Case Note & Summary
The writ petition under Article 226 of the Constitution of India was filed before the Bombay High Court at Goa by V. M. Salgaocar and Brother Pvt. Ltd., a company engaged in mining and export of iron ore, and its Chairman & Managing Director, challenging the legality of the General Alert Circular No. 02/2019 dated 12/15 April 2019 issued by the Directorate of Revenue Intelligence, and two orders-in-original dated 17.03.2022 and 31.03.2022 passed by the Assistant Commissioner of Customs. The petitioners exported iron ore from Mormugao Port under shipping bills filed in March 2018 and June 2020, classifying the goods under Customs Tariff Headings 2601 11 21, 2601 11 22, and 2601 11 41, and claimed Nil rate of export duty under exemption notification dated 01.03.2011. Provisional assessments were made under Section 18 of the Customs Act, 1962, and the petitioners furnished provisional duty bonds and bank guarantees. The DRI issued the impugned GA Circular mandating the Dry Metric Ton method for determining Fe content, whereas the petitioners relied on the Wet Metric Ton method as approved by the Supreme Court in Union of India Vs. Gangadhar Narsingdas Agarwal & Anr. and the Revenue's own Circular dated 17 February 2012. The Assistant Commissioner initiated finalization of assessments between May 2021 and December 2021 and passed the impugned orders levying export duty at 30%. The court considered the preliminary objection of alternate remedy under Section 129-A of the Customs Act but decided not to non-suit the petitioners because the challenge to the vires of the GA Circular and constitutional issues could not be decided by the appellate authority. The matter was heard finally and reserved on 16 September 2022, with judgment pronounced on 23 September 2022. The court framed the core issues involving the legality of the GA Circular, the validity of the orders-in-original, the appropriate method for determining Fe content, and the entitlement to Nil rate of duty. The final decision and operative directions are not contained in the provided excerpt.
Headnote
A) Constitutional Law - Writ Jurisdiction - Maintainability - Constitution of India, Article 226; Customs Act, 1962, Section 129-A - Petitioners challenged GA Circular and assessment orders; Revenue raised preliminary objection of alternate remedy; Court observed not inclined to non-suit on that ground as challenge involved legality/validity of GA Circular and constitutional issues, which appellate authority cannot decide - Held that alternate remedy not a bar where vires of circular is challenged and issues are ultra vires (Paras 4-5).
B) Customs Law - Export Duty Classification - Iron Ore - Customs Tariff Act, 1975, Chapter 26; Customs Act, 1962, Section 18 - Petitioners exported iron ore classified under CTH 2601 11 21, 2601 11 22, 2601 11 41 claiming Nil rate under exemption notification; DRI Circular mandated DMT method for Fe content; petitioners contended WMT method approved by Supreme Court in Gangadhar Agarwal - Issue framed whether DMT method valid and whether orders imposing 30% duty sustainable (Paras 6-9).
Issue of Consideration
Whether GA Circular No. 02/2019 dated 12/15 April 2019 is illegal and ultra vires; Whether orders-in-original dated 17.03.2022 and 31.03.2022 are sustainable; Whether alternate remedy under Section 129-A bars writ petition; Whether DMT method for Fe content is valid; Whether petitioners entitled to Nil rate of export duty under Notification No. 27/2011-Cus.
Law Points
- Article 226 of Constitution of India
- Section 129-A Customs Act 1962
- Section 18 Customs Act 1962
- classification of iron ore under Customs Tariff Act 1975
- Wet Metric Ton vs Dry Metric Ton method
- exemption notification
Case Details
2022 LawText (BOM) (09) 127
Writ Petition No. 216 of 2022
G. S. Kulkarni, Bharat P. Deshpande
Rohan Shah, Srisabari Rajan, Neha Shirdokar, Asha Desai, Natasha Volvoikar, Pravin Faldessai
V. M. Salgaocar and Brother Pvt. Ltd., Mr. Shivanand V. Salgaoncar
The Assistant Commissioner of Customs (Export), Directorate of Revenue Intelligence, Union of India
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Nature of Litigation
Writ petition under Article 226 of Constitution of India challenging legality of General Alert Circular No. 02/2019 and two orders-in-original imposing export duty on iron ore exports.
