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TMI Blog2022 (2) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the satisfaction/existence of the twin conditions which are sine qua non for exercise of power by the Central Government under Section 8A(1) of the Customs Tariff Act, 1975 - a recital in a notification raises a presumption though not conclusive, however, the burden is on the person who assails the recital as not reflecting the true state of affairs, to demonstrate the same by letting in cogent and appropriate material and mere assertion however strong, may not be an adequate discharge of such burden - The impugned notification expressly states that the twin conditions/prerequisites for issuance of notification under Section 8A(1) of the Customs Tariff Act, 1975, exist resulting in raising a presumption as to the correctness thereof and also casting a burden on the respondents challenging the correctness of the said recital. In the light of the view expressed by the Federal Court in EMPEROR VERSUS SIBNATH BANERJEE AND ORS. [ 1943 (8) TMI 7 - FEDERAL COURT ] which view has been affirmed by the Supreme Court in SWADESHI COTTON MILLS CO. LTD. VERSUS STATE INDUSTRIAL TRIBUNAL U.P. [ 1961 (3) TMI 105 - SUPREME COURT ] and which in turn has been reiterated in NARAYAN GOVIND GAVATE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of M.Jhangir Bhatusha looked into the reasons in the order itself, since Section 25(2) of the Customs Act, 1962, necessitated that the order must set out/state the circumstances warranting exercise of power under Section 25(2) of the Customs Act, 1962. However, Section 8A of the Customs Tariff Act, 1975 which is the enabling provision, does not impose a condition on the delegate to set out /state the circumstances warranting exercise of power under Section 8A(1) of the Customs Tariff Act, 1975 in the notification itself and thus reliance on the decision in M.Jhangir Bhatusha is wholly misplaced. Whether a subordinate legislation can be challenged on the ground of non-compliance of the principles of natural justice? - HELD THAT:- It is submitted by the respondents that the notification which has resulted in certain adverse consequences, is bad inasmuch as it was made without affording an opportunity to the parties, who are likely to be adversely affected - The above submission is contrary to the well settled principle that delegated legislation, which is legislative in character, cannot be questioned for violating the principles of natural justice in its making, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 46 of the Customs Act, 1962 (or) in the case of goods cleared from a warehouse under Section 68 of the Customs Act, 1962, the date on which the goods are actually removed from the warehouses (or) on the date of payment of duty. The rate of duty is governed by Section 15 of the Customs Act, 1962 and the same shall be the rate in force- a. In the case of goods entered for home consumption under Section 46 of the Customs Act, 1962 on the date on which bill of entry was presented for home consumption. b. In the case of goods cleared from a warehouse under Section 68 of the Customs Act, 1962 the date on which goods are actually removed from warehouse Substituted by Act 32 of 2003, S.106, for the goods are actually removed from the warehouse (w.e.f. 14-05-2003). (the date on which a bill of entry for home consumption in respect of such goods is presented under that section). c. In the case of any other goods on the date of payment of the duty. d. Provided that if a bill of entry has been presented before the date of entry inwards of the vessel or the arrival of the aircraft on the date of such entry inwards or arrival as the case may be. The fact that the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The respondent mills import cotton in view of the fact that adequate quantity of cotton may not be available within the country. Importantly, it is submitted by the respondent association/mills that the duty element is taken into account, while deciding the import and also offering quotation to its customers. The orders on the foreign exporters are normally placed 5 to 6 months in advance and the prices are fixed on the basis of the duty prevailing on the date on which such orders are placed. 4. While so, the Central Government passed the impugned notification No.2/2002-Customs dated 08.01.2002 thereby increasing the rate of duty from 5% to 10% with effect from 09.01.2002, which was challenged in the writ petitions inter alia on the premise that the circumstances/conditions precedent for exercise of power under Section 8A of the Customs Tariff Act, 1975, have not been set out in the notification. It was further submitted by the respondents that if the enhanced rate in terms of the impugned notification is made applicable to the raw materials already in transit and contracts already entered into with the foreign suppliers, it would cause undue hardship as the cost of the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the case of the Central Government cannot be improved on the basis of counter affidavit. 