 44. The Latin Maxim ignorantia Juris non excusat (ignorance of law is no excuse) means that every one is presumed to know the law. The said presumption could apply only when the law is made known to the person to whom it would apply. This is particularly so in the case of delegated legislation. 45. It is a mandatory requirement that there is publication of every law, so that the people to whom it would apply are aware of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . But, where publication of a Notification is a mandatory requirement even on the date of its issuance, it must be sent for publication in the Official Gazette. 48. Panama Refining Co. vs. Ryan [293 US 388, 434 (1935)] is the landmark decision of United States of America. In that case, the Supreme Court therein was dealing with publication of delegated legislation. Thereafter, the Federal Register Act was enacted in the year 1935 to provide a Federal Register for publication of all federal rules, regulations, orders and other documents of general applicability and legal effect . The Register is published every day from Monday through Friday. Failure to publish rules results in an infirmity insofar as such rules are not to adversely affect a person having no actual knowledge of them. Thus, publication in the Register is a mandatory requirement for legal effectiveness of rules; failure to publish renders a regulation unenforceable, except against a person who has actual knowledge thereof. A corollary of the above principle is that once a rule is published in the federal Register, it is legally binding regardless of the lack of knowledge of those persons who are subject to it. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, unless otherwise provided, a notification would come into force on the date of its issue by the Central Government for publication in the Official Gazette. Therefore, the day on which it comes into force is connected with the publication of the notification. Thus, the date of the Notification, coming into force is, when the same is issued by the Central Government and sent for publication in the Official Gazette. But, Section 25(4)(b) of the Act states that, such a notification must also be published and offered for sale on the date of its issue by the Directorate of Publicity and Public relations of the Board, New Delhi. This would imply that, not only publication of the notification, but also offering the same for sale on the date of its issue are concomitant conditions which have to be complied with before it can be enforced. Thus, a notification issued under that Section would not become enforceable only if it is issued and sent for publication and not published at all. It would become enforceable only when such a notification is published and also offered for sale on the date of its issue. In other words, if a notification is published in the Official Gazette and not offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a Gazette. We have seen what is meant by the words notification and publication . Principle ignorance of law is no excuse cannot be invoked unless that law is made public. It is, therefore, the date on which the Official Gazette is made available to the public that matters, and not the date on which it is shown to have been printed. 56. In this context it would also be relevant to refer to the judgment of the Hon ble Supreme Court in the case of Govindlal Chhaganlal Patel vs. The Agricultural Produce Market Committee, Godhra and Others [AIR 1976 SC 263]. In that case, a Notification to regulate purchase and sale of agricultural produce in any area had to be published as a draft Notification followed by a final notification in the Official Gazette as well in Gujarati language local newspaper. Thus, double publication of the final notification was prescribed. In that case, the final Notification was published in the Gazette, but not in Gujarati in the local newspaper. The Hon ble Supreme Court declared that the publication of notification in Gujarati in the local newspaper was mandatory. The publication in a newspaper attracts greater public attention than publica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation comes into force. Sub-section (5) of Section 25 of the Act also has been omitted with effect from 14.05.2016. Be that as it may. A reading of the same would clearly indicate the fact that, the Notification must be offered for sale before the date, the same comes into force. In other words, if a notification is to come into force at a later date than the date of issue, prior to the date of its coming into force, the same must be offered for sale and be available to those persons to whom it would have an impact or effect. Therefore, what is crystal clear before a Notification issued under Section 25(1) is made applicable to a party, it must be made available to the party by offering the same for sale. The reason being, as the provision itself indicates that, unless otherwise provided, the Notification would come into force on the date of its issue for its publication in the Official Gazette. But, in the absence of any availability of the said Notification to the concerned parties, although the same is published, it cannot be made applicable to the said parties. This is clear from the use of the expression also be published and offered for sale on the date of its issue by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... published and offered for sale by the Directorate of Publicity and Public Relations of the Board, New Delhi. Therefore, even when the Central Government provides that a Notification issued on a particular date is to come into force from a future date on or before coming into effect of the said Notification on a future date. The two requirements are to be complied, namely, publication of the said Notification and offering of the same for sale by the Directorate of Publicity and Public Relations of the Board, New Delhi. This is to ensure that on the date the said Notification comes into force, the same is published and available to the persons to whom it would apply. Therefore, in Param Industries Ltd., the Hon ble Supreme Court opined that, both the conditions must be complied with. 63. In view of the aforesaid discussion, we hold that the learned Single Judge was justified in holding that notification dated 17.09.2015 could not have been made applicable to the imported goods in question and the demand for payment of differential amount of duty was rightly quashed by the learned Single Judge. 64. Since we do not find any merit in the appeal, appeal is liable to be dismissed an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elates to the year 2015. The said proceedings pertain to the period prior to the commencement of the corporate insolvency resolution process and in any case, the same relates to period prior to the effective date and therefore, the same shall stand extinguished. 68. Reliance has been placed on the judgments of the Hon ble Supreme Court in the matter of Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta and others dated 15.11.2019 (Civil Appeal Nos.8766-67 of 2019) and Ultra Tech Nathdwara Cement Ltd. (formerly known as Biinani Cements Ltd.) vs. Union of India and others (D.B. Civil Writ Petition No.9480/2019) disposed of on 07.04.2020 by the Rajasthan High Court. It is stated that the aforesaid facts were brought to the notice of the appellant/department by the respondent through its communication dated 24.04.2020, which was received and acknowledged on 05.05.2020 vide Annexure R6 . Therefore, the prayer in the application is to dismiss this appeal as having become infructuous in view of the subsequent events. 