1. The issue in the instant appeal relates to the refund claim filed by the appellants, vide their letter dated 15-1-2001 for refund of Special Additional Duty paid in respect of the imports made from Nepal during the period from 13-3-2000 to 29-9-2000. The Special Additional Duty was paid by the appellants under protest and accordingly, the assessments were provisional. The said refund claim has been rejected by the authorities below on the ground that during the relevant period, Special Additional Duty was leviable on the imports and the same was exempted by issuance of the Notification No. 124/2000-Cus., dated 29-9-2000. The appellants are not disputing the factual position that Special Additional Duty on all Nepalese Imports into India, was exempted with effect from 29-9-2000 when Notification No. 124/2000 was issued. But they submit that the said Notification should be treated as clarificatory and hence having retrospective effect, inasmuch as under the Treaty of Trade and Agreement of Co-operation to control unauthorised trade between His Majesty's Government of Nepal and the Government of India, only Additional Excise Duty was leviable on goods imported from Nepal into India.
2. As per facts on record, the appellants were importing Tooth Paste products from Nepal through Land Customs Station, Raxaul and were clearing the same after paying Special Additional Duty of Customs @ 4% under protest with effect from 1-3-2000. The goods in question were exempted from Basic Customs Duty vide Notification No. 37/96-Cus., dated 23-7-96 and during the relevant period, there was no specific exemption from payment of Special Additional Duty (SAD in short). The exemption from SAD was granted only on issuance of Notification No.124/2000, dated 29-9-2000 by way of amendment to Notification No.37/96-Cus., dated 23-7-96. For better appreciation, Notification No.124/2000 is reproduced below :- "...........The Central Government being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 37/96-Customs, dated the 23rd July, 1996, namely :- In the said notification for the words and figures 'from the whole of duty of Customs leviable thereon under the First Schedule to the Customs Tariff Act, 1985' the words, figure and letter 'from the whole of the duty of Customs leviable thereon under the First Schedule to the said Customs Tariff Act, and Special Additional Duty leviable under Section 3A of the said Customs Tariff Act' shall be substituted." 3. The appellants' contention is that the above Notification No.124/2000 which amends the earlier Notification No. 37/96 and enlarges the scope of exemption from Basic Customs Duty to Special Additional Duty, should be considered as retrospective. For their above contention, they refer to the terms of the provisions of the Treaty of Trade between the Government of India and His Majesty's Government of Nepal, which is to the effect that all the goods manufactured in Nepal and imported into India, would be exempted from the Customs Duty and such goods would be liable only to Additional Duty of Customs equal to the Excise Duty for the time being leviable on similar products manufactured in India. As such, they contend that in terms of the provisions of the said Treaty, no SAD was leviable and the subsequent Notification issued on 29-9-2000 would be clarificatory notification and hence retrospective. It is their contention that the said Treaty of Trade governing imports of Nepal to India, provided for levy of countervailing duty only and as such, the levy and collection of SAD under Section 3A of the Customs Tariff Act, 1975 was, ab initio, void and contrary to the provisions of Treaty and Trade between the two countries. Notification No. 124/2000 only reiterated the correct legal position and the refund of duty paid by the appellants under protest prior to coming into force of the said Notification, is liable to be granted to them.
4. Shri B.V. Kumar, learned Advocate appearing for the appellants has strongly contended that it was on the representations made by the appellants seeking clarification on the leviability of SAD, that Notification No. 124/2000 was issued. He submits that treating the said Notification to be effective from the date of issuance of the same would be against the very terms of the Treaty of Trade between the two countries and would defeat the purpose of the same. In support of his submission that the said Notification should be considered as clarificatory and hence retrospective, he relied upon number of decisions and judgments of the Tribunal.
5. Shri T.K. Kar, learned SDR, for the Revenue appeared on behalf of Revenue and contended that the SAD, having been exempted vide Notification No. 124/2000 issued on 29-9-2000, was correctly levied in respect of the imports made prior to the said date and the refund claim of the appellant-company has been rightly rejected. He also submits that there is no justification for treating the Notification in question with retrospective effect. It is well-settled law that the fiscal statute has to be treated as prospective in nature unless the same clearly provides for retrospectivity or on reasonable ground, it can be concluded that the same is meant to be retrospective. Learned SDR submits that the Notification is a substantive benefit given under the law by the Legislature and by extending the scope of the same with reference to date of its availability, the applicability of the same cannot be made with retrospective effect.
6. From the above narration of facts, it is clear that the dispute revolves around the date of effectiveness of Notification No. 124/2000.
The said Notification grants exemption to the imports made from Nepal from the Special Additional Duty leviable thereon. No doubt, in terms of the Treaty and Trade entered into between the Government of India and His Majesty's Government of Nepal, the imports made from Nepal were only to attract Additional Duty and no Special Duty was to be levied on the same. However, that does not mean that the exemption would automatically become available to all the imports from Nepal in terms of the said Treaty. The Treaty between the two countries is required to be activated by issuance of notifications under the provisions of the Customs Act, 1962. Admittedly, during the relevant period, there was no notification granting exemption from SAD, though the terms of the Treaty provided for the same. It is the job of the Legislature to issue notifications under the Act to further the terms of the Treaty. But if the same have not been issued, the question arises as to whether the benefit can still be extended to the importers. In our view, the answer to the above question is in emphatic, 'No'. All imports to India have to be made under the provisions of the Customs Act, 1962 and the benefits, if any, provided thereunder. The Treaty cannot supersede the provisions of the Customs Act, 1962, as contended by the appellants and the terms of the Treaty have to be activated by the Government of India under the relevant provisions of the Customs Act, 1962 before the same could be implemented. If the terms is of the Treaty by themselves were to be treated as law, then there was no need for the Government of India to even issue the notification exempting imports from the Basic Customs Duty. As rightly observed by the original adjudicating authority that undoubtedly, the Treaty provides the framework for the bilateral trade between the two countries; but the actual import and export is governed by the Customs and Central Excise Statutes and the provisions of the Treaty do not, ipso facto, translate into import and export procedures within India until a corresponding notification in Customs is issued to bring the same into effect. We are of the view that it may be a lapse on the part of the Government of India not to issue the notification exempting the imports from SAD prior to 29-9-2000, but that lacuna cannot be filled by the judiciary and it is not our job to discuss as to what notifications the Government should have issued or not to further the cause of the Treaty between the two countries.National Trading Limited v. Collector of Customs (Prev.) reported in 1990 (45) E.L.T. 626 (T), it was observed in para 23 - "In order to bring implementation of any provision of this Treaty (or of any International Treaty or protocol for that matter) within the ambit of the Indian Customs Act, it was necessary that a notification was issued under Section 11(2)(r) of the Customs Act, 1962." As such, it is clear that without a corresponding notification in the Indian Customs Statute, the importer cannot claim the benefit of the Treaty automatically and the provisions of same cannot be enforced.
8. The appellants, in support of their plea that the said Notification No. 124/2000 is to be treated as being effective prior to the date of issuance of the same, have strongly contended that inasmuch as the exemption from SAD was available for all the Nepalese imports in terms of the said Treaty, the Notification should be held to be clarificatory. As per the general principle of interpretation of law, every fiscal enactment is to act prospectively, unless it is otherwise provided in the enactment itself or it is necessary to give a retrospective effect to the same going by the language of the enactment or legislative intent. No statute should be considered to have retrospective operation unless either the Act itself provides for the same or such construction arises by necessary and distinct implication.
