The Supreme Court rescued importers who were required to pay an elevated customs duty of 200% on import of products from Pakistan due to the Centre’s unexpected tariff enhancement on imports after the 2019 Pulwama terror attack and directed them to pay the duty on import below the older tariff.
The case before the Court is linked with India’s response to Pakistan in the aftermath of the Pulwama terror attack that claimed the lives of over 40 security personnel.
Two days after the February 14 terror attack, the Union Government issued a notification under Section 8A of the Customs Tariff Act 1975. The notification introduced a tariff entry by which all goods originating in or exported from Pakistan were subjected to an enhanced customs duty of 200%.
The notification was uploaded on the e-Gazette at 8:48 pm. Customs authorities at the land customs station at Attari sought to enforce the enhanced rate of duty on importers who had already presented bills of entry for home consumption before the enhanced rate was notified in the e-Gazette. The imported goods entered Attari at around 6 pm on that day, two hours before the notification was published.
This prompted the importers to file petitions before the High Court of Punjab and Haryana.
On August 26, 2019, a Division Bench of the High Court held that since the importers, who had imported goods from Pakistan, had presented their bills of entry and completed the process of “self-assessment” before the notification was issued and uploaded, the enhanced rate of duty was not attracted.
The High Court held that the importers were liable to pay the duty applicable at the time the bills of entry for home consumption were filed under Section 46 of the Customs Act, 1962.
One of the importers of cement had contended before the Court that though his goods arrived at 6 pm, two hours before the government notification, his customs duty was hiked from Rs 73,342 to Rs 8,10,952.
The High Court had directed the Centre to release the goods within seven days on the payment of duty ‘as declared and assessed’ without applying the notification enhancing the rate of duty on goods originating in Pakistan. The Union of India thereafter appealed this order before the Supreme Court.
The Centre argued that since the notification was issued on February 16, 2019, the Court must, regardless of the time at which it was uploaded on the e-Gazette, treat it as being in existence with effect from midnight on February 16.
“The consequence of this interpretation would be to do violence to the language of Section 8A(1) of the Customs Tariff Act, and to disregard the meaning, intent and purpose underlying the adoption of provisions in the Customs Act in regard to the electronic filing of the bill of entry and the completion of self-assessment,” the court said.
The three-judge Bench of Justices DY Chandrachud, KM Joseph, and Indu Malhotra. Justices Chandrachud and Joseph held that The purpose of the notification being to discourage the import of goods from Pakistan, it has prospective effects. The object and purpose is not to penalize Indian importers who had completed their imports, presented bills of entry for home consumption and had completed self-assessment in terms of the provisions of the Customs Act and the Regulations, prior to the issuance of the notification.
The Apex Court held that the notification published under Section 8A of the Customs and Tariff Act, 1975, late in the evening of February 16, 2019, would not have retrospective effect.
The Court further held that the rate of duty which was applicable was crystallized at the time, on the date of the presentation of the bills of entry in terms of the provisions of Section 15 read with Regulation 4(2) of the Bill of Entry (Electronic Integrated Declaration and Paperless Processing) Regulations, 2018.
The top court dismissed the appeal of the Centre against a Punjab and Haryana high court judgment holding that it cannot levy enhanced custom duty from importers who had already presented “bills of entry for home consumption before the enhanced rate was notified’ in e-Gazette.Subscribe Taxscan AdFree to view the Judgment