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TMI Blog1986 (9) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... force upto and inclusive of December 31, 1979. 6. Relying upon these notifications dated January 5, 1979, the petitioners entered into contracts with foreign companies for supply of different quantities of viscose staple fibre under a bona fide belief that the exemption granted thereunder would remain in force upto December 31, 1979. 7. The ships carrying the commodity entered the territorial waters of India long before December 31, 1979, but the Bills of Entry could not be presented before January, 1980 within the meaning of Section 15 of the Customs Act, 1962. 8. In the meantime, on or about December 30, 1979, a fresh notification purported to be one under Section 25(1) of the Customs Act, 1962, was issued amending the two earlier notifications dated January 5, 1979 by extending the date of expiry of the said notifications till December 31, 1980 instead of December 31, 1979 and simultaneously enhancing the rate of additional duty from Rs.1.32 per kg. to Rs.2.37 per kg. 9. It is the validity of this notification dated December 30, 1979 (hereinafter to be referred to as the impugned notification) enhancing the rate of additional duty of viscose staple fibre, which is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoppel against the exercise of legislative power. 17. Mr. Roy Chowdhury further contended that the impugned notification was also not bad in law on account of its being introduced before the expiry of December 31, 1979, since it was not given any retrospective effect, but only prospective effect since the date of its publication of December 30, 1979. 18. Coming now to the first point first, the question regarding charge ability to the Customs duty of imported goods in the background of exemption notifications issued under Section 25(1) of the Customs Act exempting such goods either wholly or partially from payment of customs duty, still remains a highly controversial issue and in the absence of any authoritative pronouncement on the point by the Supreme Court, two distinct and different views are now holding the field. 19. The Bombay High Court in its latest Full Bench decision in Apar Private Ltd. v. Union of India - (1985) 22 E.L.T 644 has after taking into consideration its earlier decisions and particularly the decision in Shawhney v. Sylvania and Laxman, 77 Bom. L.R. 380 - ILR 1978 Bom. 425 and disagreeing with the contrary decision of the other High Courts, taken th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in its Bench decision in Jain Shudh Vanaspati Ltd. v. Union of India - 1983 E.L.T 1688 has, however, taken a different view. According to that High Court, Section 15 of the Customs Act does not cover only the quantification and that irrespective of the date when the ship enters the territorial waters of India, calculation for the purpose of rate of duty must be done with reference to the dates mentioned in Section 15. The Court further held that entry in the territorial waters, though amounting to import, will not for fiscal purpose determine the date and time for the purpose of calculating the rate of duty which is leviable under the Customs Act and for which Section 15 has to be looked into. 22. The Bombay High Court in the case of Apar Pvt.Ltd. (supra), has, however, explained the position by observing that chargeability is different from assessing the duty payable, which has to be done with reference to the dates mentioned in section 15. Taxability, as it was explained, is determined on the date when the goods enter the territorial waters and amount of duty payable with reference to the date mentioned in Section 15. 23. A learned Single Judge of the Kerala Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partial exemption on the date of importation, Section 15 of the Customs Act would have applicable, though the matter would be different in the case of total exemption. 27. Against the above argument advanced on behalf of the petitioners, it was contended by Mr. Roy Chowdhury, the learned Counsel representing the respondents that since in view of the definition of 'imported goods' as given in Section 2(25) of the Customs Act, goods brought into India from a place outside India continue to be imported goods till their clearance for home consumption, it would be wrong to assume that the goods cease to be imported goods immediately on their entry into the Indian Territorial Waters. And that being so, Mr. Roy Chowdhury's contention was that any change in the rate of duty subsequent to the date of importation could not be said to be invalid and would be quite operative in terms of Section 15 of the Act. 28. In my judgment, this contention of Mr. Roy Chowdhury has sufficient force in it. It is true that in view of the definition of 'India' as given in Section 2(27) of the Customs Act, importation takes place as soon as the goods enter the Indian territorial waters, but though the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from levy of Customs duty either wholly or in part in public interest. There is apparently no limitation to such power of the Central Government excepting constitutional limitations, public interest being the guiding factor in all cases. And under Section 21 of the General Clauses Act power to issue a notification includes a power to add, to amend, vary or rescind it. Thus, if after issuing a notification exempting any specified goods from levy of Customs duty, the Central Government is of the view that to allow such notification to continue for any further period would be detrimental to the