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  • Writer's pictureRajesh Audithyan

Constitutional Validity of Section 25(4)of the Customs Act-DECLARED as arbitrary and contrary GuJ HC

On the date of filing Bill of Entry, customs duty was increased by a notification but not published in official gazette.

Whether the importers are liable to pay increased rate of duty as per the Notification issued under Section 25(1) of the Customs Act on the same day on which the bills of entry were field ?

The notification was made available in official gazette in electronic form subsequently, in view of the provisions of Section 25(4) of the Customs Act as amended by the Finance Act, 2016.

Whether the provisions of Section 25(4) of the Customs Act, 1962 as amended by the Finance Act, 2016 is arbitrary, illegal, ultra vires and unconstitutional or not?

The above questions came for the consideration before the Andhra Pradesh High Court in M/S RUCHI SOYA INDUSTRIES LTD. VERSUS UNION OF INDIA and has declared by Hon’ble High Court that Section 25(4) of the Customs Act is contrary to Section 25(1)(2A) and to be strike off.

As held by the Supreme Court in case of KUSUM INGOTS & ALLOYS LTD. VERSUS UNION OF INDIA the parliamentary legislation without receiving the consent of the President of India and published in a official gazette unless specifically excluded will apply to entire territory of India. If passing of the legislation gives rise to cause of action, the writ petition questioning the constitutionality thereof can be filed in any High Court of the country having requisite territorial jurisdiction and an order passed on writ petition questioning the constitutionality of Parliamentary Act, where interim or final keeping in view the provisions contained in clause (2) of Article 226 of the Constitution of India will effect throughout the territory of India, subject to applicability of the Act.

Relevant part of the Customs Act given below ;

Customs Act - Power to grant exemption from duty Section 25

(1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification goods of any specified description from the whole or any part of duty of customs leviable thereon.

(2A) The Central Government may, if it considers it necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or order, as the case may be, by notification in the Official Gazette, at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be.

(4) Every notification issued under sub-section (1) or sub-section (2A) shall, unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette.

Readers can see the underlined words which are contradictory to each other. One says “Notification in the official gazette” and another one says “on the date of issue ” which leads to this litigation.

The provisions of Section 25(4) of the Customs Act, 1962 is declared as arbitrary and contrary to Section 25(1) & (2)(A) of the Customs Act, 1962.

Customs Department was directed to refund the excess amount of custom duty and differential amount of IGST collected from the Importer with simple interest @ 6% p.a. from the date of deposit till the date of payment.


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