Remedy Sought
Petitioners sought declarations that GA Circular and orders-in-original are illegal, quashing of the same, and direction to assess exports under CTH 2601 11 21, 2601 11 22, 2601 11 41 with Nil rate of export duty; also sought to prevent enforcement of provisional duty bonds and bank guarantees.
Filing Reason
Assessment finalized using DMT method per GA Circular resulting in export duty at 30%, contrary to petitioners' claimed classification under WMT basis and exemption notification.
Previous Decisions
Assistant Commissioner of Customs passed orders-in-original dated 17.03.2022 and 31.03.2022 finalizing provisional assessments and levying export duty; GA Circular No. 02/2019 issued by DRI.
Issues
Whether GA Circular No. 02/2019 dated 12/15 April 2019 is illegal and without authority of law.
Whether orders-in-original dated 17.03.2022 and 31.03.2022 are illegal and unsustainable.
Whether alternate remedy under Section 129-A of Customs Act bars the writ petition when vires of circular and constitutional issues are raised.
Whether Fe content in exported iron ore should be determined on Wet Metric Ton (WMT) basis or Dry Metric Ton (DMT) basis for classification.
Whether petitioners are entitled to Nil rate of export duty under Notification No. 27/2011-Cus dated 1 March 2011.
Submissions/Arguments
Petitioners argued GA Circular is ultra vires Constitution and contrary to Supreme Court decision in Union of India Vs. Gangadhar Narsingdas Agarwal & Anr. and Revenue's own Circular dated 17 February 2012.
Petitioners contended DMT method is not correct and WMT method approved by Supreme Court should apply.
Revenue raised preliminary objection that petitioners have alternate statutory remedy of appeal under Section 129-A of Customs Act.
Petitioners submitted alternate remedy not efficacious as challenge to vires of circular cannot be decided by appellate authority.
Ratio Decidendi
Alternate remedy is not a bar when challenge is to legality/vires of circular and constitutional issues; appellate authority cannot decide such issues.
Judgment Excerpts
This petition under Article 226 of the Constitution of India, inter alia challenges the legality of the General Alert Circular no. 02/2019 dated 12/15th April 2019... and two orders-in-original dated 17.03.2022 and 31.03.2022, passed by the Assistant Commissioner of Customs.
Mr. Shah responding to such query, would however submit that this Court ought to entertain this Petition as the petitioners have raised a challenge to the legality and validity of the GA Circular no. 02/2019 on the ground of it being ultra vires to the Constitution, which according to him cannot be decided by the Appellate Authority.
we are not inclined to non-suit the petitioners on the ground of alternate remedy, the reasons for which, we would also dismiss hereafter.
Procedural History
Petitioners filed shipping bills in March 2018 and June 2020 for export of iron ore under CTH 2601 11 21, 2601 11 22, 2601 11 41 claiming Nil rate of export duty under exemption notification. Provisional assessments under Section 18 of Customs Act were done and duty bonds/bank guarantees furnished. DRI issued GA Circular No. 02/2019 on 12/15 April 2019 mandating DMT method. Assistant Commissioner issued letters for finalization between May 2021 and December 2021 and passed orders-in-original dated 17.03.2022 and 31.03.2022 levying 30% export duty. Petitioners filed WP No. 216 of 2022. Court heard preliminary objection on alternate remedy and not inclined to dismiss; heard finally and reserved judgment on 16.09.2022; pronounced on 23.09.2022.
Acts & Sections
- Constitution of India: Article 226
- Customs Act, 1962: Section 129-A, Section 18, Section 18(2)
- Customs Tariff Act, 1975: First Schedule, Second Schedule, Chapter 26, Tariff items 2601 11 21, 2601 11 22, 2601 11 41, 2601 11 42