In the instant case, it is an exemption given to the importers and can by no stretch of imagination be considered as a clarificatory notification. The exemption cannot be claimed as a matter of right and it, only after taking into account the overall trade effects or the agreement and business proposition, that the Government of India decides to examine a particular product from levy of a particular duty.
Merely because the Government of India should have exempted the imports from Nepal to SAD in terms of the Treaty by itself cannot be made the ground to hold that the Notification issued on 29-9-2000, should be treated as having been issued with effect from 1-3-2000.Indye Chemicals, Ahmedabad v. C.C.Ex.
reported in [1986 (25) E.L.T. 318 (T) = 1986 (7) ECR 45] the CEGAT had held that the exemption notification cannot be considered to be having retrospective effect and any exemption provision which enlarges the scope of an earlier notification cannot be considered to be of clarificatory nature, unless there is a specific provision to the contrary. To the similar effect, was another decision of the Tribunal in the case of Shri Krishna Tiles and Potteries (Madras) Pvt. Ltd. reported in 1986 (25) E.L.T. 843.
10. The appellants' contention that the said Notification issued on 29-9-2000 enlarges the scope of the earlier Notification No. 37/96, does not appeal to us inasmuch as the earlier Notification exempted the imports from Basic Customs Duty whereas the Notification No. 124/2000 exempted the imports from SAD. Special Additional Duty is altogether, a distinct and independent levy from the Basic Customs Duty and the exemption from Basic Customs Duty does not mean that the imports are also exempted from the Special Additional Duty unless there is an exemption notification to that effect. Inasmuch as prior to 29-9-2000, there was no exemption from SAD and a reading of the earlier Notification would not even remotely suggest that the exemption from Basic Customs Duty also included the exemption from Special Additional Duty, the appellants' contention that the subsequent Notification was only clarificatory, cannot be appreciated. We fail to understand as to what clarification the appellants are referring to. There was no ambiguity in the earlier Notification and there was no ambiguity in the subsequent Notification No. 124/2000. Both operated in separate fields one granted exemption from Basic Customs Duty and the other from the Special Additional Duty. There can be no question of any clarification of the earlier exemption granted. As such, we are of the view that the substantive benefit of law, extended by the Legislation, with effect from a particular date, would be applicable from that date only and cannot be made to act retrospectively on the ground that the Legislation should have acted in accordance with the terms of the Treaty provision and should have issued the Notification prior to the date on which the same was issued. Hence we hold that the Notification No. 124/2000-Cus., dated 29-9-2000 would be applicable from the date of its issuance and the SAD has been rightly paid by the appellants for the period prior to 29-9-2000.
11. Before we part, we would like to deal with the various decisions relied upon by the learned Advocate, Shri B.V. Kumar for the appellants. Reference has been made to the Tribunal's decision in the case of Central Machine Tool Institute v. C.C., Bangalore reported in 2000 (124) E.L.T. 231 (T). In the said decision, the amending Notification No. 276/90, dated 15-11-90 incorporating word, 'computer-software' in the earlier Notification No. 70/81-Cus., dated 26-3-81 and 229/88-Cus., dated 1-8-88, was held to be clarificatory, by observing that the Notification has made explicit what was made implicit and the amendment was to remove the ambiguity in the earlier Notification by way of further clarification. The ratio of the said decision is not applicable to the facts of the instant case, inasmuch as it cannot be said that the exemption from SAD was implicit in the earlier Notification and there was no ambiguity in the earlier notification which has been removed by way of issuance of the subsequent Notification No. 124/2000.
12. The next judgment referred to by the learned Advocate is in the case of C.C. v. Shaw Wallace & Co. Ltd. reported in 1990 (50) E.L.T.143 (T). It is seen that Notification No. 157/76-Cus. exempted furnace oil falling under Chapter 27 of the First Schedule of the Customs Tariff Act, 1975 and supplied ex-bond to coastal vessels as bunker, from so much of the additional duty leviable thereon under Section 3 of the Customs Tariff Act as was in the excess of Rs. 5.20 per kilo litre at 15 degrees of centigrade thermometer. The Notification was amended by another Notification No, 295/87-Cus. vide which the words -'or retained on board the vessel at the time of its reversion from foreign run to coastal run and during its coastal run and were consumed during its coastal run' - were inserted after the word 'bunker'. It was held by the Tribunal that such Notification is a clarificatory notification.
It was observed that what was implicit in the Mother Notification No.157/76 was made explicit by amending the same subsequently. We are afraid that the ratio of the above decision would not be applicable to the facts of the present case, inasmuch as it cannot be said that implicit has been made explicit subsequently, on the simple reasoning that there was nothing implicit in the earlier notification, in view of the exemption available in respect of Basic Customs Duty only.
13. In the case of Johnson & Johnson Ltd. v. CCE, Bombay reported in 1994 (71) E.L.T. 438 (T), the amending Notification including Miconazole Nitrate for the purposes of exemption, was held to be clarificatory and hence retrospective on the ground that the earlier Notification granting exemption to Miconazole has to be considered as granting benefit to Miconazole Nitrate also, inasmuch as the Miconazole is not capable of being used in its base form. As such, it was concluded that the exemption to Miconazole was exemption to Miconazole Nitrate even under the parent Notification and the subsequent amendment only made the scope of the earlier Notification clarificatory. The same cannot be held in the present situation in relation to the two Notifications in question. The exemption from the Basic Customs Duty does not automatically include the exemption from SAD. As such, the subsequent Notification giving exemption from SAD cannot be considered to be clarificatory and hence retrospective.
14. In view of the foregoing discussions, we are of the view that the Notification No. 124/2000 is not retrospective and would operate only with effect from 29-9-2000. As such, the appellants are not entitled to the refund of duty paid by them prior to the said date.
15. Inasmuch as we have held against the appellants on merits, we are not considering the other issues of the refund being barred by limitation or hit by the provisions of unjust enrichment. The appeal is accordingly rejected.
16. I have the benefit of the perusal of the order of learned Member (Judicial). After considering the material on record the submissions made, I am not able to pursuade myself to concur with the views and the findings arrived at by learned Member (Judicial) in the order. I therefore record the following order.
(A) The facts of the case and the submissions have been brought out in paras 1-5 of the order prepared by learned Member (Judicial). I am not repeating the same.
(B) As regards the findings arrived at in para 6 of the order of learned Member (Judicial) I find that a Treaty has been entered into, between two sovereign States. The Govt. of India is therefore bound to implement the terms of Treaty. The Constitution of India provides and mandates that Treaties have to be honoured. When the Govt. of India has entered into and agreed that no duties of customs would be attracted and or levied on the imports made from Nepal, except the taxes and duties as mentioned in the Treaty, then, in my view, the issue of notifications, by the Ministry of Finance, Govt. of India under Section 25 of the Customs Act would only be a ministerial function.
