On September 23, a three-judge bench of SC held that a notification under Section 8A(1) of the Customs Tariff Act, even though it has the effect of amending the First Schedule, takes effect prospectively. The Notification cannot be used to alter the rate of duty based on which there was a presentation of the Bill of Entry several hours ago and the self-assessment was done.
Background
On 16 February 2019, following the Pulwama terrorist 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 precise time at which the notification was uploaded on the e-Gazette was 20:46:58 hours. Customs authorities 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. Their action led to a challenge before the High Court of Punjab and Haryana.
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 “selfassessment” before the notification enhancing the rate of duty to 200 per cent was issued and uploaded, the enhanced rate of duty was not attracted.
The union of India appealed against the same before the SC. Since the issues of law which was been raised were common to the batch of appeals, they were heard together.
Appellant’s Contentions
Additional Solicitor General of India submitted that under Section 15 of the Customs Act, the expression “on the date” for determination of the rate of duty comprehends the entire period of 24 hours, in this case beginning at midnight on 16 February 2019. Irrespective of the point of time when a notification has been uploaded or published in the e-Gazette, the rate of duty leviable on imported goods cleared for home consumption is, by a legal fiction, the rate prevalent on the date of the presentation of the bill of entry.
Respondent’s Contentions
Senior Counsel for respondents submitted that the importers fulfilled the twin requirements of the goods having entered on 16 February 2019 and the bill of entry having been filed before 20:46 hours when notification 5/2019 was issued. The bills of entry had to be assessed to customs duty at the rate which was in existence before the publication of the notification.
Issue
Whether the notification under Section 8A(1) at 20:46:58 hours on 16 February 2019 took effect commencing from 0000 hours that day?
Court’s Observations
The bench comprising Justices DY Chandrachud, KM Joseph and Indu Malhotra heard the appeal. Justice KM Joseph wrote a separate but concurring opinion to the bench. Justice DY Chandrachud, on behalf of himself and Justice Malhotra, observed the following:
- A notification under Section 8A(1) of the Customs Tariff Act, even though it has the effect of amending the First Schedule, takes effect prospectively. In the language of the law, its operation is prospective.
- The notification under sub-section (1) of Section 8A does not fulfil the description of a Regulation under Section 3(50) of the General Clauses Act. The expression is confined to specific species of Regulations. The definition does not extend to all subordinate legislation or notifications issued by a delegate of the legislature acting in pursuance of statutory authority.
- The notification has the effect of enhancing the rate of duty prescribed in the First Schedule to the Customs Tariff Act. That does not transform the notification which has been issued in pursuance of a statutory authority into a ‘Central Act’.
- Notification 5/2019, which is akin to the exercise of delegated legislative power, under the emergency power to notify and revise tariff duty under Section 8A of the Customs Tariff Act, 1975, cannot operate retrospectively unless authorized by statute. In the era of the electronic publication of gazette notifications and electronic filing of bills of entry, the revised rate of import duty under the Notification 5/2019 applies to bills of entry presented for home consumption after the notification was uploaded in the e-Gazette at 20:46:58 hours on 16 February 2019.
- Section 8A does not contain language indicative of a legislative intent to authorize the Central government to relate the exercise of the power to a period before its exercise. The conferment of the power has not been made retrospective either expressly or by necessary implication.
Court’s Decision
The court affirmed the judgment of the High Court. The appeals were dismissed holding no merit. The duty was correctly assessed at the time of self-assessment in terms of the duty which was in force on that date and at the time. The subsequent publication of the notification bearing 5/2019 did not furnish a valid basis for re-assessment.
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