6.2 It was thus, concluded by the learned Judge that the impugned Notification No.2/2002-Customs dated 08.01.2002 does not satisfy the requirements of Section 8A(1) of the Customs Tariff Act, 1975, and is hence, set aside. SUBMISSIONS OF THE PARTIES: 7.1 The learned senior standing counsel appearing for the appellants submitted that the order of the learned Judge holding the impugned notification as invalid on the premise that the prerequisites / conditions precedent for invoking Section 8A(1) of the Customs Tariff Act, 1975, do not exist, is contrary to the statutory provisions as well as the law interpreted by the Apex Court in a catena of cases and the materials available on record. 7.2 It is also submitted on the side of the appellants that pursuant to the issuance of notification No.2/2002 dated 08.01.2002 with effect from 09.01.2002 under section 8A of the Customs Tariff Act, 1975, the rate of duty was increased to 10% from 5% in order to curb the undesired heavy imports of cotton from abroad due to the international crashing of cotton price and to protect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d arbitrarily and in exercise of power capriciously, the learned Judge, after providing sufficient opportunities to the appellants, has ultimately concluded that the said notification does not satisfy the requirements of section 8A (1) of the Customs Tariff Act, 1975 and accordingly, set aside the same and thereby allowed the writ petitions. 8.2 Pointing out that the increase of import duty was introduced with immediate effect by Notification No.2/2002 dated 08.01.2002, which was in force till 08.07.2008 and the same was removed with nil rate of customs duty by Notification No.84/2008 dated 08.07.2008, the learned senior counsel appearing for the respondents submitted that while removing the import duty or exempting from the import duty, no adverse effects are seen at any levels, however imposition or increase in the import duty all of a sudden, would have strong impacts in the cotton textile industry, where the Industry has to absorb the cost on increase in all its final products including exports and hence, the import duty structure cannot be increased without the stakeholders being put on notice and without allowing sufficient time to clear the materials in the pipeline, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to provide for an increase in the import duty leviable on such article to such extent as it thinks necessary: Provided that the Central Government shall not issue any notification under this sub- section for substituting. the rate of, import duty in respect of any article as specified by an earlier notification issued under this sub- section be that Government before such earlier notification has been approved with. or with. out modifications under sub- section (2). (2) The provisions of sub-sections(3) and (4) of Section 7 shall apply to any notification issued under sub-section(1) as they apply in relation to any notification increasing duty issued under sub-section(2) of Section 7. A reading of Section 8A(1) of the Customs Tariff Act, 1975 would show that the Central Government is conferred with emergency power to increase the import duty. However, such power shall be exercised subject to the following conditions being satisfied: a) That the Central Government is satisfied that the import duty liable under Section 12 of the Customs Act, 1962 should be increased. b) That circumstances exist which render it necessary to take immediate action. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government to satisfy itself that import duty leviable under Section 12 of the Customs Act, 1962 should be increased and circumstances did exist rendering it necessary for immediate action. Since the Ministry of Finance, Department of Revenue had failed to satisfy this Court that such a contingency did exist, the Court is inclined to interfere with the notification, as has been laid down in decisions, referred to above. It is trite law that Courts will not interfere with the decision taken by Department concerned one way of the other, but it can certainly interfere if the decision-making process does not satisfy the requirement of the statute or if it is arbitrary or irrational or that it is based on no material. The above reasoning of the learned Judge appears to be in conflict with the law laid down by the Hon'ble Supreme Court, considering the relevance and sanctity to be attached to a recital by a delegate/subordinate legislation. 10.1.4 In this connection, it is apt to refer to the following judgments, which would show that once the notification contains a recital, a presumption would arise that the necessary conditions for issuance of notification stand fulfil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s held as under: 28. The High Court opined that the presumption of regularity, attached to an order containing a technically correct recital, did not operate in cases in which Section 106 Evidence Act was applicable as it was to the cases before us. We do not think that we can lay down such a broad general proposition. An order or notification, containing a recital, technically correct on the face of it, raises a presumption of fact under Section 114 illustration (e) of the Evidence Act. The wellknown maxim of law on which the presumption found in illustration (e) to Section 114 of Evidence Act is: Omnia praesumuntur rite esse acta (i.e. all acts are presumed to have been rightly and regularly done) (emphasis supplied) 10.1.7 The above view with regard to presumption in view of the provisions of the Evidence Act and the maxim 'omnia praesumuntur rite esse acta' i.e. 