Notifications issued under Section 25 of the Customs Act no doubt, are, issued in exercise of a deligated power to legislate. However, when one wing Govt. of India, has considered that it was necessary in public interest to enter into a Treaty with another sovereign State and provide for exemption from duties on the goods imported from that State, then in my judgment, the satisfaction required under Section 25(1) of the Customs Act, 1962 under delegated legislative power has been arrived at, no further satisfaction of the Central Govt. Ministry of Finance is thereafter is further required. Only the ministerial exercise, of issue of a notification under the provisions of Section 25 of the Customs Act, 1962 to implement the Treaty conditions would therefore remain. It was only a ministerial duty cast under Section 25 of the Customs Act to have issued notification effectuating the rates of duties on imports made from Nepal at the rates entered and agreed into as per the Treaty signed. The same been exercised in this case. In the present case SAD was imposed subsequent to the enactment of Notification No. 37/96, dated 23-7-96. The amendment 124/2000, dated 29-9-2000 which reads as follows :- In exercise of powers conferred by Sub-section (4) of Section 3A of the Customs Tariff Act, 1975 (51 of 1975) read with Sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962), the Central Government being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 37/96-Customs, dated the 23rd July, 1996, namely :- In the said notification, for the words and figures "from the whole of duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975", the words, figure and letter "from the whole of the duty of customs leviable thereon under the First Schedule to the said Customs Tariff Act, and special additional duty leviable under Section 3A of the said Customs Tariff Act" shall be substituted.
The amendment has been made to Notification. No. 37/96-Cus., dated 26-3-96 which would indicate the same to be a belated response to effectuate the Treaty Terms. If it was to be a new and simplicitor amendment to exempt or reduce the rates oh certain specified imports, then an amendment would have been required and made to the Notification No. 18/2000-Cus., dated 1-3-2000 and not to Notification No. 37/96.
That it was not so done, reinforces my view of a belated clerical correction being effected. The amendment records that it is a 'further amendment', these words to my mind are significant to interpret the amendment to this Notification No. 124/2000 to be effective retrospectively.
17. When a view is taken that the amendment by Notification No.124/2000-Cus. was only pursuant to a ministerial act required, then relying upon the Karnataka Division Bench's decision of Karnataka and Punjab and Haryana, decision in the case of (i) U.O.I. v. Yokogawa Bluestar - 2001 (129) E.L.T. 598 (Kar.) and (ii) Nestle India Ltd. v.State of Punjab - 1999 (13) PHT 132 (P & H) I would consider this 'further amendment', made to be not only to effectuate the Treaty Obligations but it be also clarificatory, thus effective retrospectively from the date of imposition of SAD. A Treaty entered into with a Sovereign State cannot be reneged, merely for want of an act of ministerial lapse or delay, the Treaties have to be given effect to. When such lapses are cured, subsequently by amendments, such amendment notifications have to be retrospective in operation. Since the view taken by me is not the view held in the case of National Trading Ltd. - 1990 (45) E.L.T. 626 (T), which did not have the benefit of the two Division Benches decisions of different High Courts which have been relied upon by me, to come to hold a view contrary to that held earlier by this Tribunal, I would consider referring this matter to a Larger Bench for a decision to resolve the matter of whether the amendment in such cases could be read retrospectively or not, before the other issues raised are determined.
Whether the appeal is required to be rejected as held by the Member (Judicial) or the matter needs to be referred to the Larger Bench as held by the Member (Technical).
(S.S. Sekhon) (Archana Wadhwa) Member (T) Member (J) Dated 12-12-2002 18. This case has been referred to me as third Member for resolving the differences between Smt. Archana Wadhwa, Hon'ble Member (J) and Shri S.S. Sekhon, Hon'ble Member (T).
19. The points of difference referred to me as third Member are as under.
"Whether the appeal is required to be rejected as held by Member (Judicial) or the matter needs to be referred to the Larger Bench as held by Member (Technical)." 20. The issue in the instant appeal relates to the refund claim filed by the appellants vide their letter dated 15-1-2001 for refund of Special Additional Duty paid in respect of the imports made from Nepal during the period from 13-3-2000 to 29-9-2000. The Special Additional Duty was paid by the appellants namely M/s. Colgate Palmolive (India) Ltd. under protest and accordingly the assessments were provisional.
The said refund claim has been rejected by the authorities below on the ground that during the relevant period Special Additional Duty was leviable on the imports and the same was exempted by issuance of the Notification No. 124/2000-Cus., dated 29-9-2000. The appellants are not disputing the factual position that Special Additional Duty on all Nepalese imports into India was exempted with effect from 29-9-2000 when Notification No. 124/2000-Cus., dated 29-9-2000 was issued. But they submitted that the said notification should be treated as clarificatory and hence having retrospective effect, inasmuch as under the Treaty of Transit. Treaty of Trade and Agreement of Co-operation to control unauthorised trade between His Majesty's Government of Nepal and the Government of India, 1991 (As amended), only Additional Excise Duty was leviable on goods imported from Nepal into India. As per facts on record, the appellants were importing tooth paste products from Nepal through Land Customs Station, Raxaul and were clearing the same after paying Special Additional Duty of Customs @ 4% under protest with effect from 1-3-2000. The goods in question were exempted from Basic Customs Duty vide Notification No. 37/96-Cus., dated 23-7-96 and during the relevant period there was no specific exemption from payment of Special Additional Duty (SAD in short). The exemption from SAD was granted only on issuance of Notification No. 124/2000, dated 29-9-2000 by way of amendment to Notification No. 37/96-Cus., dated 23-7-96.
Notification No. 124/2000, dated 29-9-2000 has reproduced in para 2 of the order recorded by ld. Sister Smt. Archana Wadhwa, Member (J).
21. The appellant's contention is that the above Notification No.124/2000, which amends the earlier Notification No. 37/96 and enlarges the scope of exemption from Basic Customs Duty to also Special Additional Duty should be considered as retrospective. In support of their contention they referred to the terms of provisions of the Treaty of Trade between the Government of India and His Majesty's Government of Nepal which is to the effect that all the goods manufactured in Nepal and imported into India would be exempted from the Customs duty and such goods would be liable only to Additional Duty of Customs equal to the Excise Duty for the time being leviable on similar products manufactured in India. They however contend that in terms of the provisions of the said Treaty, no SAD was leviable and the subsequent Notification issued on 29-9-2000 would be a clarificatory notification and would be effective retrospectively. It is their contention that the Treaty of Trade governing imports of Nepal to India, provided for levy of Additional Duty of Customs (popularly known as countervailing duty) and as such, the levy and collection of SAD under Section 3A of the Customs Tariff Act, 1975 was, ab initio, void and contrary to the provisions of Treaty and Trade between the two countries. They further contended that Notification No. 124/2000 only reiterated the correct legal position and the refund of duty paid by the appellants under protest, prior to coming into force of the said notification, is liable to be granted to them.
22. My ld. Sister, Ms. Archana Wadhwa, Hon'ble Member (J) did not countenance the appellant's contention that the said notification issued on 29-9-2000 enlarges the scope of the earlier Notification No.37/96 inasmuch as the earlier notification exempted the imports from Basic Customs Duty whereas the Notification No. 124/2000 exempts the imported goods also from Special Additional Duty (SAD). She further held that Special Additional Duty is altogether a distinct and independent levy from the Basic Customs Duty and does not mean that the imports are also exempted from the Special Additional Duty unless there is an exemption notification to that effect. She further held that inasmuch as prior to 29-9-2000, there was no exemption from Special Additional Duty and a reading of the earlier notification would not even remotely suggest that the exemption from Basic Customs Duty also included the exemption from Special Additional Duty, and therefore, the appellants' contention that the subsequent notification was only clarificatory cannot be countenanced. She also held that there was no ambiguity in the earlier notification and there was no ambiguity in the subsequent Notification No. 124/2000 and both the notifications operated in separate fields, one granted exemption from Basic Customs Duty and the other from the Special Additional Duty. As such, she was of the firm decision that the substantive benefit of law, extended by the Legislation, with effect from a particular date, would be applicable from that date only and cannot be made to act retrospectively on the ground that the Legislation should have acted in accordance with the terms of the Treaty provision and should have issued the notification prior to the date on which the same was issued.
