(Per : HONOURABLE MR. JUSTICE AKIL KURESHI) 1. These petitions arise in similar factual background. They have been heard together and are being disposed of by this common judgment. For the purpose of this judgment, we may notice pleadings from Special Civil Application No.9306/2002.
2. Petitioner No.1 is a company registered under the Companies Act (hereinafter referred to as 'the company'). Petitioner No.2 is its authorised signatory. The company is engaged in the business of import of various goods particularly various types of edible oils. The company purchased for import 10,000 metric tonnes of 'crude degummed oil of edible grade' (hereinafter to be referred to as 'the goods') for a price agreed between the company and the seller situated in Singapore. The agreed CIF value of the goods was USD 370 per metric tonne.
3. Part of the goods arrived at Jamnagar on 2-9-2002. The company thereupon filed three bills of entries No.371, 372 and 373 all of 2-9-2002 before the customs authorities at Jamnagar for a total quantity of 1250 metric tonnes for home consumption. The company declared the CIF value of the goods on the basis of the contracted price. As per the company, assessment of customs duty and additional duty would be based on the value so declared in the bills of entries. The respondent authorities, however, insisted on collection of duty on the basis of the tariff value fixed by the respondents under a notification dated 2-9-2002 (hereinafter to be referred to as 'the notification of 2002') issued in exercise of powers under section 14(2) of the Customs Act, 1962 ('the Act', for short).
4. Such dispute was not peculiar to the present petitioners and the Department. Several importers across the country had similar disputes. Various petitions were filed before different High Courts. Since the petitioners were not willing to pay the duties on the basis of the tariff value fixed under notification dated 2-9-2002 and since the Department was not releasing the goods without payment of full duties on such basis, the petitioners approached this court by filing the present petitions. In the petitions, the petitioners have basically challenged the said notification dated 2-9-2002 on various grounds. Such notification is essentially in the nature of an amendment to the earlier notification dated 3-8-2001 (hereinafter to be referred to as 'the notification of 2001') which for the first time fixed the tariff value of the subject goods as provided under section 14(2) of the Act. The petitioners have also challenged such notification of 2001. Referring to interim orders passed by different High Courts in similar circumstances, the petitioners had also prayed for provisional release of the goods by way of interim arrangement upon payment of duties as per the CIF value. This court while admitting the petitions by an order dated 7-10-2002 permitted the petitioners to clear the goods upon furnishing bank guarantee for the difference of the duty of customs payable under sections 14(1) and 14(2) of the Act. It was provided that such arrangement would be subject to the order of final assessment to be made by the respondents. We are informed that subsequently the final order of assessment also came to be passed. However, since the petitioners have questioned the very legality of the two notifications on the basis of which the customs authorities seek to replace the contracted value of the goods by the tariff value, we have heard the counsel with respect to such challenge.
5. Learned senior counsel Shri G.R. Rawal appearing with Mr. Dipen Desai for the petitioners at the outset raised a contention that hearing of these petitions should be deferred. He pointed out that the Karnataka High Court in its judgment dated 3-9-2002 in case of M/s. Param Industries Ltd. vs. Union of India held that the notification of 2001 was illegal. Such decision has been challenged by the Union of India before the Supreme court, leave is granted and appeals are pending. He, therefore, submitted that till the outcome of such appeals, hearing of these petitions should be deferred. In support of such contention the counsel relied on the following decisions:-
i. In the case of Tribhovandas Purshottamdas Thakkar vs. Ratilal Motilal Patel and others reported in AIR 1968 SC 372 in which it was observed that when it appears to a Single Judge or a Division Bench that there are conflicting decisions of the same court or there are some decisions of other High Courts which are strongly persuasive, and take a different view from the view which prevails in his or their High Courts, or that a question of law of importance arises in the trial of a case, the Judge or the Bench passes an order that papers be placed before the Chief Justice of the High Court with request to form a special or Full Bench.
ii. In the case of Damodar J. Malpani vs. Collector of Central Excise reported in 2002 (146) E.L.T. 483 (S.C.).
iii. In the case of Unipatch Rubber Ltd. vs. Commissioner of Central Excise, Bhopal reported in 2011 (272) E.L.T. 340 (S.C.).
5.1 With respect to the substantive challenge to the two notifications raised in the petitions, the counsel raised the following contentions:-
(1) that the notification of 2002 was never published in the Official Gazette on 2-9-2002. The petitioners filed bills of entries on 2-9-2002. Since on such date, the notification of 2002 was not gazetted, the same cannot be made applicable to these imports. In support of such contention, the counsel relied on the following decisions:-
i. In the case of D.B. Raju vs. H.J. Kantharaj and Others reported in (1990) 4 SCC 178 wherein the Apex Court discussed the issue of communication of an order so that the person who would be affected by that order could be bound by such an order.
ii. in the case of B.K. Srinivasan and Others vs. State of Karnataka and Others reported in (1987) 1 SCC 658 wherein the Apex Court in the context of delegated legislation observed that unlike Parliamentary legislation which is publicly made, delegated or subordinate legislation is often made unobtrusively in the chambers of a Minister, a Secretary to the Government or other official dignitary. It was observed that, therefore, it is necessary that the subordinate legislation, in order to take effect, must be published or promulgated in some suitable manner whether such publication or promulgation is prescribed by the parent statute or not.
iii. in the case of State of Madhya Pradesh and Another vs. Shri Ram Ragubir Prasad Agarwal and Others reported in (1979) 4 SCC 686 wherein the Apex Court considered the meaning of the term 'publication'. In the context of such word being used in the statute under consideration, the court observed that publication means more than mere communication to concerned officials or departments.
