Amendment to Section 25 of Customs Act has Prospective Application: Karnataka High Court [Read Judgment]

Imposition - Karnataka High Court - ITAT - Taxscan

In M/s. Ruchi Soya Industries Ltd. vs. Union of India & Ors., the Karnataka High Court held that prior to the amendment made by the Finance Act 2016, a notification under Section 25 of the Customs Act 1952 can come into force only after satisfying the conditions of publishing the notification in the official gazette & offering for sale on the date of its issue by Directorate of Publicity and Public Relations of the Board, New Delhi.

The Petitioner, M/s. Ruchi Soya Industries Ltd is a Public Company. It had entered into a Contract with a foreign supplier M/s. Avanti Industries Pvt. Ltd., Singapore for the import of 10,000/- MTs of Crude Palm Oil of Edible Grade. The Imported goods reached the Mangalore Port on 17th September 2015. The Petitioner had filed four bills of entry seeking clearance of the subject goods and accordingly the duty was fixed at 7.5% vide a notification dated 17th March 2012. Later, instead of clearing the bills of entry, the Customs department recalled and reassessed it on the ground that the rate of duty on the subject goods had increased by 5% in terms of a new notification issued on the day when the goods have reached the port. The petitioner was asked to deposit the duty at the enhanced rate of 12.5%. Aggrieved the Petitioner approached the High Court via a Writ Petition.

The main argument put forward by the Counsel for the Petitioner was that the new notification issued didn’t satisfy the requirements to come into force. According to him, a notification issued under Section 25 (1) of the Customs Act 1852 would come into force on satisfying two conditions provided in Section 25, which are (1) Notification should be published in the official gazette & (2) It should be offered for sale on the date of its issue by Directorate of Publicity and Public Relations of the Board, New Delhi. He contends that the respondents have failed to satisfy the second condition. Reliance was placed upon the decision of Supreme Court in Union of India vs. Param Industries Ltd.,

The Counsel for the respondents argued that Section 25(4) providing the conditions has been amended by the Finance Act, 2016 and that only the first condition needs to be satisfied.

The Court after considering the arguments made before it pointed out that any amendment to the Statute is prospective unless it is explicitly made retrospective. It said that provisions of Section 25 before the amendment would be applicable in the case and for that reason, the court insisted compliance of both the conditions laid down in the said section.

Affirming the decision of the Supreme Court in Param industries Ltd. case, the High Court Bench of Justice S. Sujatha found that the second requirement laid down in Section 25(4) was not satisfied by the Department and thus the Department could not enhance the duty to 12.5%.

“For the reasons narrated above, the demand made by the department is not justified. No claim of differential amount of duty can be made on the basis of the notification No.46/2015-Cus dated 17.09.2015, and the same deserves to be set aside. The demand made by the respondents at Annexures-W, X, Y and Z are quashed. The petitioner is liable to pay the duty at 7.5% based on the notification No.12/2012-Cus.” said the bench.

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