It was in this background she was of the opinion that the Notification No. 124/2000-Cus., dated 29-9-2000 would be applicable from the date of its issuance and the Special Additional Duty has been rightly paid by the appellants for the period prior to 29-9-2000. My ld. Sister Mrs.
Archana Wadhwa, while rejecting and holding that the notification is prospective in nature has taken support from various judgments mentioned in her order. She relied on the judgment rendered by the Tribunal in the case of National Trading Ltd. v. CC (Prev.) as reported in 1990 (45) E.L.T. 626 (T) wherein in para 23 it was held that "in order to bring implementation of any provision of this Treaty (or of any International Treaty or protocol for that matter) within the ambit of the Indian Customs Act, it was necessary that a notification was issued under Section 11(2)(r) of the Customs Act, 1962". As such, without a corresponding notification in the Indian Customs Statute, the importer could not claim the benefit of the Treaty automatically and the provisions of the same cannot be enforced. She also relied on the judgment rendered by the Tribunal in the case of Indye Chemicals, Ahmedabad v. CCE as reported in 1986 (25) E.L.T. 318 (T) = 1986 (7) ECR 45 wherein the CEGAT had held that the exemption notification could not be considered to be having retrospective effect and any exemption provision which enlarges the scope of an earlier notification cannot be considered to be of clarificatory nature, unless there is a specific provision to the contrary. She also relied on another decision of the Tribunal rendered in the case of Shri Krishna Tiles and Potteries (Madras) Pvt. Ltd. reported in 1986 (25) E.L.T. 843 wherein in paras 4 and 5 of the judgment it was held that the normal rule is that any notification or amendment to any notification would come into effect on the date the notification is promulgated or amendment is made and that they would be prospective and not retrospective except when such retrospective effect is specifically provided for or could be specifically spelt out. She therefore held that inasmuch as prior to 29-9-2000 there was no exemption from SAD and a reading of the earlier notification would not even remotely suggest that the exemption from Basic Customs Duty included the exemption from SAD and she did not agree with the appellant's contention that the subsequent notification was only clarification. She also did not find any ambiguity in the subsequent Notification No. 124/2000 and held that both the notification operated in separate fields - one granted exemption from Basic Customs Duty and the other from Special Additional duty and there is no question of any clarification of the earlier exemption granted.
As such she was of the view that the substantive benefit of law extended by the legislation with effect from a particular date would be applicable from that date only and cannot be made to act retrospectively on the ground that the legislation should have acted in accordance with the terms of the Treaty provision and should have issued the notification prior to the date on which the same was issued.
She therefore held that the notification No. 124/2000-Cus., dated 29-9-2000 would be applicable and operative from the date of its issuance and the SAD has been rightly paid by the appellant for the period prior to 29-9-2000. She also distinguished the judgment relied by the Advocate Shri B.V. Kumar in the case of Central Machine Tool Institute v. CC as reported in 2000 (124) E.L.T. 231. In the said decision the amending notification No. 276/90, dated 15-11-90 incorporating word "computer-software" in the earlier Notification Nos.
70/81-Cus., dated 26-3-81 and 229/88-Cus., dated 1-8-88 was held to be clarificatory by observing that the notification has made explicit what was made implicit and the amendment was to remove the ambiguity in the earlier notification by way of further clarification. She therefore held that the ratio of the said decision was not applicable to the facts of the instant case, inasmuch as it cannot be said that the exemption from SAD was implicit in the earlier notification and there was no ambiguity in the earlier notification which has been removed by way of issuance of the subsequent Notification No. 124/2000. The next judgment referred to by the ld. Advocate before her was in the case of CC v. Shaw Wallace & Co. Ltd. as reported in 1990 (50) E.L.T. 143 (T).
The facts of that case were that Notification No. 157/76-Cus. exempted furnace oil falling under Chapter 27 of the First Schedule of the Customs Tariff Act, 1975 and supplied ex-bond to coastal vessels as bunker, from so much of the additional duty leviable thereon under Section 3 of the Customs Tariff Act as was in the excess of Rs. 5.20 per kilo litre at 15 degrees of centigrade thermometer. The notification was amended by another notification No. 195/87-Cus. vide which the words - 'or retained on board the vessel at the time of its reversion from foreign run to coastal run and during its coastal run and were consumed during its coastal run' - were inserted after the word "bunker". It was held by the Tribunal that such a notification is a clarificatory notification by observing that what was implicit in the mother Notification No. 157/76 was made explicit by amending the same subsequently. She therefore observed that the ratio of the above decision would not be applicable to the facts of the present case, inasmuch as it could not be said that implicit has been made explicit subsequently, on the simple reasoning that there was nothing implicit in the earlier notification, in view of the exemption available in respect of Basic Customs Duty. She also analysed the judgment of Johnson & Johnson Ltd. v. CCE, Bombay as reported in 1994 (71) E.L.T.438 (T) in which the amending notification including Miconazole Nitrate for the purposes of exemption was held to be clarificatory and hence retrospective on the ground that the earlier notification granting exemption to Miconazole has to be considered as granting benefit to Miconazole Nitrate also, inasmuch as the Miconazole is not capable of being used in its base form. As such, it was concluded that the exemption to Miconazole was exemption to Miconazole Nitrate even under the parent notification and the subsequent amending only made the scope of the earlier notification clarificatory. The same cannot be held in the present situation in relation to the two notifications in question.
The exemption from the Basic Customs Duty did not automatically include the exemption from SAD. As such, the subsequent notification giving exemption from SAD could not be considered to be clarificatory and hence retrospective. She was therefore of the view that the Notification No. 124/2000 was not retrospective and would operate only with effect from 29-9-2000. As such, the appellants are not entitled to the refund of duty paid by them prior to the said date. Inasmuch as, she had held against the appellants on merits. She did not consider the other issues of the refund being barred by limitation or hit by the provisions of unjust enrichment and accordingly rejected the appeal.
23. Whereas ld. Brother Shri S.S. Sekhon, Hon'ble Member (T) was of the view that the Treaty between two sovereign States has been entered into and the Government of India is therefore bound to implement the terms of the Treaty. He observed that the Constitution of India provides and mandates that Treaties have to be honoured. He also held that the Government of India had entered into and agreed that no duties of customs would be attracted and or levied on the imports made from Nepal, except the taxes and duties as mentioned in the Treaty. Then, the issue of notifications by Ministry of Finance, Government of India under Section 25 of the Customs Act would only be a ministerial function. However, when one wing of the Government of India has considered that it was necessary in public interest to enter into a Treaty with another sovereign State and provide for exemption from duties on the goods imported from that State, then the satisfaction required under Section 25(1) of the Customs Act, 1962 under delegated legislative power has been arrived at and no further satisfaction of the Central Govt. Ministry of Finance is thereafter further required.