(2) According to the counsel, such notification of 2002 was not made available to the public and the trade. He submitted that the notification was not sent for publication till 3-9-2002. Till such publication, the notification cannot have any effect. He submitted that publication of the notification was statutorily required under section 25(4) of the Act.
(3) The counsel lastly submitted that as per section 159 of the Act, the notifications were required to be placed before the Parliament for any amendment that may be suggested therein. There was nothing on the record to suggest that such requirement was fulfilled. Counsel submitted that in absence of fulfilment of such statutory requirement, the notifications would be rendered ineffective. In support of this contention, the counsel relied on the decision of Apex Court in the case of Union of India vs. National Hydroelectric Power Corpn. Ltd. and others reported in AIR 2001 SC 2512 wherein finding that the requirement of placing the notification under Parliament was not satisfied, the Apex Court held that such notification was invalid.
(4) (a) The counsel also contended that sub-section (2) of section 14 of the Act authorises the Central Board of Excise and Customs ('the Board', for short) if it is satisfied that it is necessary or expedient to do so to fix tariff value by issuance of a notification having regard to the trend of the value of such or like goods. According to the counsel, the requirement for issuance of such a notification would be the satisfaction of the Board that it was necessary or expedient to fix the tariff value and that the same should be done having regard to the trend of the value of such or like goods. According to the counsel, in the present case, both these requirements are not satisfied. He submitted that from the record, it nowhere emerges that the Board having regard to the trend of the value of such or like goods was satisfied that the tariff value of the goods in question was required to be fixed.
(b) On the same ground the counsel also questioned the legality of the notification of 2001. He, in fact, contended that in the base notification of 2001, no exercise was undertaken as was required under sub-section (2) of section 14 of the Act. On that ground, notification of 2001 would be rendered invalid. He submitted that the authorities though are applying the notification of 2002 in case of the imports made by the petitioners, since the notification of 2001 itself was invalid, subsequent notification of 2002 which provides only for amendment in the earlier notification also would be rendered inoperative.
In support of this ground, the counsel relied on the decision of the Apex Court in the case of Ramadhar Pandey vs. State of Uttar Pradesh reported in 1993 (66) E.L.T. 547 (S.C.) wherein in context of transfer of a Government servant, the Apex Court observed that mere recitation of words that it was in the public interest would not be sufficient.
(5) Counsel submitted that both the notifications were discriminatory and, therefore, violative of Article 14 of the Constitution of India. Counsel submitted that the notifications provided for tariff value in case of only certain categories of edible oils. The edible oil as a genus formed a homogeneous class. The respondents could not have issued notification only with respect to few of the categories of edible oils out of such class. In support of this contention, the counsel relied on the decision of Karnataka High Court in case of Param Industries (supra).
6. On the other hand, learned Government counsel Ms. Amee Yajnik opposed the petitions contending that the notifications have been issued under delegated powers of legislation. Such notifications have been validly issued after taking into account all relevant facts. Drawing our attention to the notification of 2001, she pointed out that in the notification itself, it was stated that the tariff value was being fixed under section 14(2) of the Act having regard to the trend of the value of such or like goods. Our attention was also drawn to the affidavit dated 21-6-2010 filed by Shri Tejas Kumar Rathod, Assistant Commissioner of Customs in which it is stated that the Central Government fixed the tariff value at USD 542 metric tonnes keeping in view the trend of the value of Crude Palm Oil or the like goods. In the said affidavit, it is further stated that the value revealed by the petitioners of such goods was USD 370 per metric tonne which was much lower than the tariff value fixed by the Central Government.
6.1 The counsel also relied on the affidavit dated 20-8- 2012 filed by one Shri Manish Kumar Chavda, Assistant Commissioner of Customs, Jamnagar in which the details of publication of the notification of 2002 in Official Gazette and its publication for general public consumption on the very same day has been highlighted.
6.2 Counsel relied on a decision of Karnataka High Court dated 20-1-2012 in case of Ruchi Soya Industries i.e. the present petitioner No.1 company in which a notification issued by the Central Government dated 13-6-2002 revising the tariff value of these very goods to USD 411 per metric tonne came up for consideration. In such decision, the High Court noticed the earlier decision in the case of Param Industries (supra) but proceeded to dismiss the petitions upholding the validity of the notification dated 13-6-2002.
6.3 Counsel relied on the decision of Apex Court in the case of Union of India vs. Ganesh Das Bhojraj reported in 2000 (116) E.L.T. 431 (S.C.) in which the Apex Court held that the notification under section 25 of the Customs Act would come into operation as soon as it is published in the Gazette of India.
