Amin Merchant Versus Chairman, C.B.E. & C, New Delhi>2011(09)LCX0339

2011(09)LCX0339

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

Dr. D.Y. Chandrachud and A.A. Sayed, JJ.

Amin Merchant

Versus

Chairman, C.B.E. & C, New Delhi

Writ Petition No. 1761 of 2009, decided on 2-9-2011

Cases Quoted -

13.K. Industries v. Union of India - 1993(04)LCX0042 Eq 1993 (065) ELT 0465 (S.C.) - Referred [Para 6]

Bharat Surfactants (Pvt.) Ltd. v. Union of India - 1989(05)LCX0019 Eq 1989 (043) ELT 0189 (S.C.) - Referred [Para 8]

Choksi Tube Company Ltd. v. Union of India - 1997(01)LCX0208 Eq 1998 (097) ELT 0404 (S.C.) - Inapplicable [Para 8]

M. Jhangir Bhatusha v. Union of India - 1989(05)LCX0029 Eq 1989 (042) ELT 0344 (S.C) - Relied on [Para 8]

Shah Devchand & Co. v. Union of India - 1991(07)LCX0030 Eq 1991 (055) ELT 0003 (S.C.) - Referred [Para 8]

Advocated By -

Shri Amin Merchant, the Petitioner.
S/Shri A.S. Rao with Jitendra B. Shah, for the Respondent.

[Judgment per : D.Y. Chandrachud, J. (Oral)]. -

During financial years 1993-94 and 1994-95, the Petitioner imported eight consignments of goods falling under Tariff Heading 2208.10 of the Customs Tariff namely "Compound alcoholic preparations of a kind used for the manufacture of beverages". The Customs authorities provisionally assessed the goods imported and subjected to them to a prescribed rate of duty of Rs. 300 per liter or 400% whichever is higher specified in respect of sub-heading 2208.10 of the Customs Tariff for 1993-1994 and 1994-95. The Petitioner claims to have deposited the amount of duty provisionally assessed on the assessable value declared in the eight bills of entry. The Petitioner cleared the goods for home consumption during financial years 1993-94 and 1994-95. Between 1994 and 2001 the Petitioner addressed several letters inter alia to the Central Board of Excise and Customs and to the Tariff Research Unit (TRTJ) of the Union Ministry of Finance. The grievance of the Petitioner is that the rate which has been prescribed for goods falling under Tariff Heading 2208.10 is higher than that authorized in the Budget Proposals during financial years 1993-94 and 1994-95. The Petitioner took recourse to the provisions of the Right to Information Act in order to elicit information. Eventually, these proceedings were instituted under Article 226 of the Constitution on 7th May, 2000.

2. The reliefs which the Petitioner seeks are (i) A writ of Mandamus di-recting the First and Second Respondents to issue a notification under Section 25(1) of Customs Act, 1962 in order to exempt goods falling under Tariff Heading 2208.10 so as to give effect to the Budget proposal announced by the Finance Minister in Parliament for financial years 1993-94, and 1994-95; (ii) A direction to the Chief Commissioner of Customs to finalize assessment of the eight bills of entry after a notification is issued by the First and Second Respondents under Section 25(1); (iii) A writ of Mandamus directing the Second Respondent to issue a notification under Section 25(2) of the Customs Act, 1962 for granting an exemption from customs duty for goods falling under Tariff Heading 2208.10 for financial years 1993-94, and 1994-95; (iv) An order for refund after assessments are finalized; and (v) An order for the payment of interest at the rate of 12% p.a. on the refund that is ordered.

3. The Petitioner who appears in person submitted that the Budget Proposals for 1993-94 stipulated inter alia a reduction in effective rates of import duty on items which had then attracted a rate of duty higher than 85%, to 85% ad valorem, except on dried grapes, almonds, alcoholic beverages, ball and roller bearings and passenger baggage. The Budget Proposals for 1994-95 similarly contemplated a reduction in effective rates of customs duty on items which until then attracted a duty higher than 65%, to 65% except inter alia on alcoholic beverages. Four submissions have been urged before the Court by the Petitioner at the hearing : (i) Compound alcoholic preparations are not alcoholic beverages and under the Budget Proposal the maximum rate of duty that was envisaged was 85% for financial year 1994-95; (ii) Not being alcoholic beverages, the goods imported by the Petitioner were not governed by the exceptions mentioned in the 13udget Proposals which applies to alcoholic beverages; (iii) It was the duty of the Tariff Research Unit of the Union Ministry of Finance to give effect to the budgetary proposals under which the maximum rate of duty on compound alcoholic preparations should not exceed 85% for financial year 1993-94 and 65% for financial year 1994-95; and (iv) The Finance Act which was passed by Parliament in 1993-94 did not as a matter of fact give effect to the budgetary proposal as regards compound alcoholic preparations. According to the Petitioner, the Finance Act of 1993, erroneously prescribed a duty of Rs. 300 per liter or 400%, whichever is higher in respect of Tariff Entry 2208.10. Accordingly, it was necessary for the Union Government to issue a notification under Section 25(1) of Customs Act, 1962 to rectify the error and, as a matter of fact, such notifications have been issued in other cases.

4. The Union of India, in response to the petition, has filed 2 affidavits of the Assistant Commissioner for Customs dated 9 June 2010 and 25 December 2010. According to the Respondents, the Speech of the Finance Minister while presenting budgetary proposals only highlights the more important proposals of the Budget. Budgetary changes are in fact enacted by the Parliament as contained in the Finance Bill or ratified by Parliament or implemented through notifications. The legal force for charging a particular rate of customs duty on import of goods, is derived from the First Schedule of the Customs Tariff Act, 1975, read with notifications issued under Section 25(1). If any changes in the rate were intended by Parliament it would have been reflected in the respective Finance Bills. The Respondents have denied that there was any error or discrepancy between the budget proposals announced by the Finance Minister and the Finance Bill.

