M.D. Overseas Ltd. v. Union Of India And Others

D.N. Patel, C.J. (Oral):— The disputes, in these writ petitions, revolve around Notifications Nos. 24/2015-2020 and 25/2015-2020, dated 25 August, 2017, issued by the Directorate General of Foreign Trade (DGFT), and their applicability to gold coins, imported by the petitioners.

2. For ready reference, the impugned Notifications Nos. 24/2015-2020, dated 25 August, 2017 and 25/2015-2020, dated 25 August, 2017, issued by the DGFT, are reproduced thus:

Notification No. 24/2015-20, dated 25th August, 2017:

“To be published in the Gazette of India Extraordinary Part-II, Section - 3, Sub-Section (ii)

Government of India

Ministry of Commerce & Industry

Department of Commerce

Directorate General of Foreign Trade

Notification No. 24/2015-2020

New Delhi, Dated : 25 August, 2017

Subject : Amendment in Para 2.07 of Foreign Trade Policy 2015-2020.

S.O.(E) : In exercise of powers conferred by Section 3 of FT (D&R) Act, 1992, read with paragraph 1.02 and 2.01 of the Foreign Trade Policy, 2015-2020, as amended from time to time, the Central Government hereby adds one more provision in Para 2.07 of the Foreign Trade policy (2015-20) on Principles of Restriction as under:

2.07 Principles of Restriction

(i) Relating to the importations or exportations of gold or silver.

2. Effect of this Notification : Principle of Restriction “Relating to the importations or exportations of gold or silver” is added at (i) under para 2.07 of Foreign Trade policy (2015-20).

(Alok Vardhan Chaturvedi)

Director General of Foreign Trade

E-mail : dgft@nic.in”

[Issued From F. No. 01/93/180/14/AM-18/PC-2(B)]

Notification No. 25/2015-20, dated 25 August, 2017:

“To be published in the Gazette of India Extraordinary Part-II, Section - 3, Sub-Section (ii)

Government of India

Ministry of Commerce & Industry

Department of Commerce

Directorate General of Foreign Trade

Notification No. 25/2015-2020

New Delhi, Dated : 25 August, 2017

Subject : Amendment in import policy of gold and silver under Chapter 71 of the ITC(HS)2017, Schedule-I (Import Policy).

S.O.(E) : In exercise of powers conferred by Section 3(2) of the FT (D&R) Act, 1992 as amended from time to time, read with paragraph 1.02 and 2.01 of the Foreign Trade Policy, 2015-20, the Central Government hereby inserts Policy Condition No. 4 under Chapter 71 of the ITC(HS) 2017, Schedule-I (Import Policy) to read as under:

“Imports from Sought Korea of articles of jewellery and parts thereof, of precious metal or of metal clad with precious metal under Exim code 7113; articles of goldsmiths' or silversmiths' wares and parts thereof, of precious metal or of metal clad with precious metal under Exim code 7114; other articles of precious metal or of metal clad with precious metal under Exim code 7115; and coins under Exim code 7118 are restricted.”

2. The facility/protection under para 1.05 of FTP shall not be available for import of the above items from the date of restriction.

3. Effect of this Notification : Policy Condition No. 4 restricting imports of gold and silver under Exim Codes 7113, 7114, 7115 and 7118 from South Korea is inserted in Chapter 71 of ITC (HS) 2017.

(Alok Vardhan Chaturvedi)

Director General of Foreign Trade

E-mail : dgft@nic.in”

[Issued from F. No. 1/89/180/36/AM-11/PC-2(A)]

3. The Foreign Trade Policy 2015-2020 (hereinafter referred to as “FTP 2015-20”) was notified by the Central Government, under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as “the FT (D&R) Act”), on 1 April, 2015.

4. On the same date, the Handbook of Procedures (hereinafter referred to as “HBP”), containing the procedure to be followed for implementation of the FTP 2015-20, and issued under para 1.03 thereof, was also notified.

5. Paras 2.17(a) and 9.11 of the HBP 2015-20 read thus:

“2.17 Date of reckoning of Import/Export - (a) Date of reckoning of import is decided with reference to date of shipment/dispatch of goods from supplying country as given in Paragraph 9.11 of Handbook of Procedures and not the date of arrival of goods at an Indian port.”

“9.11 Date of shipment/Dispatch in respect of Imports

Date of shipment/dispatch for imports will be reckoned as under:—

S. No. Mode of Transportation Date of Shipment/Dispatch (ii) By Air Date of relevant Airway Bill provided this represents date on which goods left last airport in the country from which the import is effected.”