7. Having thus heard learned counsel for the parties and having perused the documents on record, we may first deal with the preliminary contention of the counsel for the petitioners. We may recall, his contention was that because of the pendency of the appeals before the Supreme Court against the judgment of Karnataka High Court in the case of Param Industries (supra), we should refrain from proceeding further with the present group of petitions. Ordinarily, if the very same issue is being actively considered by the Apex Court, we would have readily stayed our hands off particularly if the outcome of such proceedings was likely to be available in near future. Our intention is not to drive either side to further litigation if the issue itself was likely to be finally decided by the Supreme Court. In the present case, however, it is not even the case of the petitioners that such S.L.P. is posted for final hearing and that it is likely to be taken up by the Supreme Court in near future. Large number of petitions are pending before different courts and the revenue collection is stayed by this court and other courts as well. No precedent is pointed out to us which would require us to refrain from hearing these petitions on merits. We may recall that these petitions are pending before this court for over ten years. By way of interim arrangement, the court has permitted clearance of goods on the basis of value of the goods declared by the petitioners. The differential duty is covered under bank guarantees. Thus, continued pendency of these petitions is neither in the interest of the petitioners nor that of the revenue.
8. None of the decisions cited by the counsel provide that in the present situation, we should refrain from deciding the petitions on merits. In fact, we may recall that the Karnataka High court itself despite earlier judgment of the same court in the case of Param Industries (supra) proceeded to decide fresh batch of petitions in case of Ruchi Soya Industries (supra) which involved the present petitioner company itself.
9. In case of Tribhovandas vs. Ratilal (supra), the Apex Court was commenting on the question of reference made by a Judge to the Chief Justice for constitution of larger or special bench. In this context, it was observed that a Single Judge does not by himself refer the matter to the Full Bench. He only refers it to the Chief Justice to constitute a Full Bench for hearing the matter. We fail to see how the said decision would support the contention of the petitioners. Likewise, the decision in case of Damodar J. Malpani (supra) pertains to requirement of uniformity in judicial approach. In case of Unipatch Rubber Ltd. (supra), the decision in case of Damodar Malpani was referred to and relied upon in the context of requirement of uniformity in classification of goods.
10. We may now examine the challenge of the petitioners to the validity of the two notifications. With respect to the publication of the notification of 2002 in the Official Gazette, we notice that in the affidavit dated 20-8-2012 filed by Shri Manish Kumar Chavda, Assistant Commissioner of Customs, Jamnagar, he stated that “It is, therefore, submitted that the documents and facts clearly show that the notification was issued by the CBEC on 02.09.2002, was sent for publication in the Official Gazette on 02.09.2002 itself and the same was received by the Government Press for publication in the Official Gazette on 02.09.2002. The allegation of the petitioner that the Notification No.60/2002-CUS(NT) dated 02.09.2002 was published in the Official Gazette on or after 03.09.2002 is far from truth.”
11. Thus, we have clear and unequivocal assertion and denial on the part of the respondents on affidavit that such notification was not only issued on 2-9-2002 but was also published in the Official Gazette on the same date. We have no reason to disbelieve such clear statement made on oath. In fact, the respondents have also produced a copy of the Government Gazette publishing such notification on 2-9-2002. This controversy, therefore, must rest here.
12. With respect to its publication in the Government press, there are two aspects. First is with respect to the question of requirement of such publication. Reliance of the petitioners was on section 25(4) and 25(5) of the Act. It was their contention that as per such provisions, not only publication in Official Gazette, it was further required that the notification be also published and offered for sale by the Directorate of Publicity and Public Relations of the Board. Section 25 of the Act pertains to power to grant exemption from duty. Sub-section (1) thereof empowers the Central Government if it is satisfied that it is necessary in the public interest so to do, by a notification in the Official Gazette, exempt generally or in case of goods of specified description from the whole or any part of duty of customs leviable thereon. Sub-sections (4) and (5) of section 25 which are relevant for our purpose read as under:-
25. Power to grant exemption from duty.
(4) Every notification issued under sub-section (1) shall,
(a) unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette;
(b) also be published and offered for sale on the date of its issue by the Directorate of Publicity and Public Relations of the Board, New Delhi.
(5) Notwithstanding anything contained in sub-section (4), where a notification comes into force on a date later than the date of its issue, the same shall be published and offered for sale by the said Directorate of Publicity and Public Relations on a date on or before the date on which the said notification comes into force.
13. We may firstly notice that the requirement of publication of the notification by the Directorate of Publicity and Public Relations of the Board as required in clause (b) of sub-section (4) is in relation to the notifications issued by the Government under sub-section (1). We are doubtful whether such statutory requirement can be rigidly insisted upon with respect to the Board's notification under section 14(2) of the Act. We also find that the Apex Court in case of B.K. Srinivasan (supra) observed in context of requirement of publication of delegated legislation that the same must be published or promulgated in some suitable manner, whether such publication or promulgation is prescribed by the parent statute or not. It was observed that it will then take effect from the date of such publication or promulgation. Where the parent statute prescribes the mode of publication or promulgation that mode must be followed. Where the parent statute is silent, but the subordinate legislation itself prescribes the manner of publication, such a mode of publication may be sufficient, if reasonable. If the subordinate legislation does not prescribed the mode of publication or if the subordinate legislation prescribes a plainly unreasonable mode of publication, it will take effect only when it is published through the customarily recognised official channel, namely, the Official Gazette or some other reasonable mode of publication.
