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TMI Blog2024 (8) TMI 1523X X X X Extracts X X X X X X X X Extracts X X X X ..... 52264 51959 52000 52083 52127 52168 52218 52265 51960 52001 52084 52128 52169 52219 52266 51961 52002 52085 52129 52170 52220 52267 51962 52003 52086 52130 52171 52221 52268 51963 52004 52087 52131 52175 52222 52269 51964 52005 52088 52132 52176 52223 52270 51965 52006 52089 52133 52177 52224 52271 51966 52007 52090 52134 52178 52225 52272 51967 52008 52091 52135 52179 52226 52273 51968 52009 52092 52136 52180 52227 52274 51969 52010 52093 52137 52181 52228 52275 51970 52011 52094 52138 52182 52229 52276 51971 52012 52095 52139 52183 52230 52277 51972 52013 52096 52140 52184 52231 52278 51973 52014 52097 52141 52185 52232 52279 51974 52015 52098 52142 52186 52233 52280 51975 52016 52099 52143 52187 52234 52281 51976 52017 52103 52144 52188 52235 52282 51977 52018 52104 52145 52189 52236 52283 51978 52019 52105 52146 52190 52237 52284 AND CUSTOMS APPEAL NO. 51228 OF 2020 WITH CUSTOMS APPEALS OF THE YEAR 2020 51229 51234 51239 51244 51249 51254 51259 51230 51235 51240 51245 51250 51255 51260 51231 51236 51241 51246 51251 51256 51261 51232 51237 51242 51247 51252 51257 51262 51233 51238 51243 51248 51253 51258 AND CUSTOMS APPEAL NO. 51266 OF 2020 WITH CUSTOMS APPEALS OF THE YEAR 2020 ..... 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X X X X Extracts X X X X X X X X Extracts X X X X ..... uxiliary power units or other parts of the aircrafts began to develop defects, they were exported out of India for repairs and the aircrafts also had to be exported out of India for repairs and maintenance. The repaired parts/aircrafts are thereafter re-imported into India and at the time of reimport, Bills of Entry are filed. 3. A dispute had earlier arisen as to whether the appellant would be justified in claiming exemption of integrated tax under the Exemption Notification on re-import of repaired parts/ aircrafts into India during the period from August, 2017 to March, 2019. The appellant had claimed exemption from integrated tax under the Exemption Notification for the reason that the importer is required to only pay 'duty of customs' on the fair cost of repairs and the cost of insurance and freight charges, both ways and not the integrated tax. The Customs Authorities, however, did not agree on this issue with the appellant, as according to them the appellant was not entitled to exemption from integrated tax since the phrase 'duty of customs' at serial no. 2 of the Exemption Notification, includes both the basic customs duty as also integrated tax. Thus, according to the Cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on behalf of the appellant in the aforesaid appeals decided by the Tribunal that: (i) Duty of customs, as mentioned in the conditions for serial no. 2 of the Exemption Notification, cannot be interpreted to include integrated tax within its purview since a plain reading of the Exemption Notification clearly denotes that what is payable in terms of serial no. 2 is the duty of customs on the fair cost of repairs carried out including to and fro freight charges. All the other duties / taxes, including integrated tax and compensation cess, are wholly exempted under the Exemption Notification; (ii) The Exemption Notification has consciously used two different expressions duty of customs and integrated tax at different places in the Notification, and so the same have to be understood differently and one cannot be substituted with the other; (iii) Where the language of any Notification is unambiguous, the plain meaning has to be assigned to such unambiguous language; and (iv) Integrated tax is not a duty of customs and, therefore aircrafts/ parts on re-import after repairs overseas are eligible for full exemption from integrated tax under the Exemption Notification. 6. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tably follows that the expression duty of customs occurring in the column (3) of the Table at serial no. (2) of the Exemption Notification would only mean the duty of customs leviable under the Customs Act as have been specified in the First and Second Schedules to the Tariff Act and not to integrated tax, which is levied under section 5 of the Integrated Tax Act. ***** 39. What also needs to be kept in mind is that mention of duty of customs, integrated tax and compensation cess in the main body of the Exemption Notification implies that the Government was conscious of the distinction between the three. What is also important to notice is that after the phrase "duty of customs levied thereon which is specified in the said First Schedule", there is a comma before "and the integrated tax, compensation cess leviable thereon". This also clearly shows that duty of customs, integrated tax and compensation cess are three different entities. Above all, all the three, namely, duty of customs, integrated tax and compensation cess have been used in the main body of the same Exemption Notification. ***** 48. The inevitable conclusion that follows from the aforesaid discussion is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Duty of customs", the words "Said duty, tax or cess" shall be substituted; (ii) in the Explanation, after clause (c), the following clause shall be inserted, namely: - "(d) on recommendation of the GST Council for removal of doubt, it is clarified that the goods mentioned at serial numbers 2 and 3 of the Table, are leviable to integrated tax and cess as leviable under the said Customs Tariff Act, besides the customs duty as specified in the said First Schedule, calculated on the value as specified in column (3), and the