* THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 20.11.2008
+ WP(C) 2321/1993
SRS ENGINERRING INDUSTRIES ......Petitioner
-versus-
SECRETARY TO GOVT OF INDIA ..... Respondent
MINISTRY OF FINANCE Advocates who appeared in this case:
For the Appellant : Mr G Umapathy
For the Respondent : Ms Maneesha Dhir with Mr R S Bhatnagar &
Ms Preeti Dalal
CORAM :-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE RAJIV SHAKDHER
1. Whether the Reporters of local papers may be allowed to see the judgment ? Yes
2. To be referred to Reporters or not ? Yes
3. Whether the judgment should be reported in the Digest ? Yes BADAR DURREZ AHMED, J (ORAL)
1. The petitioner is aggrieved by the fact that the goods imported by it are being subjected to a higher rate of duty for no fault on its part. The facts are that the petitioner imported inner and outer rings WP(C) 2321-1993 Page 1 of 9 of ball bearings. The goods arrived at the territorial waters of India for berthing at the Madras port on 20.2.1989. The relevant bill of entry under Section 46 of the Customs Act, 1962 was filed on 27.2.1989. It so happened that the vessel which brought the goods into the territorial waters of India could not get a berthing at the Madras port because of a strike by the port labour/employees. It is on account of this strike that the entry inward certificate could not be issued by the customs authorities immediately after the entry of the vessel into the territorial waters. The entry inward certificate was ultimately issued on 2.3.1989.
2. The difficulty that has arisen in the present case is that the finance budget of the Central Government was introduced on 28.2.1989 and the tax proposals took effect from 1.3.1989. In the pre-budget scenario, the petitioner was liable to pay duty to the extent of Rs 15.73 lacs on the said goods. However, after the introduction of the budget, w.e.f, 1.3.1989, the same goods became exigible to duty to the extent of Rs 1.96 crores. Subsequently, the petitioner, by virtue of Court orders, was permitted to clear the goods on the admitted duty of Rs.15.73 lacs; which was done. The WP(C) 2321-1993 Page 2 of 9 grievance of the petitioner is that it is being foisted with the huge liability for no fault on its part.
3. The petitioner had challenged the provisions of Sections 15 and 32 of the Customs Act, 1962 before the Supreme Court by way of a petition under Article 32 of the Constitution of India. During the pendency of the said writ petition, the Supreme Court had passed an order on 11.8.1992 which inter alia reads as under:-
"Without going into the merits of the issues raised before us, it appears to us, prima facie, having regard to the peculiar circumstances of the case, the fact that the delay in berthing was not due to the fault of the petitioner or the vessel, the enormous magnitude of the increase in the rate of duty, the fact that in pursuance of the orders of this Court the goods had not been allowed to be cleared but were kept in a warehouse under the supervision of the customs authorities till recently, and also the fact that the rates of duty have been again slashed so that the petitioners would have to pay a considerably smaller amount of duty if the goods were to be cleared now, that the Government should consider the facts sympathetically and, if possible scale down the duty to a figure bearing a reasonable correlation to the value of the goods imported. A representation in this behalf may be filed by the petitioner within two weeks from today. The Government should dispose of the representation within four weeks thereafter, at any rate, not later than 30.9.1992."
Thereafter, the petitioner made a representation on 20.8.1992. The said representation inter alia sought the issuance of an ad-hoc WP(C) 2321-1993 Page 3 of 9 exemption order under Section 25(2) of the Customs Act, 1962. It was rejected by a reasoned order dated 28.9.1992 by the Central Government.
4. Thereafter, another representation dated 8.10.1992 was submitted by the petitioner with regard to the contents of Paragraphs 2 to 4 of the letter dated 28.9.1992 whereby the earlier representation was rejected. This representation was also dealt with and a letter dated 17.11.1992 was issued by the Department of Revenue, Ministry of Finance, Government of India stating that the petitioner's claim remains unsubstantiated and that there was no merit in its representation dated 8.10.1992 necessitating re- consideration of the decision communicated by the letter dated 28.9.1992.
5. Subsequently, the writ petition pending before the Supreme Court being CWP No 392/1989 came to be heard and was disposed of by a judgment dated 9.12.1992. The Supreme Court concluded that the relevant date for fixing the rate of customs duty was 2.3.1989 and that the prevailing rate on that date would be the one applicable for purposes of calculating the duty payable by the WP(C) 2321-1993 Page 4 of 9 petitioner. The Supreme Court also held, with regard to the contention of the petitioner that Section 15(1) of the Customs Act, 1962 was ultra vires, that the issue was no longer a subject matter of debate, in as much as, a Constitution Bench of the Supreme Court in the case of R Changir Shatusha etc. v Union of India & Ors: 1989 3 SCR 356 had upheld the validity of Section 15(1). While concluding the Court directed as under:-
"This court, as seen, by order dated August 11, 1992 directed that the respondent may consider the case sympathetically. It is open to the government to consider the same and pass and appropriate order. Subject to the above observations the writ petitions are dismissed out, however, without costs."