He also held that the amendment has been made to Notification No, 37/96-Cus., dated 26-3-96 by Notification No. 124/2000-Cus., dated 29-9-2000, which would indicate the same to be a belated response to effectuate the Treaty terms. He further held that if it was to be a new and simplicitor amendment to exempt or reduce the rates on certain specified imports, then an amendment would have been required and made to the Notification No. 18/2000-Cus., dated 1-3-2000 and not to Notification No. 37/96. Since it was a further amendment made to be not only to effectuate the Treaty obligations but it would also be clarificatory, thus effective retrospectively from the date of imposition of Special Additional Duty. He also held that Treaty entered into with a sovereign State cannot be reneged, merely for want of an act of ministerial lapse or delay and the Treaties have to be given effect to and when such lapses are cured, subsequently by amendments, such amendment notifications have to be retrospective in operation. Ld Member (Technical) Shri S.S. Sekhon has relied upon the Karnataka Division Bench's decision of Karnataka High Court and Punjab and Haryana High Court decision in the cases of (i) Union of India v.Yokogawa Bluestar Ltd. as reported in 2001 (129) E.L.T. 598 (Kar.) ; and (ii) Nestle India Ltd. v. State of Punjab as reported in 1999 (13) PHT 132 (P&H). He also observed that the view taken by him was not the view held in the case of National Trading Ltd. as reported in 1990 (45) E.L.T. 626 (T) which did not have the benefit of the above-mentioned two Division Benches decisions of different High Courts which have been relied upon by him to come to hold a view contrary to that held earlier by this Tribunal. He, therefore, considered it appropriate to refer this matter to Larger Bench for a decision to resolve the matter of whether the amendment in such cases would be read retrospectively or not, before other issues raised are determined.
24. Shri B.V. Kumar, ld. Advocate, appearing for the appellants before me on 27-3-2003 has contended that it was on the representation made by the appellants seeking clarification on the leviability of SAD, that Notification No. 124/2000 was issued. He further points out that to treat the said notification to be effective from the date of issuance of the same would be against the very terms of the Treaty of Trade between the two countries and would defeat the purpose of the same, he invites my attention to Article IV of the Treaty of Trade (which is at page 22 of the Treaty). For better understanding, Article IV is extracted herein below : "The contracting Parties agree, on a reciprocal basis, to exempt from basic customs duty as well as from quantitative restrictions the import of such primary products as may be mutually agreed upon, from each other." He therefore points out that as per Article IV the contracting Parties agree, on a reciprocal basis, to exempt from basic customs duty as well as from quantitative restrictions the import of such primary products as may be mutually agreed upon, from each other. Ld. Advocate also invited my attention to Article V (which is also at page 22). For better understanding Article V is reproduced herein below : "Notwithstanding the provisions of Article III and subject to such exceptions as may be made after consultation with His Majesty's Government of Nepal, the Government of India agree to promote the industrial development of Nepal through the grant on the basis of non-reciprocity of specially favourable treatment to imports into India of industrial products manufactured in Nepal in respect of customs duty and quantitative restrictions normally applicable to them." 24.1 Ld. Advocate also invited my attention to Sl. No. V of the Protocol to the Treaty of Trade, with reference to Article V of the Treaty of Trade (which is at page 27) wherein, it is mentioned that with reference to Article V (Replaced by the Letters of Exchange between His Majesty's Government of Nepal and Government of India at Kathmandu on December 3rd, 1996), the Government of India will provide access to the Indian market free of customs duty and the quantitative restrictions for all articles manufactured in Nepal. For better appreciation item No. V with reference to Article V is reproduced herein below : 1. The Government of India will provide access to the Indian market free of customs duty and the quantitative restrictions for all articles manufactured in Nepal.
2. (i) Import of articles in accordance with para 1 above shall be allowed by the Indian Customs authorities on the basis of a Certificate of Origin to be issued by the agency designated by his Majesty's Government of Nepal in the format prescribed at Annexure B for each consignment of articles exported from Nepal to India.
However, this facility shall not be available for the articles listed at Annexure 'C'.
(ii) In the event of the above facility leading to a surge in the imports generally or in the import of any particular article, the two Governments shall enter into consultation with a view to taking appropriate measures.
(iii) In the case of other articles made in Nepal which do not fulfil the conditions required by the Certificate of Origin prescribed at Annexure B including those Articles listed at Annexure C for the purpose of preferential treatment into India, the Government of India will provide normal access to the Indian market consistent with its MFN treatment." 24.2 Ld. Advocate also invited my attention to para 4 of the Protocol to the Treaty of Trade Article V (which is at page 28) and is reproduced herein below : "4. The 'Additional Duty' rates equal to the effective Indian Excise duty rates applicable to similar Indian products under the Indian Customs and Central Excise Tariff will continue to be levied on the imports into India of products manufactured in the medium and large scale units in Nepal".
He therefore submitted that only additional duty rates equal to the effective Indian Excise duty rates applicable to similar Indian products under the Indian Customs and Central Excise Tariff will alone continue to be levied on the imports into India of products manufactured in the medium and large scale units in Nepal. He further submitted that the earlier treaty between the two countries was valid up to 31-3-2000 and a new treaty was entered into between His Majesty Government of Nepal and Government of India with effect from 1-4-2000.
The points of dispute therefore starts with effect from 1-3-2000 to 29-9-2000. He further submitted that at the material time Notification No, 37/96-Cus., dated 23-7-96 exempted goods specified in Column (2) of the Table falling within the First Schedule to the Customs Tariff Act, 1975 when imported into India from Nepal, from the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975, subject to the conditions, if any, specified in Column (3) of the notification. He therefore submitted that the basic customs duty was exempted on the goods imported by them. Further vide Notification No. 18/2000-Cus., dated 1-3-2000. Special Additional Duty of Customs at the rate of 4% ad valorem was imposed on "any article which is imported into India" vide Section 3A of the Customs Tariff Act, 1975. He further submitted that Government of India vide Notification No. 124/2000-Cus., dated 29-9-2000 which amended Notification No. 37/96-Cus., dated 23-7-96 substituted the words and figures in the said notification "from the whole of duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975" to the words, figure and letter "from the whole of the duty of customs leviable thereon under the First Schedule to the said Customs Tariff Act and Special Additional Duty of Customs leviable under Section 3A of the said Customs Tariff Act. Notification No. 37/96-Cus., dated 23-7-96 is at page 16 of the paper book and Notification No. 18/2000-Cus., dated 1-3-2000 and Notification No. 124/2000-Cus., dated 29-9-2000 are at page 17 of the paper book. Ld. Advocate therefore submitted that Notification No. 124/2000, dated 29-9-2000 is only clarificatory notification and was considered as effective retrospectively and not prospectively. In this connection he relied on the judgment by the Union of India v. Yokogawa Bluestar Ltd. as reported in 2001 (129) E.L.T. 598 (Kar.) wherein in para 7 it has been held that merely because there was a delay in issuing the notification that by itself does not give right to the respondent to seek differential duty from the petitioner in the case on hand. The authorities in the circumstances have acted against the said policy of the Union of India in demanding the differential duty particularly when they themselves have acted on the policy by issuing a notification under the Act. He invited my attention to para 9 of the above judgment in which the Division Bench of Hon'ble High Court of Judicature of Karnataka at Bangalore has held that delay in issue of notification should not come in the way of implementation of the EXIM policy. He also invited my attention to para 10 of the above judgment wherein the Hon'ble High Court of Karnataka has observed that before concluding they referred to the judgment of Punjab and Haryana High Court reported in 1999 (13) PHT 132 (P & H) in the case of Nestle India Ltd. v. State of Punjab. The Hon'ble High Court referred to the facts of that case and from the said case it was revealed that the Government was requested by the manufacturers of milk products to abolish the purchase tax and the Chief Minister announced the abolition of the same in the public meeting. The same was endorsed by the Finance Minister in public speech. Later the Excise Commissioner issued directions to accept the returns without collection of purchase tax. Thereafter notices were issued by the department to pay the purchase tax for the relevant year.