exemption, under said serial numbers, is only from the amount of said tax, cess and duty over and above the amount so calculated." (emphasis supplied) 13. On the same date, the Central Board of Indirect Taxes and Customs CBIC also issued a clarification regarding applicability of integrated tax on repair cost, insurance and freight on goods re-imported after their export for repairs. This clarification was issued basis the recommendation made by the GST Council in its 43rd Meeting held on 28.05.2021. It states that the matter was placed before the GST Council in view of the decision rendered by the Tribunal on 02.11.2020 in InterGlobe Aviation and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cession existed in pre-GST period too, vide notification No. 94/96-Customs, whereby, the customs duty (BCD, additional duty of customs under section 3 of Customs Tariff Act, 1975, etc.) were payable on the value of repairs instead of the entire value of goods in such imports. 4. GST rate and exemptions are prescribed on the recommendation of the GST Council. The Council, at the time of roll out of GST decided to continue the concession as were available under the said notification No. 94/96Cus, with only consequential amendment, i.e, replacing additional duties of customs with IGST and Compensation cess, as discussed in the 14th Meeting of the GST Council. Accordingly, under GST, IGST and Compensation cess were made applicable on the value of repairs, insurance and freight on re-import of goods sent abroad for repair. 5. Again, during the 37th GST Council Meeting, while examining the request to make available the credit of ITC paid on aircraft engines and parts exported for repairs and later reimported, the leviability of IGST on such imports, on the cost of repairs, insurance and freight charges, was affirmed. In fact, this was never disputed in first place and the request w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouncil taken earlier, that re-import of goods sent abroad for repair attracts IGST on a value equal to the repair value, insurance and freight. Further, in the light of the recommendations of the GST Council in its 43rd Meeting, a clarificatory amendment has been made in the said notifications, vide notification Nos. 36/2021-Customs and 37/2021- Customs, both dated 19th July, 2021, without prejudice to the leviability of IGST, as above, on such imports as it stood before the amendment. 9. The contents of this circular may please be brought to the notice of trade and industry through issue of Trade/ Public notices. The field formations may also be suitably sensitized in this regard. Difficulty, if any, in the implementation of this Circular may be brought to the notice of this office." (emphasis supplied) 14. The Commissioner, in the orders impugned in the appeals, considered the Amendment Notification dated 19.07.2021 as also the Circular dated 19.07.2021 issued by the CBIC and observed that a conjoint reading of the two would make it clear that Explanatory Note 'd' is clarificatory in nature and hence would have retrospective effect. The relevant portions of the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... W.P.I.L. Ltd. vs. Commissioner of Central Excise, Meerut, U.P. [2005 (181) E.L.T. 359 (S.C.)] which held that clarificatory notification shall have retrospective effect.***** ***** As can be noted, in the above quoted case, the policy of the Government had remained consistent and hence a clarificatory amendment was held to be retrospective in preset case also, the policy of the GST Council as well as the Government had been consistent and hence the explanation 'd' has to be considered to have retrospective application. 5.8 ***** It may be noted that the legislative intent has been clearly indicated in Circular No. 16/2021-Cus dated 19.07.2021 and for implementation of the same, explanation 'd' has been introduced. Thus explanation 'd' need to be considered to have retrospective effect. ***** 5.10 From above two paragraphs, it is evident that legislative intent is paramount and any interpretation which goes against such intent has to be negated. In the case at hand, the legislative intent has been made amply clear by the Circular No 16/2021Cus dated 19.07.2021. This leaves no scope in interpreting that explanation 'd' in Notification no. 45/2017-Cus as added by No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear doubts as to the meaning of previous language. The test, as accepted from time to time by various courts, is to first consider the meaning of the provision to which an Explanation is to be added without the Explanation and compare the same with the meaning as given by the added Explanation, and if the result is same, then alone the Explanation can be considered as clarificatory and given retrospective effect from the inception of the original provision; (vi) The newly inserted Explanation (d) reveals that phrases such as 'clarified', 'for removal of doubt', have been used. As the implications of the Exemption Notification prior to and post amendment are not the same, mere usage of expressions like 'for removal of doubts' or 'it is clarified' in the newly inserted Explanation (d), will not, by itself, make such amendments clarificatory. The Amendment Notification has created a new and additional liability of integrated tax on the re-import of goods, which was not payable under the un-amended Notification, as interpreted by the Tribunal in InterGlobe Aviation. Thus, once the amendment creates a new liability it cannot have retrospective effect. In this connection reliance h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 19.07.2021 should not be denied during the period from 01.07.2017 to 18.07.2021; and (v) The GST Council in its 43rd Meeting held on 28.05.2021 had made it clear that the benefit of the Exemption Notification for both basic customs duty and integrated tax shall be retrospective. The decision of the GST Council, therefore, should be given due importance. 17. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the department have been considered. 18. Section 12 of the Customs Act provides that except as otherwise provided in the Customs Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Tariff Act or any other law for the time being in force, on goods imported into, or exported from, India. Section 2 of the Tariff Act stipulates that the rates at which duties of customs shall be levied under the Customs Act have been specified in the First and Second Schedules. Section 3 of the Tariff Act provides for levy of additional duty equal to excise duty, sales tax, local taxes and other charges. 19. Section 25 of the Customs Act deals wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment for publication in the Official Gazette." 20. It would be seen that section 25(1) of the Customs Act empowers the Central Government to grant exemption from payment of duty by issuing a Notification in the Official Gazette. It is in exercise of the powers conferred under section 25(1) of the Customs Act that the Exemption Notification dated 30.06.2017 was issued by the Central Government. The said Exemption Notification exempts the goods falling within any Chapter of the First Schedule to the Tariff Act and specified in column (2) of the Table when re-imported into India, from so much at the duty of customs leviable thereon which is specified in the First Schedule, and the integrated tax, compensation cess leviable thereon, respectively under sub-sections (7) and (9) of section 3 of the Tariff Act, as is in excess of the amount indicated in the corresponding entry in column (3) of the said Table. 21. The main body of the Exemption Notification refers not only to duty of customs leviable thereon which is specified in the First Schedule to the Tariff Act, but also to integrated tax and compensation cess, but column (3) of the Table accompanying the main Notification again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Said duty, tax or cess' be substituted; and the second amendment is by way of insertion of clause (d) in the Explanation, which provides that on recommendation of the GST Council for removal of doubt, it is clarified that the goods mentioned at serial numbers 2 and 3 of the Table, are leviable to integrated tax and cess, and the exemption, under said serial numbers, is only from the amount of said tax, cess and duty over and above the amount so calculated. 27. In all the appeals, the Bills of Entry were filed for the period prior to the issuance of the Amendment Notification dated 19.07.2021. They would, therefore, be covered by the un-amended Exemption Notification dated 30.06.2017. The decision of the Tribunal in InterGlobe Aviation would, therefore, govern all the appeals. 28. However, two submissions have been made by the department. The first is that the some important facts could not be placed before the Tribunal in InterGlobe Aviation and, therefore, it should be reconsidered; and the second is that the Amendment Notification, though issued on 19.07.2021, would have retrospective effect from the date the Exemption Notification was issued on 30.06.2017. The contention, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (1) of section 25 of the Customs Act, can have retrospective effect. 33. The main body of the Amendment Notification mentions that the Central Government 'hereby makes the following amendments' in the Exemption Notification dated 30.06.2017. It does not state that the amendment would apply retrospectively from the date the Exemption Notification was issued on 30.06.2017 nor does Explanation (d) state that it has been inserted with retrospective effect. 34. Section 25(4) of the Customs Act provides that every notification issued under sub-section (1) shall, unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette. In the absence of any specific stipulation in the Amendment Notification providing otherwise, the said Amendment Notification shall come into force on the date of its issue by the Central Government i.e. 19.07.2021. The Amendment Notification dated 19.07.2021 cannot, therefore, have retrospective effect. 30. This view finds support from the judgment of the Meghalaya High Court in Border Trade & Chamber of Commerce, Moreh Town vs. Union of India and others 2017 (4) TMI 142 - Meghalaya High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd above the amount so calculated. 33. The department seeks to take aid of Explanation (d) that was inserted by the Amendment Notification dated 19.07.2021 to contend that since the words 'for removal of doubt' and 'it is clarified' have been used in Explanation (d), the amendment contained in clause (1) would necessarily have retrospective effect. 34. It needs to be remembered that the Amendment Notification does not state that it is retrospective in nature and only an inference is sought to be drawn by the department that the amendment would have retrospective effect because of use of the words 'it is clarified' and 'for removal of doubt'. 