14. In the present case, section 14(2) of the Act does not insist on any further requirement than publication of the notification in the Official Gazette. In view of the decision of the Apex Court in the case of B.K. Srinivasan (supra) thus, the statute prescribes the mode of publication which has been complied with. In absence of any additional requirement that such notification must also be published in the Government press, we wonder whether non-compliance with such additional requirement, even if found desirable, would invalidate the notification itself.
15. We have even otherwise examined whether the petitioners have succeeded in establishing that such publication in the Government press was never done till 3-9- 2002. To resolve such controversy, we had, in our order dated 25-7-2012, granted additional time to the respondents to file affidavit. In the affidavit dated 20-8-2012 which came to be filed pursuant to such order, the respondents have made several averments. The contention of the petitioners raised through additional affidavit that through answers in response to the application filed under Right to Information Act, it was revealed that such notification was never sent for publication atleast till 3-9-2002 has been specifically denied. It is pointed out that such answers did not pertain to the impugned notification of 2002 which bears the notification No.60/2002. Such notification was, in fact, despatched by a Special Messenger on the very same day. In the affidavit, it is further stated that “4) It is submitted that the Under Secretary to the Government of India, Ministry of Finance, Department of Revenue vide letter No.467/100/2001-CUS V dated 02.09.2002 has forwarded a copy of the Notification No.60/2002-CUS (NT) dated 02.09.2002 to the Manager, Government of India Press, New Delhi for publication of the same in Part II, Section 3, Sub Section (ii) of the Gazette of India, Extra Ordinary dated 02.09.2002 and there was a specific mention in the letter that it was a taxation matter. The said Notification has approval of Special Secretary to the Government of India. The said letter has been received by the Manager, Government of India Press, New Delhi on the very day, i.e. on 02.09.2002 as evident on the letter itself, a copy of which is produced by the petitioner at page 80. It was also specifically stated in the letter that “MOST IMMEDIATE” and “BY SPL MESSENGER”. It is, therefore, submitted that the documents and facts clearly show that the notification was issued by the CBEC on 02.0902002, was sent for publication in the Official Gazette on 02.09.2002 itself and the same was received by the Government Press for publication in the Official Gazette on 02.09.2002. The allegation of the petitioner that the Notification No.60/2002-CUS(NT) dated 02.09.2002 was published in the Official Gazette on or after 03.09.2002 is far from truth.”
16. We are satisfied that the respondents have discharged their burden to show that the notification in question was also published in the Government of India press on the same day in addition to publishing the same in the Official Gazette on 2-9-2002.
17. We may now examine the challenge to the notification on the ground that the same was not placed before both the Houses of Parliament as required under section 159 of the Act. Section 159 of the Act pertains to rules, certain notifications and orders to be laid before the Parliament and reads as under:-
“159. Rules, certain notifications and orders to be laid before Parliament.--Every rule or regulation made under this Act, every notification issued under sections 11, 11-B, 11-H, 11-I, 11-K, 11-N, 14, 25, 28-A, 43, 66, 69, 70, 74, 75, 76, 98, 98-A, 101 and 123 and every order made under sub-section (2) of section 25, other than an order relating to goods of strategic, secret, individual or personal nature, shall be laid, as soon as may be after it is made or issued, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session, or in two or more successive sessions, and if, before the expiry of the session, immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or notification or order or both Houses agree that the rule or regulation should not be made or notification or order should not be issued or made, the rule or regulation or notification or order shall thereafter have effect only in such modified form of be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation or notification or order.”
18. From the above provision, it can be seen that every notification issued under section 14 of the Act has to be as soon as after it is issued laid before each House of Parliament while it is in session for a total period of thirty days which may be comprised of one session or two or more successive sessions. If both Houses agree in making any modification in such notification, or that such notification should not be issued, such a notification would have effect only in such modified form or would have no effect. However, such modification or annulment would be without prejudice to the validity of anything previously done under such notification.
19. The decision in case of National Hydroelectric Power Corporation Ltd. (supra) relied upon by the petitioners in this context concerns the provisions contained in Water (Prevention and Control of Pollution) Cess Act, 1977. Section 16 of the said Act requires that each notification under sub-section (1) shall be laid before each House of Parliament, if it is sitting and if it is not sitting, within seven days of its re-assembly and the Central Government shall seek the approval of the Parliament to the notification by a resolution within a period of 15 days beginning with the day on which the notification is so laid before the House of the People. It can thus be seen that the requirement in such case was substantially different and more stringent. It required the notification to be placed before both the Houses of Parliament and further required the Central Government to seek approval of the Parliament to such notification by resolution moved within 15 days from the date of laying such notification before the House of the People. It was in this context the Apex Court noticed that nothing was produced on record to show that such a resolution was moved by the Government. The notification was, therefore, declared invalid for not fulfilling such a requirement.
20. In the present case, the statutory language is substantially different. Section 159 of the Act requires the laying of the notification before each House of the Parliament and further provides that if there is any modification or annulment of the notification provided by the Parliament, the notification would either operate with such modification or would stand annulled, however, the validity of anything done previously would not be affected. There is no requirement that the Government must seek approval of such notification from the Parliament within a specified time period or otherwise. This is not to suggest that the requirement is otherwise not mandatory in nature or if it is established in a given case that such requirement was not followed at all, the Government could still argue that the notification would continue to have effect. This is only to suggest that unlike in case of National Hydroelectric Power Corporation (supra), the requirement of the Government seeking approval of the notification from the Parliament in our case does not exist.
