Radha Textiles P. Ltd. vs Union of India and Others

R. Sudhakar, J.—This batch of writ petitions have been filed challenging Notification No. 2/2002-Customs, dated January 8, 2002 and that

the notification reads as follows:

Notification No. 2/2002-Customs, dated January 8, 2002.

G.S.R. (E).--Whereas the Central Government is satisfied that the import duty leviable on cotton, not carded or combed, falling under Chapter 52

of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) should be increased and that circumstances exist which rendered it necessary

to take immediate action.

Now, therefore, in the exercise of the powers conferred by sub-section (1) of section 8A of the said Customs Tariff Act, the Central Government

hereby directs that the First Schedule of the said Customs Tariff Act shall be amended in the following manner, namely:--

In the First Schedule to the said Customs Tariff Act, in Section XI, in Chapter 52, against Heading 52 01 occurring in column (2), for the entry in

column (4), the entry ""ten per cent/'' shall be substituted.

This Notification shall come into force on 9th day of January, 2002.

Almost all the petitioners are textile mills situated in different parts of the State. The raw material used by them is cotton and much of their cotton

input is by way of imports. The present dispute revolves around the period December, 2001 to January, 2002. Many of the petitioners had

entered into contracts with foreign suppliers for purchase of cotton and based on such contracts, shipments were already made and in some cases

goods were in transit. Prior to the issuance of Notification No. 2/2002-Customs, dated January 8, 2002, the rate of duty in respect of the goods

falling under First Schedule to the Customs Tariff Act, 1975, in Section XI, in Chapter 52, against Heading 52 01 was five per cent. On the

landing of the goods, the petitioners herein filed bills of entry for home consumption and are aggrieved by the increase in the rate of duty in respect

of the goods, forcing them to challenge the notification, as u/s 15 of the Customs Act, 1962 the relevant date for determining the rate of duty and

tariff valuation of imported goods will be the date on which the bill of entry in respect of such goods is presented u/s 46 of the Customs Act, 1962.

The main plea in all these writ petitions is that the ingredients of section 8A(1) of the Customs Tariff Act, 1975 are not satisfied in the present

case warranting the increase in import duty from five per cent, to ten per cent. To be more precise, the contention of Mr. R. Thiagarajan, learned

senior counsel and Mr. H. Karthik Seshadri and Mr. Palani Selvaraj, learned counsel appearing for the petitioners is that the conditions precedent

for exercise of power to increase import duty prescribed u/s 8A of the Customs Tariff Act, 1975 are:

(i) that there should be satisfaction of the Central Government that the import duty leviable should be increased; and

(ii) that the circumstances exist rendering it necessary to take immediate action. The condition, as above, did not exist at the time when the

notification under challenge was issued in terms of section 8A of the Customs Tariff Act, 1975. On the said premise, the writ petitions are filed,

alleging that notification has been issued arbitrarily and in exercise of power capriciously.

Pending the writ petitions, the goods were released by the interim orders and one such interim order reads as under:

Having regard to the facts and circumstances of the case, it is directed that it will be open to the petitioner to get release of the material by

paying five per cent, duty and by furnishing property security for the balance of five per cent, to the satisfaction of the concerned Commissioner of

Customs. It will also be open to the petitioner to furnish bank guarantee instead of property security.

It is to be mentioned that in spite of the writ petitions being admitted as early as 2002 and notice issued and served, the Union of India, Ministry

of Finance, Department of Revenue, which issued the notification u/s 8A of the Customs Tariff Act, 1975 has not chosen to file a counter-affidavit

refuting the plea taken in the writ petitions and further there is no explanation as to why the notification came to be issued and under what

circumstances. It is at the instance of this court that certain clarifications were submitted by way of letter correspondence to show that the

notification was placed before Parliament for its approval, which is the requirement of section 7 of the Customs Tariff Act, 1975. The original file

was never produced before this court, even though specific orders were passed by this court from time to time to produce it. The orders dated

November 19, 2012 and December 21, 2012 passed by this court read as under:

November 19, 2012

The notification bearing No. 2/2002-Customs, dated January 8, 2002 was issued by the Ministry of Finance, Department of Revenue,

Government of India by exercising the emergency power u/s 8A of the Customs Tariff Act, 1975 increasing the rate of import duty leviable on

cotton.