69. It was contended by the learned counsel for the respondent that the resolution plan in the instant case was approved on 24.07.2019 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 could be continued. 71. It is necessary to highlight the relevant parts of the said judgment with reference to the provisions of IBC in light of the factual controversy that arises in this case. IBC is a Code to consolidate and amend the laws relating to re-organisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto. IBC came into effect on 28.05.2016. On 13.03.2020, the Insolvency and Bankruptcy Code (Amendment) Act, 2020, was enacted amending certain provisions of the Act. Section 2 of the IBC deals with the application of IBC to the entities mentioned under the said Code. Section 3 of the IBC is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be triggered by the corporate debtor itself or a financial creditor or operational creditor. A distinction is made by the Code between debts owed to financial creditors and operational creditors. A financial creditor has been defined under Section 5(7) as a person to whom a financial debt is owed and a financial debt is defined in Section 5(8) to mean a debt which is disbursed against consideration for the time value of money. As opposed to this, an operational creditor means a person to whom an operational debt is owed and an operational debt under Section 5(21) means a claim in respect of provision of goods or services. 28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the Explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor - it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a finan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there is existence of such a dispute, the operational creditor gets out of the clutches of the Code. 30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is due i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise. 31. The rest of the insolvency resolution process is also very important. The entire process is to be completed within a period of 180 days from the date of admission of the application under Section 12 and can only be extended beyond 180 days for a further period of not exceeding 90 days if the committee of creditors by a voting of 75% of voting shares so decides. It can be seen that time is of essence in seeing whether the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tempt, by divesting the erstwhile management of its powers and vesting it in a professional agency, to continue the business of the corporate body as a going concern until a resolution plan is drawn up, in which event the management is handed over under the plan so that the corporate body is able to pay back its debts and get back on its feet. All this is to be done within a period of 6 months with a maximum extension of another 90 days or else the chopper comes down and the liquidation process begins. 73. Learned counsel for the respondent submitted that having regard to the conclusion of the Hon ble Apex Court in Ghanashyam Mishra, since the dues claimed by the appellants herein is one coming within the scope and ambit of operational debt , the Central Government would be the operational creditor as defined under Sub-section20 of Section 5 of the Act. That even without the amendment made to Section 30 by 2019 Amendment Act, the dues to the Central Government including the statutory dues would be covered within the definition of operational debt owed to a creditor, in terms of Sub-Section 10 of Section 3 of IBC . In such an event, unless the said statutory dues owed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (e) of sub-section (2) of Section 30 of I B Code also casts a duty on RP to examine, that the resolution plan does not contravene any of the provisions of the law for the time being in force. 60. Perusal of Section 29 of the I B Code read with Regulation 36 of the Regulations would reveal, that it requires RP to prepare an information memorandum containing various details of the Corporate Debtor so that the resolution applicant submitting a plan is aware of the assets and liabilities of the Corporate Debtor, including the details about the creditors and the amounts claimed by them. It is also required to contain the details of guarantees that have been given in relation to the debts of the corporate debtor by other persons. The details with regard to all material litigation and an ongoing investigation or proceeding initiated by Government and statutory authorities are also required to be contained in the information memorandum. So also the details regarding the number of workers and employees and liabilities of the Corporate Debtor towards them are required to be contained in the information memorandum. 61. All these details are required to be contained in the informatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to amendment of Section 31 of I B Code was, that though the legislative intent was to extinguish all such debts owed to the Central Government, any State Government or any local authority, including the tax authorities once an approval was granted to the resolution plan by NCLT; on account of there being some ambiguity, the State/Central Government authorities continued with the proceedings in respect of the debts owed to them. In order to remedy the said mischief, the legislature thought it appropriate to clarify the position, that once such a resolution plan was approved by the Adjudicating Authority, all such claims/dues owed to the State/Central Government or any local authority including tax authorities, which were not part of the resolution plan shall stand extinguished. x x x x x 86. As discussed hereinabove, one of the principal objects of I B Code is, providing for revival of the Corporate Debtor and to make it a going concern. I B Code is a complete Code in itself. Upon admission of petition under Section 7, there are various important duties and functions entrusted to RP and CoC. RP is required to issue a publication inviting claims from all the stakeholders. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Government, any State Government or any local authority to whom an operational debt is owed would come within the ambit of operational creditor as defined under sub-section (20) of Section 5 of the I B Code. Consequently, a person to whom a debt is owed would be covered by the definition of creditor as defined under sub-section (10) of Section 3 of the I B Code. As such, even without the 2019 amendment, the Central Government, any State Government or any local authority to whom a debt is owed, including the statutory dues, would be covered by the term creditor and in any case, by the term other stakeholders as provided in subsection (1) of Section 31 of the I B Code. x x x x x 94. Therefore, in our considered view, the aforesaid provisions leave no manner of doubt to hold, that the 2019 amendment is declaratory and clarificatory in nature. We also hold, that even if 2019 amendment was not effected, still in light of the view taken by us, the Central Government, any State Government or any local authority would be bound by the resolution plan, once it is approved by the Adjudicating Authority (i.e. NCLT). x x x x x 130. In the foregoing paragraphs, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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