'all acts are presumed to have rightly and regularly been done' was reiterated in the following judgments: a. Ayaaubkhan Noorkhan Pathan v. State of Maharashtra (2013) 4 SCC 465 : (2013) 2 SCC (Civ) 658 : (2013) 2 SCC (L S) 296 : 2012 SCC OnLine SC 926 at page 48 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Judge setting aside the notification on the premise that the Central Government is unable to satisfy the Court that there was sufficient material , before the Central Government to satisfy itself that import duty leviable under Section 12 of the Customs Act, 1962 should be increased and circumstances exist rendering it necessary for immediate action under Section 8A(1) of the Customs Tariff Act, 1975, is legal and valid, when viewed in the light of the presumption as to the constitutionality of a subordinate legislation? 10.2.1 According to the respondents, the notification does not set out the reasons which warrant the exercise of power under Section 8A(1) of the Customs Tariff Act, 1975. The learned Judge has observed that the appellants failed to produce the file pertaining to the impugned notification; and they did not demonstrate with sufficient material that the impugned notification was issued in compliance with the twin conditions set out in Section 8A(1) of the Customs Tariff Act, 1975. 10.2.2 We are not inclined to accept the above reasoning of the learned Judge as it is contrary to facts and law. It was explained on the side of the appellants that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entary proceedings which gives the institution of Parliament the great significance it possesses. This Hour has assumed greater importance because the members can elicit information through questions on matters affecting the day-today life of the citizens for which Ministers are collectively and severally answerable to the legislature. This parliamentary device, in fact, is primarily meant for exercising a kind of legislative control over executive actions. Besides, the Members also find an opportunity through this device to criticise Government's policies and programmes; ventilate public grievances; expose Government's lapses; and extract promises from Ministers. Members also get opportunity to give vent to their feelings when they are not satisfied with the answers by putting supplementaries. The Question Hour serves another purpose. The Ministers are also made aware of the working of their departments at the ground level which otherwise could have gone unnoticed. Although the apparent purpose of asking a question is to elicit information, the real object of the member is to point out shortcomings of the administration; to ascertain the thinking of the Government o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, the reasoning of the learned Judge that the Central Government failed to satisfy the Court with sufficient material that the twin requirements for issuance of the impugned notification under Section 8A(1) of the Customs Tariff Act, 1975 existed, is contrary to the law laid down by the Hon'ble Supreme Court and contrary to the facts on record as discussed supra. 10.2.6 In any event, the aforesaid reasoning of the learned Judge viz., failure to satisfy the court that there was sufficient material with the Central Government for issuance of notification and thus setting aside the impugned notification, is also contrary to the law as to the scope of judicial review, while testing the validity of a subordinate legislation. Adequacy or wisdom of legislative measures be it plenary or subordinate falls within the exclusive domain of the Legislature and its delegate and the courts have adopted hands off approach qua economic legislation. The legislature and its delegate are the sole repositories of the power to decide what policy should be pursued in relation to the matters covered by the Act and there is no scope for interference by the Court unless the particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the object and purpose of the Act . the Court should not concern itself with the wisdom or efficaciousness of such rules or regulations. It is exclusively within the province of the legislature and its delegate to determine, as a matter of policy, ..It is not for the Court to examine the merits or demerits of such a policy 16. In our opinion, the aforesaid approach made by the High Court is wholly incorrect and fallacious. The Court cannot sit in judgment over the wisdom of the policy evolved by the legislature and the subordinate regulation-making body. It may be a wise policy which will fully effectuate the purpose of the enactment or it may be lacking in effectiveness and hence calling for revision and improvement. But any drawbacks in the policy incorporated in a rule or regulation will not render it ultra vires and the Court cannot strike it down on the ground that, in its opinion, it is not a wise or prudent policy, but is even a foolish one, and that it will not really serve to effectuate the purposes of the Act. (emphasis supplied) d. Corpn. of the City of Bangalore v. Kesoram Industries and Cotton Mills Ltd . 