21. With this background, we notice that the case of the petitioners is that neither of the two notifications of 2001 or 2002 were placed before the Parliament as required under section 159 of the Act. Since there was no specific answer from the respondents on this issue, we had called upon the Central Government counsel to supply files pertaining to such notifications. She had, under the condition of confidentiality of such documents, as desired by the Government, produced in a sealed cover, authenticated copies of the files. We find that there are documents to suggest that both notifications were placed before the Parliament as required under section 159 of the Act. There are file notings with proposals for placing of several notifications including those under consideration in these petitions before the Parliament. There are documents of proforma to be attached for forwarding the notifications to be laid on the table of Lok Sabha or Rajya Sabha. For example the Director of CBEC on 13.11.2002 wrote as under:-
“The following Notifications have been issued in the Gazette Extraordinary. Since these Notifications are required to be laid before the Rajya Sabha, two copies of each Notification (with English & Hindi version, together with Explanatory Memorandum thereto) is placed below for favour of authentication by the Minister.
1. .........
6. No 60/2002 NT – CUSTOMS dated 2-9-2001 . ”
Similar letter was also written on the same day for laying the Notifications before the Lok Sabha. On file we also have a statement of Notification to be laid on the table of both houses of Parliament and the proforma to be attached to the OM forwarding papers to be laid on the table of Lok Sabha/Rajya Sabha. We have no reason to believe that such Notification was not laid before both Houses of Parliament as required under Section 159 of the Act. We are satisfied that such requirement was fulfilled.
22. We now come to the challenge of the petitioners on substantive grounds to these notifications. Essentially, there are two limbs to such challenge. Firstly that the requirements of section 14(2) of the Act have not been fulfilled and secondly that providing tariff value in case of some of the edible oils would be opposed to Article 14 of the Constitution.
23. Before dealing with such challenge, we may briefly take note of certain decisions touching the question of vires of delegated legislation. It would be necessary because undoubtedly the impugned notifications which are issued under section 14(2) of the Act form a class of delegated legislation. While examining vires of a statutory provision, the court starts with the presumption of constitutionality. It is the burden of the petitioner who contends that any piece of legislation is unconstitutional, to establish the same by producing cogent evidence on record. Reference in this respect can be made to the decision of the Constitution Bench of the Supreme Court in the case of The State of Jammu & Kashmir vs. Triloki Nath Khosa and others reported in AIR 1974 SC 1 in which it was observed:-
“24. This submission is erroneous in its formulation of a legal proposition governing onus of proof and it is unjustified in the charge that the record discloses no evidence to show the necessity of the new rule. There is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles. 1959 SCR 279, 297 (b) = (AIR 1958 SC 538). Ram Krishan Dalmia v. Justice S.R. Tendolkar. A rule cannot be struck down as discriminatory on any a priori reasoning. “That where a party seeks to impeach the validity of a rule made by a competent authority on the ground that the rules offend Art. 14 the burden is on him to plead and prove the infirmity is too well established to need elaboration.” The burden thus is on the respondents to set out facts necessary to sustain the plea of discrimination and to adduce “cogent and convincing evidence” to prove those facts for “there is a presumption that every factor which is relevant or material has been taken into account in formulating the classifications“. State of Uttar Pradesh v. Kartar Singh, 1964 (6) SCR 679, 687 = (AIR 1964 SC 1135).
In G.D. Kelkar v. Chief Controller of Imports and Exports, (1967) 2 SCR 29 at p. 34 = (AIR 1967 SC 839), Subba Rao C. J. speaking for the Court has cited three other decisions of the Court in support of the proposition that “unless the classification is unjust on the fact of it, the onus lies upon the party attacking the classification to show by placing the necessary material before the Court that the said classification is unreasonable and violative of Art. 16 of the Constitution.
25. Thus, it is no part of the appellants' burden to justify the classification or to establish its constitutionality. Formal education may not always produce excellence but a classification founded on variant educational qualifications is, for purposes of promotion to the post of an Executive Engineer, to say the least, not unjust on the face of it and the onus therefore cannot shift from where it originally lay.”
24. Such presumption of constitutionality is available also in case of a delegated legislation. In case of St. Johns Teachers Training Institute vs. Regional Director, National Council for Teacher Education and Another reported in (2003) 3 SCC 321, the Apex Court observed that “it is well-settled that in considering the vires of subordinate legislation, one should start with the presumption that it is intra vires and if it is open to two constructions, one of which would make it valid and the other invalid, the courts must adopt that construction which makes it valid and the legislation can also be read down to avoid its being declared ultra vires.” Such principle of presumption of constitutionality in case of delegated legislation is consistently followed in several decisions. It is not necessary to refer to all such decisions on this issue.