public interest, the Government has ample powers subject to constitutional limitations, to withdraw, to rescind or to modify it. To say that an exemption notification in force at the time of the entry of the goods into the Indian territorial waters, or in other words, at the time they acquire the character of imported goods; cannot be subsequently withdrawn, rescinded, added to or modified, would be putting unwarranted restrictions to the Central Government's power under Section 25 of Act in public interest. As it seems to me, the Bombay High Court while laying too much emphasis on chargeabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny imported goods shall be the rate and valuation in force on the date on which a Bill of Entry in respect of such goods is presented. And in the instant cases the rate at the relevant time was Rs.2.37 per kg. 33. In this connection, it may not be out of place to mention here that so far Matter No. 1297 of 1979 is concerned, entry inward was granted to the ship S.S. John at Cochin on November 10, 1979 and Bill of Entry was lodged with the Customs authority at Calcutta on 19th and 21st December, 1979. 34. But since the goods were meant for Calcutta granting entry inward to Cochin is immaterial. Section 15(1)(a) speaks of entry of goods for home consumption under Section 46. And since the goods were meant for consumption at Calcutta the relevant date was the date of entry inwards to Calcutta Port, which was not before January, 1980. 35. Thus, though the Bill of Entry was presented to the Customs authority at Calcutta in December, 1979, it should be deemed to have been presented on the date of entry inwards to Calcutta in view of the proviso to Section 15(1) and on that date the enhanced rate of duty had already come into force. 36. So, in case of the other contentions rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R. 1976 SC 2237, where it has been held that there can be no question of estoppel against the Government in the exercise of its legislative, sovereign or executive powers. 42. This decision, it may be recalled, was referred to in M.P. Sugar Mills case (supra) and at page 651 of the Report it was observed that:- "Whatever be the nature of the function which the Government is discharging, the Government is subject to the rule of promissory estoppel and if the essential ingredients of this rule are satisfied, the Government can be compelled to carry out the promise made by it." 43. Significantly, however, the Supreme Court while making the aforesaid observation in M.P. Sugar Mill's case (supra), did not specifically refer to any legislative function of the Government which the Government exercises as the delegate of the Legislature, and regarding taxation it was simply observed that taxation was a sovereign or a governmental function. 44. Mr. Roy Chowdhury, in this connection, referred to the decision of Supreme Court in Narinderchand v. Lt. Governor, Administrator, Union Territory, Himachal Pradesh, A.l.R. 1971 S.C. 2399 and drew my attention to the following observations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erchand's case (supra) but at the same time, did not also express any view as to the nature of the power exercised by the Government under Section 25(1) of the Customs Act. The Supreme Court, however, observed that "we shall assume for the purpose of these cases that the power to grant exemption under Section 25 of the Customs Act, 1962 is a legislative power and a notification issued by the Government also amounts to a piece of subordinate legislation." 48. The aforesaid observation, in my view, at least indicates that the contention raised on behalf of the Union of India that a notification issued under Section 25(1) of the Customs Act is in the nature of a piece of subordinate legislation, was not rejected outright by the Supreme Court. On the other hand, the Supreme Court on the basis of the decision in Narinderchand's case (supra) went to the extent of assuming that the power exercised by the Government under Section 25 of the Customs Act is a legislative power and a notification issued by the Government thereunder amounts to a piece of subordinate legislation. However, in view of the nature and facts of the cases under consideration, the Supreme Court in Indian Express New ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issory estoppel to exclude the cost of fibre board containers from the value of the goods for the relevant period. 53. Significantly, the relevant order was purely an executive order and did not amount to an exemption notification under Rule 8 of the Central Excise Rules, which contains identical provisions as in Section 25 of the Customs Act. 54. It is undoubtedly true that in the case of Uinion of India v. Godfrey Phillips (supra), a Bench constituted by three learned Judges of the Supreme Court, reiterated the view expressed earlier in M.P. Sugar Mill's case (supra) that there can be no promissory estoppel against the Legislature in the exercise of its legislative functions, but in neither of these two cases it did specifically come up for consideration whether the exercise of legislative power by a delegate of the Legislature also amounts to legislative function. This point, as already seen, was directly in issue in Narinderchand's case (supra) and the observations made therein by the Supreme Court, as referred to earlier, appear to be still holding the field, protecting subordinate or delegated legislations as well from the operation of the rule of promissory estoppel. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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