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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 ..... hed permanently. But, with consent of learned counsel on both sides, it is heard finally. 2. This appeal is filed by the Union of India, the Commissioner and Deputy Commissioner of Customs, being aggrieved by the order of the learned Single Judge dated 06.03.2018 passed in writ petition No.41394/2015. In that petition, respondent herein had sought a declaration that the reassessment of the subject goods imported by the respondent on 17.09.2015 and demanding the higher rate of duty of 12.5% for clearance of the subject goods was illegal. The learned Single 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 Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the importer was liable to pay duty at 7.5% based on the Notification Nos.12/2015 dated 17.03.2012 and no differential amount of duty could be claimed on the basis of the notification dated 17.09.2015. Being aggrieved by the order of the learned Single Judge, the Union of India and Department of Customs have preferred this appeal. 6. At this stage, it may be mentioned that the respondent/importer has filed IA No.1/2021, seeking dismissal of the appeal on the basis of Section 31 of the "IBC". While considering the said application, the merits 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur attention to sub-section (5) of Section 25 of the Act. He further submitted that with effect from 14.05.2016, Section 25(4)(b) has been omitted and therefore, the said provision no longer being on the statute book, would not apply even to the instant case, since the omission relates back to the date of enforcement of the Act itself. 11. Learned counsel for the appellants contended that the learned Single Judge was not right in coming to the conclusion that the notification dated 17.09.2015 was offered for sale only on 21.09.2015 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 17.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Petition (SLP) has been preferred before the Hon'ble Apex Court and leave has been granted by order dated 04.05.2017. 14. It was further submitted that the judgment of the Madras High Court can also be distinguished, inasmuch as the said judgment did not consider the mandate of Section 25(4)(b) of the Act and it proceeded on the basis that, with the advancement of technology, the said provision has been rendered vestigial and there is no useful purpose in carrying out the mandate of the said provision, having regard to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and the appeal filed by the appellants may be allowed. 20. Learned counsel further submitted that, it is not known, whether, the claim of the appellants is a part of the resolution plan vis-à-vis the respondent Company or not. If the said claim, which is in the nature of an operational debt, is covered under the resolution plan and if the appellants succeed on merits, they can initiate proceedings for recovery of the dues from the respondent. 21. By way of response to these submissions, learned counsel 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. If shipping berth is available, 'Entry Inwards' is granted to the vessel. Normally, Bill of Entry should be presented after ship, aircraft or vehicle arrives and arrival manifest or import manifest, is submitted by shipper. However, this will delay the assessment process and goods lying on docks will incur heavy demurrage. Hence, it is permitted to submit 'Bill of Entry' if the vessel in which goods have been shipped is expected to arrive at any time not exceeding 30 days prior to 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable to the respondent in the instant case. 33. Before delving on the said contention, it would be useful to extract Section 25 of the Act as under: "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. (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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale on the date of its issue by the Directorate of Publicity and Public Relations of the Board, New Delhi. No doubt, Section 25(4)(b) of the Act has been omitted with effect from 14.05.2016, but as far as this case is concerned, the said provision was very much on the statute book and hence is relevant. 36. The bone of contention between the parties is, whether, in the instant case, Notification dated 17.09.2015, which was 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09.2015. Therefore, the Notification dated 17.09.2015 which was not made available till 21.09.2015, could not have been applied in the instant case. 41. While referring to the same, learned counsel for the respondent submitted that during the course of proceedings before Calcutta High Court, Revenue filed an affidavit, which was extracted in the judgment and it was observed that the contents of the affidavit were 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 Maxi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date fixed for its commencement. Its non-publication does not its affect validity or effectiveness. Publication of an instrument in the manner prescribed is a notice to every one of its existence. If a publication of an instrument is to be made, it is with the object of giving constructive notice of the said instrument, which may be in the form of a Rule or Notification etc. to the affected persons. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, where to look for the rules or Notification made under any statute. (Source: M.P.Jain and S.N.Jain - Principles of Administrative Law -7th Enlarged Edition) 52. In the context of the controversy in the present case, the question that would arise is, when the delegated legislation (the impugned Notification) in the instant case came into force. On a reading of Section 25(4)(a) of the 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 com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cans and Containers Ltd. vs. Union of India [(1993) 64 ELT 23]. In that case the Division Bench of the Delhi High Court has observed at paragraph 18 as under: "18. What is the use of the Official Gazette which is lying in the printing press of the Government of India or any Government Department and is not made known to the public who are to be affected by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That apart, a reading of sub-section (5) of Section 25 of the Act would indicate that, where a notification is to come into force later than the date of its issue, the same shall be published and offered for sale by the Directorate of Publicity and Public Relations of the Board, New Delhi, on a day or before the date of which, the said notification 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit of such a Notification in the absence of having knowledge about the same. This is also evident from the fact that under subsection (5) of Section 24 of the Act, if a Notification is to come into force later than the date of its issue, then on or before the date of which the said Notification is to come into force, the same must be 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 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent. It is further stated that as per Section 32A of the "IBC", upon completion of corporate insolvency resolution process, the liability of corporate debtor would cease as the said provision has a non-obstante clause. It is further stated that the present proceedings concerning the subject import leading to demand of duty relates 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and declaratory in nature and therefor will be effective from the date on which I&B Code has come into effect; (iii) Consequently, all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand 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. "IB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aning of "claim", we have to go back to Section 3(6) which defines "claim" to mean a right to payment even if it is disputed. The Code gets triggered the moment default is of rupees one lakh or more (Section 4). The corporate insolvency resolution process 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 Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , bring to the notice of the operational creditor the existence of a dispute or the record of the pendency of a suit or arbitration proceedings, which is pre-existing-i.e. before such notice or invoice was received by the corporate debtor. The moment 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 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislation on the subject, the moment the adjudicating authority approves the resolution plan, the moratorium order passed by the authority under Section 14 shall cease to have effect. The scheme of the Code, therefore, is to make an attempt, 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 Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditors. The resolution plan is also required to provide for the management of the affairs of the Corporate Debtor after approval of the resolution plan and also the implementation and supervision of the resolution plan. Clause (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 regardin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll have to be held to be prospective in nature, having force from the date on which the amendment is effected in the statute. x x x x x 77. It is clear, that the mischief, which was noticed prior 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 adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny law for the time being in force and payable to the Central Government, any State Government or any local authority would come within the ambit of 'operational debt'. The Central 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 loca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such law. Further, it is noted that crown debts do not take precedence even over secured creditors, who are private persons. This is clear on a reading of Section 238 of "IBC" which provides for the overriding effect of "IBC" notwithstanding anything inconsistent contained in other law for the time being in force or effect by any such law. Therefore, if the departments of Central or State Governments do not file an application or participate in the resolution process, their claims automatically get extinguished having regard to the judgment of the Hon'ble Supreme Court in the case of Ghanashym Mishra. 78. We are of the view that this matter does not require to be remanded to the NCLT, Mumbai, before which forum the resolution plan was approved. We however observe that the reasons are two fold: firstly, this appeal has been dismissed on merits and the respondent has succeeded on merits in this appeal, secondly, the appellants have not produced any material before us to demonstrate that the claim in the instant case was part of the resolution plan approved by the NCLT, Mumbai. 79. In the circumstances, we pass the following order: ORDER i. The appeal is dismissed on merit. ii. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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