25. It is equally well-settled that the delegated legislation does not carry same level of immunity as that of the Act of the Parliament or the State Legislatures. In Indian Express Newspapers (Bombay) Private Ltd. And Others vs. Union of India and Others reported in (1985) 1 SCC 641, the Apex Court observed as under:-
“75. A piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent Legislature. Subordinate legislation may be questioned on any of the grounds on which plenary legislation is questioned. In addition it may also be questioned on the ground that it does not conform to the statute under which it is made. It may further be questioned on the ground that it is contrary to some other statute. That is because subordinate legislation must yield to plenary legislation. It may also be questioned on the ground that it is unreasonable, unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary. In England, the Judges would say "Parliament never intended authority to make such rules. They are unreasonable and ultra vires". The present position of law bearing on the above point is stated by Diplock, L.J. in Mixnam's Properties Ltd. v. Chertsey Urban District Council thus:
The various grounds upon which subordinate legislation has sometimes been said to be void ... can, I think, today be properly regarded as being particular applications of the general rule that subordinate legislation, to be valid, must be shown to be within the powers conferred by the statute. Thus, the kind of unreasonableness which invalidates a bye-law is not the antonym of ''reasonableness” in the sense in which that expression is used in the common law, but such manifest arbitrariness, injustice or partiality that a court would say: 'Parliament never intended to give authority to make such rules; they are unreasonable and ultra vires”... if the courts can declare subordinate legislation to be invalid for “uncertainty” as distinct from unenforceable ... this must be because Parliament is to be presumed not to have intended to authorise the subordinate legislative authority to make changes in the existing law which are uncertain."
26. One of the grounds for challenge of a delegated legislation would be that it is ultra vires the parent Act or that it does not fulfill the policy envisaged under the parent Act. This would be so because for delegated legislation, the parent Act is both its source of power as well as of its limits. The delegated legislation which traces its source to the parent Act must, therefore, conform to the limitations of exercise of such powers provided in the Act itself.
27. In the above context, therefore, it would certainly be necessary that the impugned notifications fulfill the requirements of discharge of the power by the Board as provided under section 14(2) of the Act. We have noticed that section 14(2) of the Act empowers the Board, by issuance of notification, to provide tariff value when it is satisfied that having regard to the trend of the value of such or like goods, it is necessary so to do. Since such aspects were not elaborately met with by the respondents in their affidavit, we had perused the documents produced before us pertaining to issuance of both the notifications. We find that before issuance of such notifications particularly the notification of 2001, a detailed exercise was carried out. From the documents it appears that the issue arose out of the investigation by the Revenue Intelligence of large scale price rigging of certain kind of edible oils for evasion of duty. The Director of Revenue Intelligence had carried out country-wide search operations covering various importers of edible oils in May 2001. Before issuing the impugned notification, various details were collected and price trends were gathered. Valuation suggested by the Director of Valuation was taken into account. The same was compared with the price reported in Oil World Weekly. On the basis of such material, recommendations of DVO were taken into consideration. Ultimately, on the basis of international prices reported in the Oil World Weekly, the suggestions of the DVO and the recommendations for fixing the tariff value of crude palm oil, decision was taken to fix the same at USD 350 per tonne with effect from 1.8.2001. From these materials, it emerges that after due deliberation and full consideration of relevant factors, the tariff value was fixed by issuing notification of 2001 under section 14(2) of the Act. Even at that time, it was realized that the price trend may fluctuate from time to time and that therefore, it would be necessary to modify such prices in future keeping in tune with the changing trends. Notification of 2002 was only making modification in the price fixation. In fact, the basis of such subsequent notification of 2002 was the earlier notification of 2001. Thus sufficient material was collected which indicated that there was prevalent manipulation of prices for customs duty purpose in imports of edible oils. Various details and materials in support of such theory were placed before the Board by the Customs Department. Such materials were examined and eventually the decision to fix a certain value for Palm Oil came to be taken. The value was accordingly fixed at USD 372 per metric tonne with effect from 1-8-2001. Computations made by Director of Valuation on the basis of contemporaneous documents and data such as the prices reported in Oil World Weekly were taken into account before coming to such a decision. By no stretch of imagination, can it be stated that the fixation of the tariff value was without having regard to the trend of the value of such or like goods or that without being satisfied that having regard to such factors, it was necessary to fix the tariff value in the present case.
28. Similarly, in addition to the affidavit already filed before us, the documents from the file further reveal that before issuance of notification of 2002 and revising such tariff value, further exercise was undertaken to take note of subsequent price fluctuations. Information received from various Commissionerates was analysed and compared to international prices given by Oil World Weekly, comparisons were carried out and only thereupon the decision to amend the tariff value came to be taken which ultimately culminated into issuance of notification dated 2-9-2002.
29. We may remind ourselves that we are examining challenge to a piece of legislation albeit a delegated legislation. Such legislation is in the field of taxation. Though it is open for the court to examine vires thereof on the well recognised principles on which a delegated legislation can be called in question, undoubtedly, neither the sufficiency of the reasons which prompted the competent authority to issue such a notification nor the wisdom of the policy would be open for this court to examine. In case of Maharashtra State Board of Secondary and Higher Secondary Education and Another vs. Paritosh Bhupeshkumar Sheth and Others reported in 1984 (4) SCC 27, the Apex Court in the context of the challenge to the Maharashtra Secondary and Higher Secondary Education Board's regulations observed that the question whether a particular piece of delegated legislation is in excess of the power of subordinate legislation conferred on the delegate has to be determined with reference only to the specific provisions contained in the relevant statute conferring the power to make the rules. So long as the body entrusted with the task of framing the rules or regulations acts within the scope of the authority conferred on it, it is not within the legitimate domain of the court to determine whether the purpose of the statute can be served better by adopting any policy different from what has been laid down by the Legislature or its delegate. It was further observed that it would be wholly wrong for the court to substitute its own opinion for that of the Legislature or its delegate as to what principle or policy would best serve the objects and purposes of the Act and to sit in judgment over the wisdom and effectiveness or otherwise of the policy laid down by the regulation-making body and declare a regulation to be ultra vires merely on the ground that, in the view of the court, the impugned provisions will not help to serve the object and purpose of the Act.
