Case: Dai-Ichi Karkaria Ltd Vs. Union Of India

the notification issued under Section 25 of the Customs Act, 1962 is considered. This Court held that power to grant exemption under Section 25 of the Customs Act is a legislative power and a notification issued by the Government thereunder amounts to a piece of subordinate legislation, even then the notification is liable to be questioned on the ground that it is an unreasonable on inasmuch as 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 grounds on which plenary legislation can be challenged; (i) that it does not conform to the statute under which it is made; (ii) that it is contrary to some other statute inasmuch as subordinate legislation must yield to plenary legislation, (iii) that it is unreasonable in the sense that it is manifestly arbitrary. The embargo of arbitrariness is embodied in Article 14 of the Constitution. An enquiry into the vires of delegated legislation must be confined to the ground on which the plenary legislation may be questioned, except that subordinate legislation cannot be questioned on the ground of violation of the principle of natural justice on which administrative action may be questioned. In cases where power vested in the Government is a power which has got to be exercised in public interest, as is the case in the present case, the Court may require the Government to exercise that power in a reasonable way in accordance with the spirit of the constitution. The mere fact that a notification issued under Section 25 of the Customs Act is required to be laid before Parliament under Section 159 of the Customs Act does not make any substantial difference as regards the jurisdiction of the Court to pronounce on its validity. Section 25 of the Customs Act under which notifications are issued confers a power on the Central Government coupled with a duty to examine the whole issue in the light of public interest. If the Central Government is satisfied that it is necessary in the public interest so to do, it may exempt generally either absolutely or subject to such conditions, goods of any description, from the whole or any part of the customs duty leviable thereon. Power exercisable under Section 25 of the Customs Act is no doubt discretionary, but it is not unrestricted. The pattern of the law imposing customs duties and the manner in which it is operated to a certain extent exposes the citizens who are liable to pay customs duties to the vagaries of executive discretion. While Parliament has imposed duties by enacting the Customs Act and the Customs Tariff Act, 1975, the executive Government is given wide power by Section 25 of the Customs Act to grant exemption from the levy of customs duty. It is ordinarily assumed that while such wide power is given to the Government, it will consider all relevant aspects governing the question whether exemption should be granted or not. 10. Ms. Nisha Bagchi, learned counsel for respondents, relied on Union of India v. Indian Charge Chrome, 1999(112) ELT 753 (S.C.) In this case, however, the law stated in Kasinka Trading & Anr. (supra) is reiterated but there is no plea in the petition that the formation of opinion as to public interest is based on no material or was vitiated by mala fides. In the present case. The position is altogether different. Specific plea has been raised that there is no basis for formation of the opinion as to public interest calling for withdrawal or modification of the exemption already granted. Therefore, the principle stated in that case has no application to the facts of the present case. 11. Relying upon a decision in Collector of Central Excise v., R.M.D.C. Press Pvt. Ltd., 1997(92) ELT 29 (S.C.), it was further submitted by the learned counsel for the respondents that public interest should be presumed to exist even when the judgment under appeal does not expressly refer to public interest which moved the respondents to curtail the period of exemption. When a specific contention had been raised regarding non-existence of public interest in curtailing the period of exemption, we fail to understand as to how this decision can be of any assistance to the learned counsel. 12. In the present case, by issuing different set of notifications and granting exemption at different stages and limiting only to the extent of 75% for the period from December 30, 1986 to September 10, 1987 and for the reasons stated earlier in the manner set out in the counter affidavit clearly indicate that the Government has not taken into account all the relevant factors while issuing the impugned notifications reducing the exemption to 25% for the aforesaid period. We may state that the Government had failed to discharge its statutory obligation while issuing the impugned notifications. Justifications offered, to say the least, is far too halve to be accepted. The reasons set out does not carry the case of the State Government further at all. 13. However, Ms. Nisha Bagchi sought to distinguish the different notifications by stating that different notifications issued subsequently are in respect of different commodities and it is always open to the Government to change its policy. Undoubtedly it is so, but those factors per se would not discharge the burden of the Government in establishing as to what public interest governed the Government in reducing the extent if exemption. 14. We have already held that the Government has failed to discharge that burden. In the result, we have no hesitation in quashing the amended notifications which are applicable for the period from December 30, 1986 to September 10, 1987 reducing the extent of exemption. The notification issued earlier on September 10, 1982 and modified in 1983 shall be effective till September 10, 1987. The appellants should be subject to duty only in accordance with those notifications issued under the Customs Act.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]In the present case, by issuing different set of notifications and granting exemption at different stages and limiting only to the extent of 75% for the period from December 30, 1986 to September 10, 1987 and for the reasons stated earlier in the manner set out in the counter affidavit clearly indicate that the Government has not taken into account all the relevant factors while issuing the impugned notifications reducing the exemption to 25% for the aforesaid period. We may state that the Government had failed to discharge its statutory obligation while issuing the impugned notifications. Justifications offered, to say the least, is far too halve to be accepted. The reasons set out does not carry the case of the State Government further atMs. Nisha Bagchi sought to distinguish the different notifications by stating that different notifications issued subsequently are in respect of different commodities and it is always open to the Government to change its policy. Undoubtedly it is so, but those factors per se would not discharge the burden of the Government in establishing as to what public interest governed the Government in reducing the extent ifhave already held that the Government has failed to discharge that burden. In the result, we have no hesitation in quashing the amended notifications which are applicable for the period from December 30, 1986 to September 10, 1987 reducing the extent of exemption. The notification issued earlier on September 10, 1982 and modified in 1983 shall be effective till September 10, 1987. The appellants should be subject to duty only in accordance with those notifications issued under the Customs Act.