The said notices were subject-matter of writ petition before the Division Bench of the Punjab and Haryana High Court and the Division Bench had noticed the various judgments including Kanishka Trading v.Union of India as reported in 1994 (77) E.L.T. 782 (SC) = AIR 1995 SC 874 in the said judgment. Similar argument as in the present case of "no notification" exempting the tax under the Act was pressed into service by the Deputy Advocate General appearing for the State. The Division Bench ruled that the absence of formal notification "are in our opinion in the facts of these cases was, no more than ministerial act which remain to be performed, cannot be made basis to regulate the promise made to milk purchasers". Ld. Advocate therefore submitted that the Division Bench of the Hon'ble High Court of Karnataka after noticing all the aspects has ruled that the doctrine of promissory estoppel represented a principle of equity evolved by the Courts to prevent injustice. He submitted that this judgment of the Hon'ble High Court of Karnataka supports the view taken by them. Ld. Advocate also invited my attention to the judgment rendered by the Apex Court in the matter of Union of India and Ors. v. Godfrey Philips India and Ors. as reported in 1985 (22) E.L.T. 306 (S.C.) wherein it has been held that promissory estoppel would be applicable against clarification issued by the Central Government or the CBEC where representation made to revenue authorities by manufacturers' association were accepted by revenue authorities but revenue authorities subsequently changed their stand.
The promissory estoppel was held to be applicable from the date of clarification to the date of change in stand wherein the Board vide their letter dated 24-5-1976 had clarified that the cost of corrugated fibre board containers does not form part of the value of cigarettes under Section 4 of the Central Excise Act, 1944 and such a clarification by their letter dated 24-5-1976 was held to constitute the promise. He also invited my attention to paras to 9 to 13 of the above judgment which are extracted herein below : "9. Now the doctrine of promissory estoppel is well established in the administrative law of India. It represents a principle evolved by equity to avoid injustice and, though commonly named promissory estoppel, it is neither in the realm of contract nor in the realm of estoppel. The basis of this doctrine is the inter position of equity which has always true to its form, stepped into mitigate the rigour of strict law. This doctrine, though of ancient ventage, was rescued from obscurity by the decision of Mr. Justice Denning as he then was, in his celebrated judgment in Central London Property Trust Limited v. High Trees House Limited (1956) 1 All: E.R. 256. The true principle of promissory estoppel is that where one party has by his word or conduct made to the other a clear and unequivocal promise or representation which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise or representation is made and it is in fact so acted upon by the other party, the promise or representation would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so, having regard to the dealings which have taken place between the parties. It has often been said in England that the doctrine of promissory estoppel cannot itself be the basis of action : it can only be a shield and not a sword : but the law in India has gone far ahead of the narrow position adopted in England and as a result of the decision of this Court in Motilal Sugar Mills v. State of Uttar Pradesh, (1979) 2 S.C.R. 641, it is now well-settled that the doctrine of promissory estoppel is not limited in its application only to defence but it can also found a cause of action. The decision of this Court in Motilal Sugar Mills case (supra) contains an exhaustive discussion of the doctrine of promissory estoppel and we find ourselves wholly in agreement with the various parameters of this doctrine outlined in that decision.
10. More importantly, it is necessary to point out that the decision in Motilal Sugar Mills case (supra) marks a significant development in the law relating to the doctrine of promissory estoppel. The principal question debated in that case was as to whether and if so, to what extent, is the doctrine of promissory estoppel applicable against the Government. It was contended on behalf of the State of Uttar Pradesh that the plea of promissory estoppel is not available against the exercise of executive functions of the State, for the State cannot bind itself, so as to fetter its future executive action. This contention was sought to be supported by relying on the observations of Rowlatt J. in an early decision in Rederiaktiebolaget Amphitrite v. The King, (1921) 3 K.B. 510. But this Court observed in Motilal Sugar Mills case (supra) that what Rowlatt J. said in that case did not represent the correct law on the subject and pointed out that doctrine of executive necessity propounded by Rowlatt J. was disapproved by Denning, J. as he then was, in Roberston v. Minister of Pensions, (1949) 1 K.B. 227.
Denning, J. categorically expressed the view in Roberston's case (supra) that the crown cannot escape its obligation under the doctrine of promissory estoppel "by praying in aid the doctrine of executive necessity". This Court also in Union of India v. Indo Afghan Agencies, (1968) 2 S.C.R. 366 exploded the doctrine of executive necessity. Shah, J. speaking on behalf of the Court negatived the argument urged on behalf of the Government that "it is not competent for the Government to fetter its future executive action which may necessarily be determined by the needs of the community when the question arises and no promise or undertaking can be held to be binding on the Government so as to hamper its freedom of executive action" and observed at page 376 of the Report : "We are unable to accede to the contention that the executive necessity releases the Government from honouring its solemn promises relying on which citizens have acted to their detriment. Under our constitutional set-up no person may be deprived of his right or liberty except in due course of and by authority of law; if a member of the Executive seeks to deprive a citizen of his right or liberty otherwise than in exercise of power derived from the law-common or statute-the Courts will be competent to and indeed would be bound to protect the rights of the aggrieved citizens." The learned judge also after examining the decisions cited before him summed up the position in the following words : "Under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the Judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in which the obligation has arisen." The defence of executive necessity was thus clearly negatived by this Court and it was pointed out that it did not release the Government from its obligation to honour the promise made by it, if the citizen, acting in reliance on the promise, had altered his position. The doctrine of promissory estoppel was in such a case applicable against the Government and it could not be defeated by invoking the defence of executive necessity. This Court in Motilal Sugar Mills case (supra) also negatived the argument that if the Government were held bound by every representation made by it regarding its intention, the result would be that the Government would be bound by a contractual obligation even though no formal contract in the manner required by Article 299 of the Constitution was executed. It was held by this Court that a party who has, acted in reliance on a promise or representation made by the Government, altered his position, is entitled to enforce the promise or the representation against the Government, even though the promise or representation is not in the form of a formal contract as required by Article 299 and that Article does not militate against the applicability of the doctrine of promissory estoppel against the Government.