30. We are of the opinion that both the notifications were issued by the Board in valid exercise of the power under section 14(2) of the Act. The decision of the Board would be based on subjective satisfaction of the requirement that it was necessary to fix such tariff value.
31. Coming to the last surviving challenge on the ground of the notifications being ultra vires Article 14 of the Constitution, we recall that the main thrust of this argument was based on the decision of Karnataka High Court in the case of Param Industries (supra). In such case, the High Court had quashed the notification revising the tariff value of Palm Oil on the ground that such notification fixed the tariff value in case of only some of the edible oils to the exclusion of the rest. The court was of the opinion that such fixation of tariff value for only a part of the class of goods was not authorised by the statute. Referring to section 14(2) of the Act, the court held and observed as under:-
“A reading of the above Section makes it clear that tariff values can be fixed only for any class of goods. The customs Tariff Act, 1975 specifies the class of goods for the purpose of levy of duty. Under the impugned Notification No.36/2001-CUS (N.T.) dated 3.8.2001, the trend values have been fixed only in respect of some of the goods viz., Crude Palm Oil, RBD Palmolein classified under chapter sub- heading 15.11 constituting only a part of the class of goods being vegetable oils under chapter Heading 15 of the Tariff Act. Clearly a large number of other vegetable oils such as Sunflower, Safflower, Cotton Seed, Soyabean, all of which form part of the same class of goods as the goods notified vide the impugned Notification No.36/2001-CUS (N.T.) dated 3.8.2001, have been left out. Such a discretionary fixation of trend value for only part of class of goods is not authorised by statute and in the absence of any reasonable explanation and materials placed on record to satisfy the Court justifying that the same has been issued after due application of mind and objective satisfaction, the notification is not sustainable.”
32. With respect, we are unable to persuade ourselves to adopt such a line. We say so because of the following reasons:-
32.1 Article 14, as is well-settled, prohibits class legislation but not reasonable classification. In other words, Article 14 would strike at a law which will apply only to a particular class of persons or things without there being any rational reason why such class is being singled out from the rest for such differential treatment. It is also true that such classification to be reasonable and thus permissible, two requirements must be satisfied namely (1) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out in the group and (2) that differentia must have a rational relation to the object sought to be achieved by the statute. The above principles were emphasized by the Apex Court as far back as in 1955 in a Constitution Bench judgment in the case of Budhan Choudhry and others vs. State of Bihar reported in AIR 1955 SC 191. It was held and observed as under:-
“It is now well established that while Article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (ii) that that differential must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases; namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. It s also well established by the decisions of this Court that Article 14 condemns discrimination not only by a substantive law but also by a law of procedure.”
32.2 The class of goods, namely, crude degummed oil of edible grade, forms one class. If within this homogeneous class, the notification had made some artificial discrimination and provided for different treatment in terms of fixation of tariff value, the grievance of the petitioners would have been justified. In the present case, however, the case of the petitioners was that trend value has been fixed only in respect of some of the goods namely Crude Palm Oil, RDB oil etc. classified under Chapter 15.11 which constitute only a part of the class of goods being vegetable oils under Chapter Heading 15 of the Customs Tariff Act. Large number of other vegetable oils such as Sunflower, Saffola, Cottonseed, Soyabean etc. have been left out.
32.3 We do not see how the entire Chapter Heading 15 can be stated to be forming a homogeneous class of goods with respect to which further sub-classification is not permissible. The Chapter itself contains several sub-headings and classifications. As we already noted, the rule making authority found it necessary to fix tariff value in case of some of these goods since the price rigging was found prevalent. Simply because certain items which fall under Chapter 15 were not included for such exercise, in our view, cannot be stated to be violative of Article 14 of the Constitution. Essentially, we do not think that edible oils as a class form one homogeneous category of goods in which further sub-classification was not permissible.
