Contract shall be Amended in lines with Subsequent Changes in Law: CESTAT upholds Proceedings against Importer [Read Order]

The New Delhi bench of Customs, Excise & Service Tax Appellate Tribunal has held that contract shall be amended in lines with subsequent changes in law and upholds proceedings against importer.

The appellant, M/s. Climax Overseas Private Limited, signed a contract with a supplier in Vietnam for import of natural rubber RSS3. Thereafter, the Director General of Foreign Trade (DGFT) issued a notification revising the policy condition for import of natural rubber. The overseas exporter issued a commercial invoice to the and dispatched the consignment of natural rubber by bill of lading from Ho Chi Min port in Vietnam with port of discharge as Nhava Sheva and final destination as ICD Garhi Harsaru, India.  

Thereafter, the officers pointed out to the appellant that in terms of the EXIM policy as notified by DGFT notification, the consignment of rubber could only be imported through Chennai or Nhava Sheva ports and not through ICD Garhi, Harsaru, India. The Joint commissioner directed to deposited a redemption fine of Rs. 1,00,000/- and impose a penalty of Rs.50,000/-. The order was upheld by the Commissioner (Appeals) and hence, appealed before CESTAT.

The appellant submitted that the contract was signed with overseas supplier well before the issue of the DGFT notification. The counsel for the appellant further submitted that there was no violation of DGFT notification as the goods should not have been forwarded to ICD Garhi, Harsaru by Nhava Sheva Port customs officers.

The counsel for the revenue submitted that there cannot be two ports of import. The import is complete only when goods cross the customs frontiers and this happened at ICD Garhi Harsaru and not at Nhava Sheva. Before reaching the ICD the goods have to be discharged at some port and carried to the ICD and this does not make the port of discharge the port of import.

The Coram of Mr. P.V. Subba Rao, Member (Technical) and Ms. Rachna Gupta, Member (Judicial) has observed that any contract between parties is subject to law and public policies, if the laws change making it impossible to fulfil the contracts as per the original terms, it is open for the parties to either cancel or modify the contract to bring it in conformity with the laws of their respective countries. After the notification was issued the appellant could have negotiated changes to the contract and got an invoice issued and delivery modified to bring it in conformity with the new legal notification.

The Tribunal has held that “we find that the impugned order is correct and proper and calls for no interference. Accordingly, impugned order is upheld and the appeal is rejected”.

Advocate Mr. B.M. Joshi, appeared for the appellant and Mr. R. Kumar, appeared for the department.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.