35. A clarificatory provision generally seeks to supply an obvious omission or to clear doubts on the meaning of the language used in the previous provisions. It makes explicit or clears the meaning of a provision contained in the Act, which meaning was already implicit. The Courts have repeatedly held that in such a situation it is necessary to first consider the meaning of the provision to which Explanation is added without such Explanation, and then compare the same with the meaning given by the added Explanation. If the result is same, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercome the decision of the Gujarat High Court, observed that an explanation to a provision may either clear the ambiguity in the main provision or may add and widen the scope of the main section. If it clarifies, it may be given retrospective effect, but if it changes the law it must not be presumed to be retrospective, despite the use of 'it is declared' or 'for removal of doubts'. The relevant portions of the judgment of the Supreme Court are reproduced below: "5.3 ***** As was affirmed by this Court in Goslino Mario [2000] 241 ITR 314, a cardinal principle of the tax law is that the law to be applied is that which is in force in the relevant assessment year unless otherwise provided expressly or by necessary implication. [See also: Reliance Jute and Industries vs. CIT (1980) 1 SCC 139]. An Explanation to a statutory provision may fulfil the purpose of clearing up an ambiguity in the main provision or an Explanation can add to and widen the scope of the main section. If it is in its nature clarificatory then the Explanation must be read into the main provision with effect from the time that the main provision came into force. But if it changes the law it is not presumed to be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and which applies to future periods. In this connection, see the following:- ***** 56. Otherwise also, it has been consistently held that a provision must be read subject to the rule that in the absence of an express provision or clear implication, the Legislature does not intend to attribute to the amending provision, a greater retrospectivity than is expressly mentioned. It is settled law that a taxing provision imposing liability is governed by the normal presumption that is not retrospective. ***** 59. There is nothing in the language of Section 271(1)(c) as amended by the Finance Act, 2002 w.e.f. 1.4.2003 to suggest that the amendment is retrospective. The amendment in clause (iii) and simultaneously in Explanation 4(a) carried out enlarges the scope of penalty under Section 271(1)(c) to include even cases where assessment has been completed at loss. The same being in the nature of a substantive amendment would be prospective, in the absence of any indication to the contrary *****" (emphasis supplied) 40. In Union of India & Ors. vs. M/s Martin Lottery Agencies Ltd. 2009 (5) TMI 1 - Supreme Court, the Supreme Court held: "24. ***** The explanation, in our op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the Supreme Court in Martin Lottery Agencies was followed by the Supreme Court in Sree Sankaracharya University of Sanskrit & Ors. vs. Dr. Manu & Anr. 2023 (5) TMI 1246 -Supreme Court The Supreme Court distinguished the role of a clarificatory/explanation from that of a substantive amendment and held that an explanation/clarification cannot expand or alter the scope of the original provision. The relevant portion of the judgment of the Supreme Court is reproduced below : "9.2 From the aforesaid authorities, the following principles could be culled out: i) If a statute is curative or merely clarificatory of the previous law, retrospective operation thereof may be permitted. ii) In order for a subsequent order/ provision/amendment to be considered as clarificatory of the previous law, the preamended law ought to have been vague or ambiguous. It is only when it would be impossible to reasonably interpret a provision unless an amendment is read into it, that the amendment is considered to be a clarification or a declaration of the previous law and therefore applied retrospectively. iii) An explanation/clarification may not expand or alter the scope of the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er meaning and scope of the provision. The Delhi High Court further observed that if an explanation alters or widens the scope of the main provision, it cannot be applied to past periods when the explanation was not in force. The relevant portions of the judgment of the Delhi High Court are reproduced below : "22. Mr. Gupta, for the Revenue tried to lead us on a different path. According to the learned counsel. Explanation 2, is clarificatory in nature, declaratory in character, and explanatory in substance; therefore, it is not affected by any rule against retrospectivity; the Explanation brings into force the real meaning of the term "entertainment expenditure" and, therefore, should be read as if it was there all along. The learned counsel took us through a few decisions on this aspect: Commissioner of Income-tax v. India Steamship Co. Ltd., [(1992) 196 ITR 917] is a decision of the Calcutta High Court. ***** The Court held that the retrospectivity need not be confined to the period after 1-4- 1974, because, the Explanation was clarificatory in nature, intended to clear up any doubt or ambiguity as to the true meaning of the relevant provision. Therefore, this meaning was h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... troduction of the Explanation was not leviable under the unamended Exemption Notification dated 31.06.2017. It cannot, therefore, be said to be retrospective in nature, more so when neither clause (i) nor clause (ii) specifically mentions that it is retrospective in nature. Section 25(4) of the Customs Act also makes it abundantly clear that every Notification issued under sub-section (1) or sub-section (2A) of section 25 of the Customs Act shall, unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette. At the cost of repetition, the Amendment Notification dated 19.07.2021 issued under section 25(1) does not provide that it would be applicable retrospectively. Thus, in terms of section 25(4) of the Customs Act, it would come into force on the date of its issue by the Central Government for publication in the Official Gazette. 