1989 Supp (2) SCC 753 at page 757 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he notification itself must set out elaborately the circumstances/reasons which warranted exercise of power under Section 8A(1) of the Customs Tariff Act, 1975, is legal? 10.3.1 The order of the learned Judge insofar as it placed reliance on the judgment of the Hon'ble Supreme Court in M. Jhangir Bhatusha ibid and interpreted Section 25(2) of the Customs Act, 1962, is misplaced. It may be relevant to note the difference in the language employed in Section 8A of the Customs Tariff Act, 1975 and Section 25(2) of the Customs Act, 1962, which is tabulated below: Section 8A of the Customs Tariff Act, 1975 Section 25(2) of the Customs Act, 1962 Emergency powers of Central government to increase import duties (1) Where in respect of any article included in the First Schedule, the Central Government is satisfied that the imported duty leviable thereon under Section 12 of the Customs Act, 1962 (52 of 1962) should be increased and that circumstances exist which render it necessary to take immediate action, it may, by notification in the Official Gazette, direct an amendment of that Schedule to be made s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vity; we are concerned with the making of a legislative instrument, the declaration by notification of the government that a certain place shall be a principal market yard for a market area, upon which declaration certain statutory provisions at once spring into action and certain consequences prescribed by statute follow forthwith. The making of the declaration, in the context, is certainly an act legislative in character and does not oblige the observance of the rules of natural justice. In Bates v. Lord Halsham [(1972) 1 WLR 1973] , Megarry,J., pointed out that the rules of natural justice do not run in the sphere of legislation, primary or delegated, and in Tulsipur Sugar Co. v. Notified Area Committee [(1980) 2 SCC 295 : (1980) 2 SCR 1111] , our brothers Desai and Venkataramiah, JJ. approved what was said by Megarry,J., and applied it to the field of conditional legislation too. In Paul Jackson's Natural Justice (2nd Edn.), it has been pointed out (at p. 169): There is no doubt that a minister, or any other body, in making legislation, for example, by statutory instrument or by law, is not subject to the rules of natural justice - Bates v. Lord Haisham of St. Maryl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve principle may have relevance only in relation to an administrative or a quasijudicial order, but not to a notification, which is legislative in character. Thus, the reliance on the decision of the Hon'ble Supreme Court in Mohinder Singh Gill ibid case, while deciding the validity of a notification, which is a piece of a subordinate legislation is wholly misplaced and erroneous. This would also be clear that while examining the validity of a notification, there is a presumption as to its Constitutionality and to sustain the Constitutionality it is permissible to take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived as existing at the time of legislature as held in RK Garg 1981 (4) SCC 675 and Charajit Lal AIR 1951 SC 41. In such view of the matter, we find that the order of the learned Judge in setting aside the notification, is erroneous and contrary to law. Hence, the first question raised herein deserves to be answered in favour of the appellants and is accordingly, answered. Second Question: 11.1 We shall now proceed to examine the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be the date in force on the date on which the bill of entry is presented for home consumption under Section 46 of the Customs Act, 1962 (or) in the case of goods cleared from a warehouse under Section 68 of the Customs Act, 1962, the date on which the goods are actually removed from the warehouses (or) on the date of payment of duty. 11.3 The above position would be clear from the following decisions of the supreme court: 1. Bharat Surfactants (P) Ltd. v. Union of India (1989) 4 SCC 21 In that case, the ship arrived in Bombay Port on 09.07.1981 and the rate of customs duty prevailing on that date was 12.5% however, as the vessel was unable to secure a berth in the Port of Bombay, it was compelled to proceed to Karachi to discharge the cargo pertaining to that Port. It was submitted that but for the non-availability of the berth, the voyage to Karachi would not have been made and the vessel would have discharged the consignment meant for Bombay on that day, in which event, the Customs duty that could have been