Notifications are to be applied prospectively unless otherwise stated.

PJ/Case Law/2014-15/2175

Case:- RATNAMANI METAL & TUBES LTD. Vs COMMR. OF CUS. (EP), MUMBAI

Citation:- 2014 (300) E.L.T. 468 (Tri. - Mumbai)

Brief facts:- The appellant imported seamless steel wide coils/strips under Customs Notification No. 93/2004-Cus., dated 10-9-2004 under advance licence. According to the Notification, the appellant was to utilise the imported material for manufacture of finished goods and exportation of the same. The Notification also required the appellant not to divert the goods, if found surplus after fulfilling the export obligation also during the relevant time. However, the Foreign Trade Policy provided that restriction of diversion of materials would not apply where diversion was made to another unit belonging to the same manufacturer. The appellant fulfilled the export obligation and diverted the surplus material to another unit owned by them in June, 2008. However, before this diversion took place, Foreign Trade Policy had been amended and restriction of diversion of imported material was made applicable to their own units also which have availed the benefit of Notification No. 39/2001-C.E. which were located in Kutch area of Gujarat State. Further, the Customs Notification No. 93/2004-Cus., dated 10-9-2004 was amended on 16-7-2008. Proceedings were initiated against the appellant for non-fulfilment of the conditions of Notification and the impugned order had been passed wherein it had been held that the appellant was liable to pay standard rate of duty applicable on the whole quantity of material imported by them. Further, goods have been confiscated, redemption fine had been imposed and penalty was also imposed.

Appellant’s contentions:- Learned counsel for the appellant submitted that, in this case diversion of material to their own unit took place in June, 2008 and the Notification was amended on 16-7-2008. What was relevant for the purpose of fulfillment of the obligations cast upon the assessee by the notification had to be as per the Customs notification. Therefore, the diversion of materials by the appellant in the month of June, 2008 could not be said to be a violation of the conditions of Notification No. 93/2004 since the amendment took place only in July, 2008. No doubt, it may be violation of Foreign Trade Policy but that would attract penal provisions under the relevant statute and not under the Customs Act.

Respondent’s contentions:- The respondent reiterated the findings of lower authorities.

Reasoning of judgment:- Considered the submissions made by the ld. counsel. It was a fact on record that in this case diversion of the material to their own unit took place in June, 2008 and the Notification was amended on 16-7-2008. The effect of the Notification was to be given prospectively and not retrospectively. Therefore, the demand on the basis of amended Notification was not sustainable against the appellant. Therefore, we set aside the impugned order and allow the appeal with consequential relief, if any.

Decision:- Appeal allowed.

Comment:- The analogy drawn from the case is that merely because of the fact that there was amendment in the Foreign Trade Policy restricting the diversion of the imported material and consequently, the customs notification for advance authorisation was also amended, it cannot be held that for the period prior to amendment in the customs notification for advance authorisation, duty demand was sustainable on the assessee for diversion of imported material. The amendment in the notification is to be applied prospectively unless it has a specific clause of retrospective application.

Prepared by: Ranu Dhoot

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PJ/Case Law/2014-15/2175

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