The Bombay High Court aided Patanjali in avoiding a Rs. 62 lakh customs duty by acting just 25 minutes before a scheduled tariff hike. This timely intervention allowed Patanjali to benefit from the existing lower duty rate, resulting in significant savings for the company.
Mumbai: The Bombay High Court ruled in favour of Patanjali Foods, granting the company relief by annulling the reassessment of customs duty on their import of crude palm oil for domestic consumption. This decision will save Patanjali approximately Rs. 62 lakh, which they would have had to pay to the Department of Revenue if the revised tariff rates had been applied.
A Division Bench comprising Justices KR Shriram and Jitendra Jain observed that the notification revising the tariff rates came into effect around 9:30 pm, whereas Patanjali self-assessed and presented their ex-bond bills of entry between approximately 8:20 pm and 9 pm.
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This means that Patanjali had completed their customs clearance process about 25 minutes before the revised rates implemented.
The Court stated,
“Admittedly, in this case, four Ex-Bond Bills of Entry were presented before the said Notification came into force. One bill of entry was self-assessed on May 13, 2021, at 20:17:07 hours, the second was self-assessed at 20:56:11 hours, the third was self-assessed at 20:15:09 hours, and the fourth was self-assessed at 20:59:08 hours, whereas, the Notification was e-gazetted on May 13, 2021, at 21:24:11 hours,”
Patanjali Foods approached the Court with a writ petition against the reassessment of ex-bond bills of entry, all dated May 13, 2021, under Section 68 of the Customs Act. The company sought clearance of goods for home consumption, arguing that the Revenue had improperly applied tariff rates that became effective after the bills of entry assessed, as outlined under Section 15 of the Customs Act.
Patanjali Foods contended that this reassessment led to additional customs duty, agriculture and infrastructure development cess, social welfare surcharge, and IGST, totalling Rs. 61,69,890, which paid under protest.
The Revenue argued that Patanjali Foods had an alternative remedy and should challenge the reassessment orders through an appeal before the appropriate forum. However, the Court rejected this submission, noting that the reassessment orders were not speaking orders.
It explained,
“Therefore, even if we decide to direct the petitioner to file the appeal, the petitioner will not even know the ground on which the reassessment was made and how the reassessment was contrary to the self-assessment done by the petitioner,”
The Court referenced the Supreme Court’s decision in Union of India & Ors. v M/s GS Chatha Rice Mills & Anr., which established that the applicable tariff rate is the one in force at the time of presenting self-assessed bills of entry.
The Court observed that the last of the four bills of entry submitted at 8:59 PM on May 13, 2021, whereas the new tariff rates became effective 25 minutes later at 9:24 PM.
The Revenue contended that Patanjali Foods failed to file a refund application within the one-year limitation period. However, the Court cited the Supreme Court‘s ruling in ITC Ltd v Commissioner of Central Excise, Kolkata IV, stating that the limitation period does not apply when duty is paid under protest.
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As a result, the Court annulled the reassessment orders and instructed Patanjali Foods to submit a refund application to the proper officer. The Court further directed the officer to process the application within 12 weeks in accordance with the law.
Advocates Rajesh Rawal and HR Shetty, instructed by HR Shetty and Associates, represented Patanjali Foods.
Advocate Jitendra B Mishra, instructed by advocate Ram Ochani, represented the Department of Revenue.
Read Judgment: [Patanjali Foods Ltd. v Union of India and Ors.]