levied was only 12.5%. However, when the goods returned to Bombay, there was a material change in the rate. It was submitted that the rate applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This was a case where the ship had entered into Indian waters on February 20, 1989 ready to discharge the cargo and awaiting clearance into the port. However, due to reasons beyond the control of the ship or the importer, the goods could not be cleared until March 2, 1989 by which time the rate of duty had materially changed. It was submitted that the cargo was ready for discharge in the Indian waters since February 20, 1989 and the importer has presented the bill of entry for home consumption on February 28, 1989 which was received by the appraising section on February 28, 1989 and thus, the duty which is leviable, should be one of the above dates and not March 02, 1989, when the goods were cleared. Rejecting the said contention, it was held by the Hon'ble Supreme Court as follows: 2. .........We find no force in the contention Section 15 of the Customs Act of 1962 for short 'the Act' prescribe the rate of duly and tariff valuation on imported goods.... 3. It is clear from bare reading of these relevant provisions that the due date to calculate the rate of duty applicable to any imported goods shall be the rate and valuation in force, in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat had been raised. Dealing with the same, this Court has in clear terms come to the conclusion that what is relevant is the day on which the bill of entry in respect of the goods is presented under Section 46 and in the case of goods which are warehoused the relevant date would be the date on which the goods are actually removed from the warehouse.... 5. Kiran Spg. Mills (2000) 10 SCC 228 : When the goods were imported into India, the Ordinance providing for Special Additional Duty had not been promulgated. However, the goods which were imported were cleared from the bonded warehouse on subsequent dates by which time the Ordinance providing for Special Additional Duty had been promulgated. While considering the submission that as the ordinance had not been promulgated at the time the goods were imported into India, the levy of Special Additional Duty introduced subsequently cannot be applied was rejected holding as under: 6. . We are unable to accept the contention of Mr Ramachandran that what has to be seen is whether additional duty of excise was payable at the time when the goods landed in India or, as he strenuously contended, they had crossed int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticular time in the day when the notification was uploaded in the E-Gazette or from the first moment of the day in which the notification was issued. The said question arose in view of the peculiar facts wherein a notification under Section 8A(1) of the Customs Tariff Act, 1975 was issued at 20:46:58 hrs on 16.02.2019 resulting in enhancement of rate of duty from nil to 200%. The imports in question had entered the Indian Territory before 18.00 hrs on 16.02.2019. The bill of entry was self-assessed at 18.08 hrs on 16.02.2019 under the provisions of the Customs Act, 1962. Question arose as to whether the enhanced rate imposed vide notification No.5 of 2019 would apply only to Bills of entry for home consumption presented after 20:46:58 hrs on 16.02.2019 or it would apply from the first moment of 16.02.2019. While it was contended by the assessee that the notification would apply only to bills of entry for home consumption presented after 20:46:58 hrs on 16.02.2019. It was the contention of the Union that Section 15 which prescribes the method and the manner for determining the rate of duty only refers to date and not time and therefore once a notification has been issued, it should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resented before the date of entry inwards of the vessel or the arrival of the aircraft on the date of such entry inwards or arrival as the case may be. 11.5 The fact that the goods were in transit or the orders have been placed at the time when a lower rate of duty prevailed, will have no bearing for the rate of duty that would be applicable, shall be the rate of duty prevailing on the dates mentioned in Section 15 of the Customs Act, 1962 as explained by the various decisions referred above. 11.6 We are thus unable to accept the contention of the respondents that the enhanced rate leviable by the impugned notification should not be made applicable to cotton in transit at the time of issuance of notification and cotton in respect of which orders were placed with foreign exporters prior to the issuance of impugned notification. Accordingly, the second question raised in this batch of appeals, is also answered in favour of the appellants and against the respondents. CONCLUSION: 12. In the ultimate analysis, we have no hesitation to allow these writ appeals filed by the Revenue. Accordingly, all the writ appeals stand allowed by setting aside the order of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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