47. Explanation (d), as would be seen, merely clarifies clause (i) of the Amendment Notification dated 19.07.2021. When both clause (i) and Explanation (d) are read together, the same meaning is arrived at. However, when Explanation (d) is compared with the un-amended Exemption Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by express words but the intent and object of the legislature in relation thereto can be culled out from the background facts. 29. The question has furthermore to be considered having regard to the language and object discernible from the statute read as a whole. The Respondents were not ineligible from obtaining the benefit. Once they are held to be eligible for obtaining the benefit, the amended notification being an exemption notification should receive the beneficent construction. 30. It is not a case where the Respondents, like the cases of Mahaan Dairies (supra) and Tata Iron & Steel Co. Ltd. (supra) were ineligible from claiming the benefit. The subsequent notification, thus, should receive a beneficent construction." (emphasis supplied) 51. Reliance placed by the learned authorized representative of the department on the decision of the Tribunal in OM Fragrances is misplaced. In paragraph 22 of the decision, the Tribunal observed that since no substantive right had been taken away nor any penal consequences had been imposed and only an obvious mistake was sought to be removed, the amendment would be retrospective in nature. The relevant paragraph 22 of the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of customs. 56. In the end, learned authorized representative appearing for the department referred to the 37th and 39th meeting of the GST Council as also the Circular dated 19.07.2021 issued by the CBIC and the 43rd meeting of the GST Council to contend that the Amendment Notification dated 19.07.2021 should be construed retrospectively. 57. The Circular dated 19.07.2021 was issued on the same date the Amendment Notification dated 19.07.2021 was issued. This Circular refers to 14th, 37th and 39th meeting of the GST Council and mentions that the Council had recommended for levy of integrated tax and cess on the repair, insurance and freight cost instead of the entire value of the goods on the basis of which the Exemption Notification dated 30.06.2017 was issued but the Tribunal in InterGlobe Aviation decided that 'duty of customs' would not include integrated tax. The Circular also notes that the GST Council in its 43rd Meeting recommended that a suitable clarification, including any clarificatory amendment, if required, may be issued for removal of any doubt to clarify the decision of the GST Council that re-import of goods sent abroad for repairs attracts integrated tax and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enactment to speculative opinion as to what the legislature probably would have meant although there has been an omission to enact it. In a Court of Law or Equity, what the Legislature intended to be done or not to be done can only be legitimately ascertained from that which it has chosen to enact, either in express words or by reasonable and necessary implication." It is an application of this principle that a statutory notification may not be extended so as to meet a casus omissus. As appears in the judgment of the Privy Council in Crawford v. Spooner, (1846) 6 Moo PC 1(9): "***** we cannot aid the legislature's defective phrasing of the Act, we cannot add, and mend, and, by construction, make up deficiencies which are left there." Learned Counsel for the respondents is possibly right in his submission that the object behind the two notifications is to encourage the actual manufacturers of handloom cloth to switch over to power-looms by constituting themselves into co-operative societies. But the operation of the notification has to be judged not by the object which the rule-making authority had in mind but by the words which it has employed to effectuate the legislative in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and immaterial." (emphasis supplied) 62. In Income Tax Officer, District II(ii), Kanpur & Ors. vs. Mani Ram Etc. (1969) 72 ITR 203, the Supreme Court quoted the observations made by Lord Radcliffe and the relevant portion is reproduced below: "7 ***** In in re Mac Manasway and again by my noble and learned friend Lord Radcliffe in Inland Revenue Commissioners v. Dowdall, O'Mahoney & Co. Ltd. that the beliefs or assumptions of those who frame Acts of Parliament cannot make the law." (emphasis supplied) 63. Learned counsel for the appellant, however, also pointed out that where integrated tax was to be levied, it was specifically mentioned in the Notification. In this connection, learned counsel for the appellant referred to serial number 1 of the Exemption Notification dated 30.06.2017 which had also been noticed by the Tribunal in the decision rendered on 02.11.2021 in InterGlobe Aviation. 64. The submission advanced by the learned counsel also deserves to be accepted. In paragraph 45 of the decision of the Tribunal in InterGlobe Aviation, the following observations were made by the Tribunal : "45. In this connection it would also be relevant to refer to the en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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