M/S. Indian Farmers Fertilizer Co.Op.LTD. vs. Union Of INDIA

Held

The Court admitted the writ petition based on the fact that the Union of India had preferred a Special Leave Petition against the High Court's decision in M/s. Tata Steel Ltd. & another v. Union of India & others, and no stay order had been granted by the Hon'ble Apex Court. Consequently, the Court directed that no recovery would be made from the petitioner. However, it was stipulated that if the petitioner ultimately fails in the petition, they will be required to file an undertaking to repay the charges. The Court did not explicitly decide on the validity of the "Explanation" to Rule 10(2) or the legality of denying the refund, but rather stayed any recovery pending the outcome of the SLP and the final decision on the writ petition. The issue of the validity of the Explanation and the refund denial was implicitly deferred.

Facts

The petitioner, a manufacturer, filed a writ petition challenging the "Explanation" to Rule 10(2) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007. The petitioner also challenged the denial of a refund of customs duties paid on ship demurrage charges. The petitioner argued that this denial violated Section 14 of the Customs Act and was contrary to a previous decision of the High Court in M/s. Tata Steel Ltd. & another v. Union of India & others. The Union of India, the opposite party, had filed a Special Leave Petition against the Tata Steel judgment, but no stay order was granted by the Supreme Court. The High Court admitted the writ petition.

Key Issues

1. Whether the "Explanation" to Rule 10(2) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007, is valid and legal, in light of Section 14 of the Customs Act, 1962. 2. Whether the action of the opposite party in denying the grant of refund of customs duties paid on ship demurrage charges is arbitrary and illegal. Petitioner's Contentions: The petitioner contended that the "Explanation" to Rule 10(2) is invalid and illegal as it contravenes Section 14 of the Customs Act. They further argued that the denial of refund for ship demurrage charges is contrary to the settled position of law as decided by this Court in M/s. Tata Steel Ltd. & another v. Union of India & others, 2019 (I) OLR-600. They emphasized that the Union of India had filed an SLP against the Tata Steel judgment but no stay was granted by the Apex Court. Revenue's Contentions: The judgment records no specific contentions for the revenue or State.