Customs Gazette Notification Enhancing BCDon Palm Oil Published Only After Dates ofEntry Inward: CESTAT rejects RetrospectiveApplication, Upholds 15% Duty
The CESTAT Kolkata upheld that the Basic Customs Duty (BCD) on imported palm oil should be 15%, rejecting a 30% duty increase, as the relevant notification was published after the entry inward dates. Emami Agrotech, which paid the higher duty under protest, was ordered a refund of the differential amount. The tribunal emphasized that duty rates apply based on the Bills of Entry filing date.
In a recent ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata bench upheld the applicability of Basic Customs Duty ( BCD ) at the rate of 15% on imported palm oil, rejecting the enhanced duty rate of 30%. It ordered for a refund of the differential duty amount.
The Tribunal held that the notification increasing the duty was published in the official gazette only after the date of the entry inward and, therefore, could not apply retrospectively to the imports in question.
It was observed that a notification takes effect only upon publication in the Official Gazette, as confirmed by the report from the Department of Publication. The Ruchi Soya Industries case was important, reinforcing that Section 25(4) was arbitrary and that the duty rate before publication applies.
Emami Agrotech Limited, a company engaged in the import, processing, and sale of edible oils, imported two consignments of crude palm oil from Singapore in November 2017. The consignments, arriving via vessels MT Express and MT Nan Lian 006, were subject to a BCD of 15% as per Notification No. 50/2017-Customs, amended by Notification No. 71/2017-Customs.
However, Notification No. 87/2017-Customs, issued on November 17, 2017, increased the BCD to 30%. Importantly, this notification was published in the Official Gazette only on November 20, 2017.
The appellant filed Bills of Entry on November 16, 2017, assessing the duty at 15%, amounting to INR 12,33,81,081. The Customs Authorities, however, applied the enhanced 30% duty based on the entry inward dates of November 18 and 19, 2017, demanding additional duty. Emami Agrotech paid the differential duty under protest to clear the goods and subsequently challenged the assessment.
Initially, the appellant filed a writ petition before the Calcutta High Court, which directed the appellant to pursue the matter through an appeal to the Commissioner of Customs (Appeals). The Commissioner rejected the appeals on March 14, 2019, upholding the 30% duty rate.
Emami Agrotech, represented by Chartered Accountant Arvind Baheti, presented several key arguments. The appellant contended that Notification No. 87/2017-Customs, which increased the BCD to 30%, was effective only from its publication date, November 20, 2017, as mandated by Section 25(1) of the Customs Act, 1962. Since the entry inward dates (November 18 and 19, 2017) preceded the publication, the enhanced duty was inapplicable.
Ruchi Soya Industries Ltd. v. Union of India, which declared Section 25(4) of the Customs Act arbitrary. This section allowed notifications to take effect from the issuance date rather than the publication date, creating a contradiction with Section 25(1). Similar rulings from other high courts and tribunals were cited to support the argument.
It was also asserted that the delay in granting entry inward (3-4 days after the notice of readiness on November 15, 2017) was due to administrative inaction by the Customs Authorities. No discrepancies were alleged in the submitted documents, and judicial precedents, such as Mafatlal Industries Ltd. v. UOI, stated expeditious granting of entry inward. The appellant asserted that it should not bear the financial burden of the authorities’ delay.
Emami Agrotech sought a refund of the excess duty paid (INR 12,33,81,081) with interest, arguing that the duty should be assessed at 15% based on the Bills of Entry filing date (November 16, 2017) or the notice of readiness date (November 15, 2017)
The Authorized Representative for the Revenue, Ashwini Kr. Choudhary, defended the impugned order, arguing that the entry inward dates (November 18 and 19, 2017) fell after the notification’s issuance date (November 17, 2017). According to the proviso to Section 15 of the Customs Act, the duty rate in force on the entry inward date applies if the Bills of Entry are filed beforehand, justifying the 30% duty.
The CESTAT bench, comprising Hon’ble Shri Ashok Jindal (Judicial Member) and Hon’ble Shri K. Anpazhakan (Technical Member), meticulously analyzed the case. It observed that under Section 15(1)(a) of the Customs Act, the duty rate for goods entered for home consumption is determined by the date of filing the Bills of Entry. Since the Bills of Entry were filed on November 16, 2017, the 15% duty rate should apply. Even if the proviso to Section 15 is considered (deeming the Bills of Entry presented on the entry inward date), the entry inward dates (November 18 and 19, 2017) were prior to the notification’s publication on November 20, 2017.
Additionally, it stated that the appellant complied with all requirements, including filing Import General Manifests (IGMs) and submitting necessary documents. The delay in granting entry inward was solely due to the Customs Authorities, and the appellant could not be penalized for it.
The tribunal set aside the Commissioner’s order, ruling that the enhanced 30% duty under Notification No. 87/2017-Customs was not applicable. The tribunal held that Emami Agrotech was liable to pay BCD at 15% and was entitled to a refund of the excess duty paid, along with consequential relief as per law.
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Source : Tax Scan
