Madras HC Rules in Landmark Judgement that Enhanced Duty cannot be charged on Imports Cleared before Time of Notification Issue

· Board must Refund old Cases where wrongful Duty Charged at Gun Point by Customs

The Madras High Court, while allowing a petition, directed the Custom Authority to refund the entire excess amount paid as enhanced under protest, including the IGST amount duty within two months.

The petitioner, M/s. Ruchi Soya Industries Limited is a public limited company, challenged the Notification issued by the respondent Customs Department dated March 1, 2018, under Section 25 of the Customs Act, 1962 on several ground including the transaction of the import of crude vegetable oils in bulk by the petitioner company for the manufacture of Soya Food products.

The petitioner company entered into a contract with its foreign supplier in Malaysia for the purchase of Edible Palm Oil in bulk that was to be shipped from the port at Indonesia to be delivered at Chennai in India.

The dispute is with regard to payment of customs duty and Integrated Goods and Service Tax (IGST) for clearance of the subject goods, which the respondent department claimed on the strength of the notification dated March 1, 2018.

The petitioner contended that the said notification dated March 1, 2018, was updated on March 2, 2018, and came to be published in the Official Gazette. The customs duty, as was applicable, had already been paid along with the IGST on March 1, 2018, and March 5, 2018, respectively, and, therefore, the enhanced amount realized from the petitioner is unlawful.

The division bench headed by Chief Justice A.P. Sahi, while allowing the petition, directed the Custom Authority to refund the entire excess amount paid as enhanced under protest, including the IGST amount duty within 2 months.