5. Now in determining what is the appropriate rate of duty, the author-itative source of legislative intent is the Finance Act which is legislated upon by Parliament. The Finance Act of 1993 provided, insofar as is material, certain amendments in the First Schedule to the Customs Tariff Act. In Chapter 22 of the Customs Tariff it is stipulated that in sub-heading 2208.10, in the Entry in Column 4, the entry "Rs. 300 per liter or 400% whichever is higher" shall be substituted. By the Finance Act of 1994, in certain sub-headings of Chapter 22, a rate of duty of 65% was substituted. Flowever, the reduction of the rate of duty to 65% was not made applicable to sub-heading 2208.10. Therefore, the position is that under the Finance Act of 1993, the rate of duty that was prescribed for Tariff subheading 2208.10 was Rs. 300 per liter or 400% whichever is higher. Tariff Heading 2208.10 deals with compound alcoholic preparations of a kind used for manufacturing beverages. The Petitioner does not dispute the fact that the goods imported by him fall within the Tariff I leading 2208.10.

6. Budgetary Proposals and the speech of the Finance Minister in Par-liament introducing them are, it is well settled, not enacted law. Parliament may or may not accept the proposal. B.K. Industries v. Union of India - 1993(04)LCX0042 Eq 1993 (065) ELT 0465 (S.C). The law as enacted is what is contained in the Finance Act after it is legislated upon by Parliament. Budgetary proposals constitute legislative material antecedent to the enactment of law. The rates of tax, are those which are prescribed by legislation, once it is enacted by Parliament. Once Parliament has duly legislated, and a rate of duty is prescribed in relation to a particular tariff heading that constitutes the authoritative expression of the legislative will of Parliament. The Court in the exercise of its power of judicial review cannot go behind the law as enacted by Parliament. It is the law as enacted, which gives expression to legislative will and it is the law as enacted which prescribes the rate of tax which Parliament has duly imposed. Consequently, as a mater of first principle, it would be impermissible for the Court to undertake the exercise of entering upon a scrutiny of the correctness of the collective expression of legislative will which finds expression in the legislation as adopted by the Parliament. The Court cannot undertake a scrutiny of whether there was an error on the part of the Parliament in legislating to provide a particular rate of duty. It is to be noted that no challenge to the constitutional validity has been made on that ground, even assuming that such a course were to be open.

7. The power to issue a notification under Section 25(1) of the Customs Act, 1962 has been conferred upon the Central Government where it is satisfied that it is necessary in the public interest so to do. Under sub-section (2) of Section 25, the Central Government may where it is satisfied that it is necessary in the public interest so to do, by special order in each case, exempt from the payment of duty, under circumstances of an exceptional nature to be stated in such order, any goods on which duty is leviable. The Court under Article 226 of the Constitution would not be justified in usurping the jurisdiction which is vested in the Central Government. Parliament has conferred that power on the Central Government on specific grounds of public interest. The exercise of the power may in a given circumstance be challenged on the ground that it has been exercised on a basis extraneous to what is contemplated by sub-sections (1) and (2) of Section 25. That would not justify the Court, on a plea such as that has been raised in the present case, to direct the Central Government to issue a notification in the first instance.

8. The petitioner has relied on the decision in the case of Choksi Tube Company Ltd. v. Union of India - 1997(01)LCX0208 Eq 1998 (097) ELT 0404 (S.C.) for the proposition that Courts can direct the Central Government to issue a notification under Section 25. Reliance on this case is misfounded; in that case, the Supreme Court was dealing with the issue of discriminatory conduct towards the Petitioner as against other manufacturers of the same product, namely stainless steel strips. There, the Court held that since the authority did not cooperate in explaining, why a certain Ahmedabad Advanced Mills were being given the benefit of the exemption, while the same was not granted to the petitioners, they had engaged in discriminatory conduct without just cause. In the instant case, there is no such discriminatory conduct which would compel the interference of the Courts. In the matter of granting or not granting of an exemption, Government has been given significant discretion by the Supreme Court unless the provisions of Article 14 of the Constitution come into play. An importer cannot as a matter of right insist on exemption from levy or payment of duty as a matter of course. In fact, the Supreme Court, in M. Jhangir Bhatusha v. Union of India - 1989(05)LCX0029 Eq 1989 (042) ELT 0344 (S.C.) : AIR 1989 SC 1713 has gone further and held that there can be discriminatory treatment, where such treatment is done with just reasons, in the public interest. [See also, Bharat Surfactants (P) Ltd. v. Union of India, 1989(05)LCX0019 Eq 1989 (043) ELT 0189 (S.C.) : AIR 1989 SC 2054; and Shah Devchand & Co. v. Union of India, 1991(07)LCX0030 Eq 1991 (055) ELT 0003 (S.C.): AIR 1991 SC 1931].

9. The Petitioner who has appeared in person has argued his case with considerable objectivity. The research which he has devoted to diverse aspects of the case is noteworthy. However, having considered the nature of the grievance, we find that the relief which has been sought would fall outside the parameters of the jurisdiction that is conferred upon the High Court under Article 226 of the Constitution, which is the constitutional source of power governing the exercise of the jurisdiction. For these reasons, no case for interference under Article 226 of the Constitution is made out. We accordingly, dismiss the petition. However in the circumstances of the case we leave parties to bear their own costs.

Equivalent 2013 (298) ELT 0685 (Bom.)