6. It is clear, from a reading of aforesaid two provisions in the HBP, that the date of import, for the purposes of application of the provisions of the FTP and HBP, would be the date of shipment/dispatch of goods from the supplying country of export. This date would, ordinarily, be the date of airway bill, issued by the last port, from which the goods departed en route to India.

7. It has been held by the Supreme Court in U.O.I. v. Asian Food Industries (2006) 13 SCC 542, that the provisions of the FT (D & R) Act, the Foreign Trade Policy and the Handbook of Procedures, constitute a composite scheme.

8. These petitions deal with gold coins, imported by the various petitioners, from foreign suppliers located in the Republic of Korea. In all cases, the invoices and packing lists, relatable to the gold coins, were dated 24 August, 2017/25 August, 2017.

9. Under the cover of Airway Bills, issued by Cathay Pacific Airways Ltd., the gold coins were dispatched from Korea on 25 August, 2017.

10. On 25 August, 2017 itself, Bills of Entry, covering the imports of the aforesaid gold coins, were filed by the various petitioners/importers, in advance on arrival of the goods, under Section 46(3) of the Customs Act, 1962. The gold coins arrived at India later on 25 August, 2017, and were subjected to 100% examination on the very same day.

11. The above facts are common to all these writ petitions, and parties are ad idem thereon.

12. Till 25 August, 2017, gold coins, which were classifiable under Tariff Heading 7114, 1910 of the Customs Tariff, were freely importable as per Schedule I to the ITC (HS) (a convenient acronym for “Import Trade Clarification as per Harmonized System of Coding”, which governs the importability of goods as per the FTP and constitutes as a part thereof), subject to production of a certificate evidencing that the goods have been imported from Korea (also known as a “Country of Origin Certificate”). It is undisputed that the imports of gold coins, in all these cases, were accompanied by the requisite Country of Origin (COO) Certificate.

13. On 25 August, 2017, however, the DGFT issued the two notifications, wherewith the petitioners claim to be aggrieved i.e., Notifications Nos. 24/2015-2020 and 25/2015-2020 - which would, for the sake of ease of reference, be denoted, hereinafter, as “Notification No. 24” and “Notification No. 25” respectively.

14. Notification No. 24 amended para 2.07 of the FTP 2015-20. Prior to its amendment, para 2.07 of the FTP read thus:

“2.07 Principles of Restrictions

DGFT may, through a Notification, impose restrictions on export and import, necessary for:—

(a) Protection of public morals;

(b) Protection of human, animal or plant life or health;

(c) Protection of patents, trademarks and copyrights, and the prevention of deceptive practices;

(d) Prevention of use of prison labour;

(e) Protection of national treasures of artistic, historic or archaeological value;

(f) Conservation of exhaustible natural resources;

(g) Protection of trade of fissionable material or material from which they are derived;

(h) Prevention of traffic in arms, ammunition and implements of war.”

15. Notification No. 24 added, after the aforesaid eight clauses (a) to (h) in para 2.07 of the FTP 2015-2020, a ninth clause, viz. clause (i), by virtue whereof the import of gold - which would include, needless to say, gold coins - became restricted.

16. On par with Notification No. 24, Notification No. 25, also issued by the DGFT on 25 August, 2017, inserted policy condition no. 4 in Chapter 71 of the ITC(HS) 2017, which, too, made imports of gold coins, classifiable under Tariff Heading 7118 of the Customs “restricted”.

17. Para 2.08 of the FTP, which deals with imports/export of restricted goods/services, reads thus:

“2.08 Export/Import of Restricted goods/Services

Any goods/service, the export or import of which is ‘Restricted’ may be exported or imported only in accordance with an Authorisation/Permission or in accordance with the procedure prescribed in a Notification/Public Notice issued in this regard.”

18. By virtue of their becoming “restricted”, consequent on the issuance of the impugned Notifications Nos. 24, and 25, dated 25 August, 2017, gold coins could not be freely imported, and had to be imported in accordance with a Public Notice issued in that behalf.

19. For the said purpose, on 25 August, 2017 itself, the DGFT issued, simultaneously with Notifications Nos. 24 and 25, Public Notice No. 20/2015-2020 (hereinafter referred to as “Public Notice No. 20”), which reads as under:

“To be published in the Gazette of India Extraordinary

(Part-I, Section-1)

Government of India

Ministry of Commerce & Industry

Department of Commerce Directorate General of Foreign Trade

Udyog Bhawan, New Delhi - 110 011

Public Notice No. 20/2015-2020

New Delhi, Dated the 25th August, 2017

Subject : Introduction of Appendix-2X in Appendices and Aayat Niryat Forms (2015-20).

In exercise of powers conferred under paragraph 2.4 of the Foreign Trade Policy (2015-20), the Director General of Foreign Trade thereby notifies Appendix 2X-“Country Specific Restrictions/Prohibitions on Import/Export of Items, listing out all Notifications vide which restrictions/prohibitions have been imposed on import or export of items as in ITC (HS) 2017.