33. Additionally, we also note that Karnataka High Court itself in subsequent decision in the case of Ruchi Soya Industries (supra) examined validity of notification dated 13-6- 2002 by which also the tariff value specified in the notification of 2001 came to be amended. The petitioners therein had placed reliance on the decision of the High Court in the case of Param Industries (supra). Finding that the issues were common, the High Court opined that ordinarily it would be bound by such decision of a co-ordinate bench, however, noticing that certain statutory provisions were not brought to the notice of the court in earlier decision, held that the decision was per incuriam and proceeded to independently examine the challenge of the petitioners to the vires of the notification. The court referred to Chapter 15 of the Customs Tariff Act, 1975 which pertains to animal or vegetable fats and oils. The court also took note of several sub-headings falling under Chapter 15 and observed that these commodities and products are palpably not identical or similar and they do not constitute a homogeneous or composite class. With such observations, the court dismissed the petition making following further observations:-
“9. We find ourselves totally unmoved and unpersuaded by the argument advanced by the learned counsel for the petitioner that the entire Chapter-15 deals with one single class of goods. Instead, we are of the unequivocal opinion that each of the subject heads defined in Chapter-15 i.e., 15.01 to 15.22 deals with distinct “class of goods”, and the sub-divisions of commodities/products entitled as 'cleavage products' with which we are presently concerned. The tariff on goods is imposed to regulate the importation of different commodities so as to bring about a balance in prices in domestic markets. The demand of items such as Lard and animal fats is not similar to that of natural oils. Lard or pig fat will not be consumed by certain sections of the society and they may also not be palatable to persons belonging to different communities of our society. The reality is that there are also fluctuating preferences even of natural oils as cooking mediums, the consumption is susceptible to dietary research as well as the publicity and advertising blitz, and accordingly demand would increase or decrease. It is for this reason, it seems to us, to be inescapable that each of the subject headings contained in Chapter-15 of Section-III comprises a different class of goods in themselves. This being so, it is open to the Legislature to prescribe and modify from time to time different tariff rates in respect of each of them and such action of the instrumentalities or functionaries could not be termed as violative of Article-14 of the Constitution of India. Section 14(2) which was amended by the Finance Act, 2007, specifically contemplates the actual price of the commodities at any given point of time. Therefore, Chapter-15 of the Customs Tariff Act 1975 cannot be dealt with as one composite subject, and each of the entries mentioning a class of goods and their cleavages or fragments or divisions can be dealt with separately and distinctly. We think it proper to reiterate that the definition contained in the Customs Valuation Rules, 1988 was not brought to the notice of the Division Bench which decided Param Industries, as is manifestly evident from a perusal thereof.
10. In view of this analysis, we find no merit in the second argument advanced by learned counsel for the petitioner that the trend value of the goods cannot be prescribed separately for each of the several subject headings contained in Section-III, Chapter-15 of the Customs Tariffs Act 1975. Accordingly, we hold that prescribing different tariffs only for Palmolein or Palm oil covered by Heading No.15.11 is not violative of Article-14 of the Constitution of India. The position stands amply clarified by the definition in Rule 2 of the Customs Valuation Rules.
11. In Hind Plastics -Vs- Collector of Customs, Bombay, 1994 (71) E.L.T. 325 (SC) their Lordships have clarified the position in these words - “What should be the tax is a matter not to be decided by the Courts but by the appropriate instrumentalities or functionaries”. Viewed from any angle, the writ petitions are devoid of merits and they are liable to be dismissed.”
34. We must remind ourselves that in the matter of economic policy and taxation, the courts always recognise much greater latitude for the Government. In case of Bajaj Hindustan Limited vs. Sir Shadi Lal Enterprises Limited and Another reported in (2011) 1 SCC 640, the Apex Court observed as under:-
“39. We should not be understood to have meant that the judiciary should never interfere with administrative decisions. However, such interference should be only within narrow limits e.g. when there is clear violation of the statute or a constitutional provision, or there is arbitrariness in the Wednesbury sense. It is the administrators and legislators who are entitled to frame policies and take such administrative decisions as they think necessary in the public interest. The Court should not ordinarily interfere with policy decisions, unless clearly illegal.
40. Economic and fiscal regulatory measures are a field where Judges should encroach upon very warily as Judges are not experts in these matters. The impugned policy parameters were fixed by experts in the Central Government, and it is not ordinarily open to this Court to sit in appeal over the decisions of these experts. We have not been shown any violation of law in the impugned notification or press note.
41. The power to lay policy by executive decisions or by legislation includes power to withdraw the same unless it is by mala fide exercise of power, or the decision or action taken is in abuse of power. The doctrine of legitimate expectation plays no role when the appropriate authority is empowered to take a decision by an executive policy or under law. The court leaves the authority to decide its full range of choice within the executive or legislative power. In matters of economic policy, it is settled law that the court gives a large leeway to the executive and the legislature. Granting licences for import or export is an executive or legislative policy. The Government would take diverse factors for formulating the policy in the overall large interest of the economy of the country. When the Government is satisfied that change in the policy was necessary in the public interest it would be entitled to revise the policy and lay down a new policy.”
35. Before closing, we may record that Shri Dipen Desai for the petitioners had requested that the Government documents be shared with the petitioners. If the documents were being summoned at the request of the petitioners, we would have surely granted such a request. However, these documents were summoned at our request. The Government counsel conveyed to us the earnest request of the authorities to maintain confidentiality of such documents. We had called for such documents to verify certain factual aspects for our consideration and to examine satisfaction of certain requirements particularly when the reply of the Government of India was not elaborate on such aspects. We also record that the petitioners had, at a fairly advanced stage, also widened the scope of the petitions by placing additional material to contend that the notification of 2002 was not sent for publication in Government press till 3-9-2002. On this and certain other aspects, the Government of India had not made any satisfactory comments in the replies filed before us. Therefore, instead of judging the issues by default or defect in pleadings by both sides, we had, to satisfy ourselves on factual aspects of the matter, called for such files. Documents be kept in the sealed condition in the custody of the Registry.
36. In the result, we find no substance in these petitions. All the petitions are, therefore, dismissed. Rule discharged. Interim relief vacated.
( Akil Kureshi, J. ) ( Harsha Devani, J. ) hki