11. The resultant position was summarised by this Court in Motilal Sugar Mills case (supra) in the following words : "The law may therefore now be taken to be settled as a result of this decision that where the Government makes a promise knowing or intending that it would be acted on by the promises and, in fact, the promisee, acting in reliance on it, alters his position the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promises, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution. It is elementary that in Republic governed by the rule of law, no one, howsoever high or low, is above the law. Everyone is subject to the law as fully and completely as any other and the Government is no exception. It is indeed the pride of constitutional democracy and rule of law that the Government stands on the same footing as a private individual so far as the obligation of the law is concerned : the former is equally bound as the latter. It is indeed difficult to see on what principle can a Government, committed to the rule of law, claim immunity from the doctrine of promissory estoppel. Can the Government say that it is under no obligation to act in a manner i.e. fair and just or that it is not bound by the considerations of "honesty and good faith" Why should the Government not be held to a high "standard of rectangular rectitude while dealing with its citizens" There was a time when the doctrine of executive necessity was regarded as sufficient justification for the Government to repudiate even its contractual obligations, but let it be said to the eternal glory of this court, this doctrine was emphatically negatived in the Indo-Afghan Agencies case and the supremacy of the rule of law was established. It was laid down by this court that the Government cannot claim to be immune from the applicability of the rule of promissory estoppel and repudiate a promise made by it on the ground that such promise may fetter its future executive action." The doctrine of promissory estoppel as explained above was also held to be applicable against public authorities as pointed out in Motilal Sugar Mills case. This court in Motilal Sugar Mills case quoted with approval the observations of Shah, J. in Century Spinning and Manufacturing Company Limited v. Ulhasugar Municipal Council, "Public bodies are as much bound as private individuals to carry out representations of facts and promises made by them, relying on which other persons have altered their position to their prejudice." "If our nascent democracy is to thrive different standards or conduct for the people and the public bodies cannot ordinarily be permitted. A public body is, in our judgment, not exempt from liability to carry out its obligation arising out of representations made by it relying upon which a citizen has altered his position to his prejudice." The Court refused to make a distinction between a private individual and a public body so far as the doctrine of promissory estoppel is concerned.
12. There can therefore be no doubt that the doctrine of promissory estoppel is applicable against the Government in the exercise of its governmental, public or executive functions and the doctrine of executive necessity or freedom of future executive action cannot be invoked to defeat the applicability of the doctrine of promissory estoppel. We must concede that the subsequent decision of this Court in Jeet Ram v. State of Haryana, (1980) 3 S.C.R. 689 takes a slightly different view and holds that the doctrine of promissory estoppel is not available against the exercise of executive functions of the State and the State cannot be prevented from exercising its functions under the law. This decision also expresses its disagreement with the observations made in Motilal Sugar Mills case that the doctrine of promissory estoppel cannot be defeated by invoking the defence of executive necessity, suggesting by necessary implication that the doctrine of executive necessity is available to the Government to escape its obligation under the doctrine of promissory estoppel. We find it difficult to understand how a Bench of two Judges in Jeet Ram's case could possibly overturn or disagree with what was said by another Bench of two Judges in Motilal Sugar Mills case. If the Bench of two Judges in Jeet Ram's case found themselves unable to agree with the law laid down in Motilal Sugar Mills case, they could have referred Jeet Ram's case to a Larger Bench, but we do not think it was right on their part to express their disagreement with the enunciation of the law by a coordinate Bench of the same Court in Motilal Sugar Mills case. We have carefully considered both the decisions in Motilal Sugar Mills case and Jeet Ram's case and we are clearly of the view that what has been laid down in Motilal Sugar Mills case represents the correct law in regard to the doctrine of promissory estoppel and we express our disagreement with the observations in Jeet Ram's case to the extent that they conflict with the statement of the law in Motilal Sugar Mills case and introduce reservations cutting down the full width and amplitude of the propositions of law laid down in that case.
13. Of course we must make it clear, and that is also laid down in Motilal Sugar Mills case (supra), that there can be no promissory estoppel against the Legislature in the exercise of its legislative functions nor can the Government or public authority be debarred by promissory estoppel from enforcing a statutory prohibition. It is equally true that promissory estoppel cannot be used to compel the Government or a public authority to carry out a representation or promise which is contrary to law or which was outside the authority or power of the officer of the Government or of the public authority to make. We may also point out that the doctrine of promissory estoppel being an equitable doctrine, it must yield when the equity so requires, if it can be shown by the Government or public authority that having regard to the facts as they have transpired, it would be inequitable to hold the Government or public authority to the promise or representation made by it, the Court would not raise an equity in favour of the person to whom the promise or representation is made and enforce the promise or representation against the Government or public authority. The doctrine of promissory estoppel would be displaced in such a case, because on the facts, equity would not require that the Government or public authority should be held bound by the promise or representation made by it. This aspect has been dealt with fully in Motilal Sugar Mills case (supra) and we find ourselves wholly in agreement with that has been said in that decision on this point." 25. Ld. Advocate therefore submitted that since the Government of India had made the promise to the Government of Nepal and the industries at large in Nepal, the doctrine of promissory estoppel would be in full force and therefore they are entitled for the refund. He also invited my attention to similar treaties exchanged between Government of India and Government of Bhutan and various notifications like Notification No. 37/96. No. 38/96 (Bhutan) and No. 85/98. Notifications have been issued in pursuance of fulfilment of the promise made by Government of India.
26. Ld. SDR Shri T.K. Kar submitted that the notification is not clarificatory in nature and the order recorded by ld. Member (Judicial) may be concurred with and appeal filed by the appellant deserves to be rejected.
27. I have gone through the submissions made by both sides. I have also gone through the orders recorded by my ld. Sister Mrs. Archana Wadhwa, Member (J) and my ld. Brother Shri S.S. Sekhon, Member (T). Ld.
Advocate Shri B.V. Kumar appearing for the appellant before me on 27-3-2003 had contended that it was on representation made by the appellants seeking clarification on the leviability of SAD, that Notification No. 124/2000 was issued. He had further argued that to treat the said notification to be effective from the date of issuance of the same would be against the very terms of the Treaty of Trade between the two countries and would defeat the purpose of the same. He had invited my attention to Article IV of the Treaty of Trade wherein it was agreed between the two contracting parties namely His Majesty's Government of Nepal and the Government of India, on a reciprocal basis to exempt from Basic Customs Duty as well as from quantitative restrictions the import of such primary products as may be mutually agreed upon from each other. A perusal of Article IV of the Treaty of Trade would make it clear that there was an understanding between both the Governments and both had agreed on reciprocal basis to exempt from basic customs duty but from which date the goods should be exempted was not mentioned and that was only after issuance of notification that goods were exempted from basic customs duty. Similarly a perusal of Article V of the Treaty of Trade it was agreed by the two Governments to promote industrial development through non-reciprocity of specially favourable treatment to imports into India of industrial products manufactured in Nepal in respect of customs duty and quantitative restrictions normally applicable to them. Advocate had also invited my attention to Sl. No. V of the Protocol to the Treaty of Trade, with reference to Article V of the Treaty of Trade wherein it was mentioned that with reference to Article V (Replaced by the Letter of Exchange between His Majesty's Government of Nepal and Government of India at Kathmandu on December 3rd, 1996), the Government of India will provide access to the Indian Market free of Customs duty and the quantitative restrictions for all articles manufactured in Nepal. Here it is worth mentioning that both Articles IV and V of the Treaty of Trade mentioned about the exemption of the Basic Customs Duty only and there was no mention of Special Additional Duty of Customs (SAD) in the treaty. Thus the plea of ld. Advocate that it was a promise made by the Government of India to His Majesty's Government of Nepal and through His Majesty's Government of Nepal to the industry at large situated in Nepal to exempt all customs duty including Special Additional Duty, is not acceptable inasmuch as the treaty was only an agreement between the Government of India and His Majesty's Government of Nepal to exempt Basic Customs Duty only and that agreement was only an understanding between the two sovereign countries only and it cannot be held as a promise, as was contended by ld. Advocate Shri B.V. Kumar, to the industry at large. Ld. Advocate also invited my attention to para 4 of the Protocol to Article V of the Treaty of Trade which levied only the additional duty rates equal to the effective Indian Excise duty rates applicable to similar Indian products under the Indian Customs and Central Excise Tariff on the imports into India of products manufactured in the medium and large scale units in Nepal. He therefore submitted that only additional duty rates equal to the effective Indian Excise duty rates applicable to similar Indian products under the Indian Customs and Central Excise Tariff will alone continue to be levied on the imports into India of products manufactured in the medium and large scale units in Nepal. He had also argued that the earlier Treaty of Trade between the two countries was valid up to 31-3-2000 and a new Treaty was entered into between His Majesty's Government of Nepal and Government of India with effect from 1-4-2000. At the material time Notification No. 37/97-Cus., dated 23-7-96 exempted goods specified in Column (2) of the Table falling within the First Schedule to the Customs Tariff Act, 1975 when imported into India from Nepal from the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975 subject to the conditions, if any, specified in Column (3) of the notification. He had therefore submitted that the basic customs duty was exempted on the goods imported by them.