6. From the above extract it appears that the Supreme Court had not been apprised of the fact that the representation filed by the petitioner pursuant to the order dated 11.8.1992 had already been disposed of as indicated above. However, since the Supreme Court had directed that the respondent may consider the case sympathetically and that it was open to the Government to consider the same and pass appropriate order, the petitioner filed another representation before the Central Government on 29.12.1992. In Paragraphs 6 to 8 of this representation, for the first time, the WP(C) 2321-1993 Page 5 of 9 petitioner represented that it was not the intention of the Central Government, as discernible from the Finance Minister's speech, that the amendment sought to be introduced would have any revenue significance. The petitioner's contention was that the entire exercise of bringing in the amendments, particularly, with regard to ball bearings falling under Chapter 84 of the Customs Tariff Act, 1975 was merely to restructure the customs duty scheme and was not intended to bring about any new levy or higher rate of duty. It was also contended that in this context the application of the Provisional Collection of Taxes Act, 1931 would not have immediate effect from the midnight of 1.3.1989. Rejection of this representation was also communicated to the petitioner by a letter dated 13.4.1993 in the following words:-
"The undersigned is directed to refer to your representation dt. 29.12.92, on the above subject, addressed to the Minister of State (R&E), and to say that it has not been found possible to accede to your request."
7. It is this communication that is impugned in the present writ petition. This writ petition has been pending since 1993. In so far as the legal position is concerned, with regard to the applicability and interpretation of Section 15(1) of the Customs Act, 1962, the issue WP(C) 2321-1993 Page 6 of 9 stands settled by the Supreme Court judgment dated 9.12.1992. It is only the question of sympathetic consideration by the Government that remained to be considered in as much as the Supreme Court was not aware of the fact that the petitioner's representation had already been rejected. The petitioner had, as mentioned above, filed another representation in which the said additional point was taken.
8. The learned counsel for the respondent drew our attention to the counter affidavit filed on behalf of the respondent with regard to the point made by the petitioner pertaining to the Provisional Collection of Taxes Act, 1931. The relevant parts of the said affidavit reads as under:-
"The Provisional Collection of Taxes Act 1931 provides that where a Bill to be introduced on behalf of the government provides for the increase of a duty of custom or excise, the Central Government may cause to be inserted in the Bill a declaration that it is expedient in the public interest that any provision of the Bill relating to such imposition or increase shall have immediate effect under this Act. Section 4 of the said Act enacts that a declared provision shall have the force of law immediately on the expiry of the day on which the Bill containing it is introduced. In the present case the Finance Bill of 1989 contains a declaration to the following effect : "It is hereby declared that it is expedient in the public interest that the provisions of clause 34 (except sub-Clause
(b) thereof) and clauses 35, 36, 37, 38 and 39 of this Bill WP(C) 2321-1993 Page 7 of 9 shall have immediate effect under the Provisional Collection of Taxes Act, 1931".
Therefore as the Provisional Collection of Taxes Act provides for giving immediate effect to clause 34 (a) which applies to the second schedule therefore the increase in the duty comes into effect immediately i.e. from the date of introduction of the Finance Bill, that is 28th February, 1989.
7. Further in exercise of the power conferred under sub section (1) of section 25 of the Customs Act the Central Government issued a notification No. 70/89 Customs dated 1.3.89 which amended notification No. 146/86 Customs dated 26.2.86 providing the effective rates of duty on ball bearing and roller ball bearings and parts thereof. Therefore on the basis of the abovementioned changes introduced by the Finance Bill and the notification dated 1.3.89 the Customs assessed the Bill of entry and the duty levied has rightly been levied. Further the notification is perfectly valid as the increase in duty came into effect from 28th Feb 1989 and the taxable event occurred on 2.3.89.
9. The learned counsel for the respondent, after reading the said portion of the counter affidavit, submitted, and in our view rightly, that the Supreme Court by virtue of its judgment dated 9.12.1992 had already fixed 2.3.1989 as the effective date on which the applicable rate of duty was to be ascertained. That being the position, any other submissions contrary thereto made by the petitioner cannot be entertained or at least could not have been WP(C) 2321-1993 Page 8 of 9 entertained by the Government while considering the matter sympathetically.
10. Consequently, this writ petition cannot be allowed in view of the decision on merits already taken by the Supreme Court on 9.12.1992. In so far as the question of sympathetic consideration is concerned, that was for the Central Government and this Court cannot give any specific direction in that regard. They have considered the representations made by the petitioner and have rejected the same. The writ petition is dismissed. No order as to costs.
BADAR DURREZ AHMED, J RAJIV SHAKDHER, J November 20, 2008 mb WP(C) 2321-1993 Page 9 of 9