2. Effect of Public Notice:

Appendix 2X-Country Specific Restrictions/Prohibitions on Import/Export of Items of in Appendices and Aayat Niryat Forms (2015-20) is notified.

(Alok Vardhan Chaturvedi)

Director General of Foreign Trade

E-mail : dgft@nic.in”

20. This Public Notice, too, has been impugned in these proceedings.

Rival stands and analysis thereof

21. We have heard Mr. Tarun Gulati, learned Senior Counsel appearing on behalf of the petitioners, as well as Mr. Manik Dogra, Ms. Suparna Srivastava and Mr. Anurag Ahluwalia, learned CGSC for Respondent No. 1 and Mr. Amit Bansal, learned SSC for the Customs authorities, at length.

22. There can be no dispute about the fact that, by combined operation of Notification Nos. 24 and 25, dated 25 August, 2017 and Public Notice No. 20, dated 25 August, 2017, which came into existence, as triplets, on 25 August, 2017, gold coins could not be freely imported, and had to be imported in accordance with country-specific restriction/prohibition on imports/export of items contained in Appendix-2(X), which was engrafted by the aforesaid Public Notice No. 20/2015-2020.

23. The petitioners, however, contend that the gold coins imported by them could not be subjected to the rigours of the aforesaid Notification Nos. 24 and 25, or of Public Notice No. 20, for the simple reason that they already stood imported before the impugned notifications and Public Notice came into force.

24. It is averred, in the writ petition, that the above Notifications and Public Notice were published, in the Official Gazette, only on 28 August, 2017. The petitioners would seek to contend that the impugned Notification Nos. 24/2015-2020 and 25/2015-2020, both dated 25 August, 2017, became effective only consequent on their publication in the Official Gazette. The gold coins in questions having been imported prior thereto, inasmuch as they had left the country of dispatch on 25 August, 2017, Notification Nos. 24 and 25, both dated 25 August, 2017 and Public Notice No. 20, also dated 25 August, 2017, having been published in the Official Gazette three days thereafter, on 28 August, 2017, could not apply to them.

25. In order to buttress their submissions that the impugned Notification Nos. 24 and 25, dated 25 August, 2017 were published in the Official Gazettee “electronically” only on 28 August, 2017, the petitioners have filed, with the writ petitions, electronic copies of the Gazette where, at the close of the notification, the following endorsement appears:

“Rakesh Sukul : Digitally signed by Rakesh Sukul Date 2017.08.28, 22 : 47 : 05+5’30’”

26. The petitioners have also filed, with the writ petition, a purported screenshot of the website of the Ministry of Commerce on 25 August, 2017, which does not reflect the aforesaid two Notification Nos. 24 and 25.

27. Mr. Manik Dogra, learned CGSC for Respondent No. 1, however, contends that, as per his instructions - sans, however, any supporting material - the impugned notifications had, in fact, been uploaded on the website of the DGFT on 25 August, 2017 itself.

28. We do not think so.

29. In any event, however, as the notifications would become enforceable only from the date of their publication in the Official Gazettee, the aspect of whether they were, or were not, uploaded on the website of the DGFT on 25 August, 2017, loses its significance.

30. Section 8 of the Information Act, 2000 (hereinafter referred to as “the IT Act”) reads thus:

“8. Publication of rule, regulation, etc., in Electronic Gazette.-

Where any law provides that any rule, regulation, order, bye-law, notification or any other matter shall be published in the Official Gazette, then, such requirement shall be deemed to have been satisfied if such rule, regulation, order, bye-law, notification or any other matter is published in the Official Gazette or Electronic Gazette:

Provided that where any rule, regulation, order, by-law, notification or any other matter is published in the Official Gazette or Electronic Gazette, the date of publication shall be deemed to be the date of the Gazette which was first published in any form.”

31. In terms of the Section 8 of the IT Act, the following Office Memorandum (OM) was issued by the PSP Division in the Ministry of Urban Development on 30 September, 2015:

“No. O-17022/1/2015-PSP-I

Government of India

Ministry of Urban Development

(PSP Division)

Nirman Bhawan, New Delhi

Dated : 30th September, 2015

OFFICE MEMORANDUM

Subject : E-publishing of Government of India Gazette

Notification Discontinuing of the practice of physical printing.

In compliance with the provisions of Section 8 of the Information Technology Act, 2000, it has been decided in consultation with Department of Legal Affairs to switch over to exclusive e-publishing of the Government of India Gazette Notification on its official website with effect from 01.10.2015 and to do away with the physical printing of Gazette Notification. The date of publishing shall be the date of e-publication on official website by way of electronic gazette in respect of Gazette Notifications. The Gazette Notification can be accessed and downloaded/printed from the official e-Gazette website i.e. www.egazette.nic.in free of cost.