Further vide Notification No. 18/2000-Cus., dated 1-3-2000. Special Additional Duty of Customs at the rate of 4% ad valorem was imposed on any article which is imported into India vide Section 3A of the Customs Tariff Act, 1975. He also submitted that the Government of India vide Notification No. 124/2000-Cus., dated 29-9-2000 which amended Notification No. 37/96-Cus., dated 23-7-1996 substituted the words and figures in the said notification 'from the whole of duty of customs leviable thereon under the First Schedule to the Customs Tariff Act, 1975' to the words, figures and letter 'from the whole of duty of customs leviable thereon under the First Schedule to said Customs Tariff Act and Special Additional Duty of Customs leviable under Section 3A of the said Customs Tariff Act.' Ld. Advocate therefore argued that Notification No. 124/2000-Cus., dated 29-9-2000 is only clarifica-tory notification and was considered as effective retrospectively and not pro-spectively. In this connection he relied on the judgment by the Union of India v. Yokogawa Bluestar Ltd. as reported in 2001 (129) E.L.T. 598 (Kar.) wherein para 7 it has been held that merely because there was a delay in issuing the notification that by itself does not give right to the respondent to seek differential duty from the petitioner in the case on hand. He therefore argued that the authorities in the above circumstances have acted against the said policy of the Union of India in demanding the differential duty particularly when they themselves have acted on the policy by issuing a notification under the Act.
28. I am not able to accept the plea of the ld. Advocate that there was any promise by the Government to the appellant. At best there was understanding between the two sovereign Governments. Further the judgment rendered by the Division Bench of Hon'ble High Court of Judicature of Karnataka at Bangalore had come to the conclusion that there was a promise by the Government because in the case of Nestle India Ltd. v. State of Punjab which was relied by the Hon'ble High Court of Karnataka reported in 1999 (13) PHT 132 (P&H) the Chief Minister had announced the abolition of the purchase tax on the milk products in the public meeting. The same was also endorsed by the Finance Minister of the State in a public speech. Later the Excise Commissioner had issued directions to accept the returns without collection of purchase tax. It was in this background the Division Bench of the Hon'ble High Court had ruled that the absence of formal notification was no more than a ministerial act which remained to be performed and such ministerial act could not be made basis to regulate the promise made to milk purchasers. Whereas in the present case there was no promise of the type which was in the case referred by the Hon'ble High Court of Judicature of Karnataka at Bangalore.
29. The doctrine of promissory estoppel is well established in the administrative law of India. It represents a principle evolved by equity to avoid injustice and, though commonly named promissory estoppel, it is neither in the realm of contract nor in the realm of estoppel. The basis of this doctrine is the inter position of equity which has always, true to its form, stepped in to mitigate the rigour of strict law. The true principle of promissory estoppel is that where one party has by his word or conduct made to the other a clear and unequivocal promise or representation which is intended to create or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise or representation is made and it is in fact so acted by the other party, the promise or representation would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so, having regard to the dealings which have taken place between the parties. In the present case, there was no promise either by the Prime Minister of India to the appellant industry situated in Nepal or by the Finance Minister and no speeches were made by them of the type which was in the case of Nestle India Ltd. v. State of Punjab, because in the case of Nestle India Ltd. v. State of Punjab, there was a promise made by the Chief Minister of Punjab in the public meeting and similar promise was also made by the Finance Minister of Punjab and the Excise Commissioner of that State had also given directions to the field formations to accept the returns without collection of purchase tax. Whereas in the present case there was only an understanding between the Government of India and His Majesty's Government of Nepal and that too for exempting only the Basic Customs Duty and not the Special Additional Duty of Customs (SAD).
30. I am of the considered opinion that there was no promise even to the Government of Nepal that the Special Additional Duty of Customs would be exempted and that too from a particular date. The industry at large, especially the appellant M/s. Colgate Palmolive (India) Ltd. cannot claim that any promise was ever made to them by the Government of India. Therefore promissory estoppel from collecting additional duty of customs would not be applicable in their cases. The Apex Court judgment rendered in the case of Union of India and Ors. v. Godfrey Philips India Ltd. and Ors. reported in 1985 (22) E.L.T. 306 (S.C.) would not be applicable inasmuch as there was neither any public speeches made by the Prime Minister, the Finance Minister of India nor there was any directions even to the field formations either by the Central Government or by the Central Board of Excise and Customs in the light of representations, if any.
31. I am therefore in agreement with the findings of the ld. Sister Mrs. Archana Wadhwa that both Notifications No. 37/96-Cus., dated 23-7-96 and No. 124/2000-Cus., dated 29-9-2000 are independent notifications and both would be applicable from the date of its issuance and Notification No. 124/2000, dated 29-9-2000 will not be effective from 1-3-2000 as was pleaded by ld. Advocate Shri B.V. Kumar.
Both the notifications do not talk of retro-spectivity and in the absence of retrospectivity applicable in the concerned notification, it has to be construed that they are applicable from the date of issue or publication in the Official Gazette as would be mentioned in the concerned notification. The appellant's contention that subsequent notification was only clarificatory cannot therefore be countenanced.
Further I am in agreement with my ld. Sister Mrs. Archana Wadhwa that there was no ambiguity in the earlier notification and or in the subsequent notification No. 124/2000 and both the notifications operated in separate fields - one granted exemption from Basic Customs Duty and the other from the Special Additional Duty of Customs. As such, I am therefore of the considered view that the substantive benefit of law extended by the legislation with effect from a particular date would be applicable from that date only and cannot be made to act retrospectively on the ground that the legislature should have acted in accordance with the terms of the Treaty provision and should have issued the notification prior to the date of on which the same was issued. I am therefore not able to persuade myself to agree with the proposal of my ld. Brother Shri S.S. Sekhon referring the case to the Larger Bench, as there is no cause for referring the case to the Larger Bench inasmuch as there are no contradictory decisions of the Tribunal on this issue. I therefore agree with the judgment rendered by my ld. Sister Mrs. Archana Wadhwa. I am of the view that the Notification No. 124/2000 is not retrospective and would operate only from the date of issue, that is, with effect from 29-9-2000. As such the appellants are not entitled to the refund of duty paid by them prior to the said date. In view of the above facts and circumstances the appeal is therefore rejected.
32. The file may be placed before the original Bench for issue of majority order.
33. In view of the majority decision, the impugned Order is upheld and the appeal is rejected.
Sd/- Sd/- (S.S. Sekhon) (Archana Wadhwa) MEMBER (T) Member (J) Dated 17-6-2003