All the Ministries and Departments are requested to give wide publicity to bring this to the notice of all attached & subordinate offices, PSU, etc., as well as various stakeholders including all private users.

This issues with the approval of competent authority.

(Kailash Choudhary)

Under Secretary to the Govt. of India”

(Emphasis supplied)

32. The endorsement on the electronic copy of the Gazette, whereby the impugned Notification Nos. 24 and 25, dated 25 August, 2017, were notified, seen in juxtaposition with Section 8 of the IT Act, and of the OM dated 30 September, 2015 supra, of the Ministry of Urban Development, makes it clear that the impugned Notification Nos. 24 and 25, dated 25 August, 2017 were, in fact, electronically published in the Official Gazetee only at or after 10 : 47 p.m. on 28 August, 2017.

33. It has been conclusively held, by the Supreme Court, in a catena of decisions - including Harla v. State of Rajasthan (1952) 1 SCR 110, B.K. Srinivasan v. State of Karnataka (1987) 1 SCC 658 , AIR 1987 SC 1059 and Union Of India v. Param Industries Limited . (2016) 16 SCC 692 that, notifications would come into force on their publication in the Official Gazettee, i.e. in the present case, with effect from the date and time when they were electronically printed in the Gazettee, which was at or after 10 : 47 p.m. on 28 August, 2017.

34. The imports of the gold coins by the petitioners in these writ petitions took place prior thereto.

35. It is also worthwhile to note that, from the time of their import on 25 August, 2017, the petitioners had made numerous efforts to have the gold coins cleared immediately, including representations in writing addressed to the respondents, but to no avail.

36. Clearly, the submission, of the petitioners in these writ petitions, that the imports of gold coins effected by them, could not be subjected to the rigour of Notification Nos. 24 and 25, dated 25 August, 2017 or Public Notice No. 20 dated 25 August, 2017, is well merited and commends acceptance.

37. During the pendency of these writ petitions, the petitioners were visited with Show Cause Notices, issued by the Customs authorities, on 8 September, 2017, to show cause as to why the gold coins imported by the petitioners be not confiscated under Section 111(d) of the Customs Act, 1962 as they had been imported in violation of the restrictions imposed by the impugned Notification Nos. 24 and 25, dated 25 August, 2017, and as to why penalty be not imposed on the petitioners.

38. Taking stock of the aforesaid factual and legal position, this Court had, vide its interim order dated 14 September, 2017, observed that there was, prima facie, merit in the case of the petitioners, and had, therefore, permitted provisional release of the gold coins imported by them subject to furnishing of a Bond covering 100% of the value of the gold coins. Adjudication of the show cause notices issued to the petitioners was also stayed.

39. The Show Cause Notice has been challenged in WP (C) No. 8667/2017, though there is no specific prayer, in any of the other writ petitions, for quashing, or setting aside, the Show Cause Notice.

40. In the absence of any challenge, to the Show Cause Notices issued to the petitioners in these writ petitions (except in WP (C) 8667/2017) it is not possible for this Court to quash the show cause notices, dated 8 September, 2017, issued to the petitioners (except to the petitioners in WP (C) 8667/2017) and this Court would have, necessarily, to limit itself to directing that the Show Cause Notices be adjudicated in terms of this judgment.

41. In view of the above factual and legal position, it is not necessary to enter into any other aspect urged in the writ petitions, or pronounce on the validity, or otherwise, of the impugned Notification Nos. 24 and 25, dated 25 August, 2017.

42. In view of the aforesaid discussions, these writ petitions succeed and are allowed, in the following terms:

(i) It is declared that the impugned Notification Nos. 24/2015-2020, dated 25 August, 2017 and 25/2015-2020, dated 25 August, 2017, and Public Notice No. 20/2015-2020 issued by the DGFT, would not apply to the gold coins, imported by the petitioners in these writ petitions, which had left the Republic of Korea on 25 August, 2017.

(ii) Inasmuch as the gold coins already stand provisionally released, no order for release thereof is required to be passed; however, the Bonds executed by the petitioner, pursuant to the order dated 14 September, 2017 of this Court, shall stand discharged.

(iii) The Show Cause Notice dated 8 September, 2017, issued to petitioner in WP (C) 8667/2017 is quashed. The show cause notices, if any, issued to the petitioners in the other writ petitions shall be adjudicated in the light of the observations and findings contained in this judgment, in accordance with law.

43. These writ petitions are allowed in the aforesaid terms, with no orders as to costs.