Mr. R. Thiagarajan, learned senior counsel draws analogy to section 25(2) of the Customs Act, 1962 and submits that the satisfaction of the

Central Government supported by reasons is sine qua non for issuing a notification increasing the rate of duty, which is absent in the present case

and in this regard, he relies on paragraph 13 of the decision of the Supreme Court in M. Jhangir Bhatusha and Others Vs. Union of India (UOI)

and Others, He would also place reliance on the decision in Indian Express Newspapers (Bombay) Private Ltd. and Others Vs. Union of India

and Others, to plead that there should be reasons to support the notification and there should be circumstances warranting the issuance of the

notification and mere placing it before Parliament is of no avail.

In view of the above, the Under Secretary to the Government of India, Ministry of Finance (first respondent), is directed to produce the files

relating to the notification bearing No. 2/2002-Customs, dated January 8, 2002. The counsel appearing for the respective Departments are

permitted to inform the first respondent to produce the file.

Post the matter on December 3, 2012.

December 21, 2012

Heard Mr. R. Thiagarajan, learned senior counsel appearing for the petitioners.

The Joint Secretary to the Government, Ministry of Finance, Department of Revenue is directed to transmit the file which necessitated the

issuance of Notification No. 2/2002-Customs, dated January 8, 2002 in exercise of section 8A of the Customs Tariff Act, 1975.

In spite of several adjournments, the original file has not been produced before this court and Mr. Ravindranath, Mr. Mahadevan, Mr. Ravi

Anantha Padmanaban, learned standing counsel appearing for the respondents plead that they have issued several letters and there is no proper

response. The issue involved in these cases has to be addressed by the Department of Revenue, Ministry of Finance, Government of India and not

by the Customs Department, as the challenge is to the notification issued by the Department of Revenue, Ministry of Finance.

Therefore, on receipt of this order, the Joint Secretary to the Government, Ministry of Finance, Department of Revenue is directed to transmit

the files relating to the issuance of the above stated customs notification without fail on or before January 21, 2013.

Post the matter on January 21, 2013 for orders.

Without fear of contradiction it has to be recorded that no officer of the Revenue Department, Government of India appeared before the court nor

was the file produced.

A counter-affidavit has been filed by the Customs Department on insistence by this court, in December, 2012 stating that the said counter-

affidavit is filed for and on behalf of all the respondents. When the Union of India is not in a position to produce the file relating to the passing of the

impugned notification and when there is no material available on record, it is not clear as to how the Customs Department received instructions

from the Ministry of Finance, Department of Revenue so as to file a counter-affidavit. It is apparent that the counter-affidavit filed for and on behalf

of the Ministry of Finance, Department of Revenue is not based on any materials. All that the counter-affidavit refers to is the placing of the

materials before Parliament. Therefore, it can be safely assumed that no effective counter-affidavit has been filed by the Ministry of Finance,

Department of Revenue.

The Customs Department, on its part, relies upon the proceedings said to be placed before Parliament to show that in response to starred

questions by some members, the matter was placed before Parliament and it was approved and, therefore, the notification is valid.

Before we embark on the merits of the notification, the provision of section 8A of the Customs Tariff Act, 1975 and the requirement of placing it

before Parliament will have to be noticed. Section 8A of the Customs Tariff Act, 1975 reads as follows:

8A. Emergency power of Central Government to increase import duties.--(1) Where in respect of any article included in the First Schedule, the

Central Government is satisfied that the import duty leviable thereon u/s 12 of the Customs Act, 1962 (52 of 1962) should be increased and that

circumstances exist which render it necessary to take immediate action, it may, by notification in the Official Gazette, direct an amendment of that

Schedule to be made so as to provide for an increase in the import duty leviable on such article to such extent as it thinks necessary:

Provided that the Central Government shall not issue any notification under this sub-section for substituting the rate of import duty in respect of any

article as specified by an earlier notification issued under this sub-section by that Government before such earlier notification has been approved

with or without modifications under sub-section (2).

(2) The provisions of sub-sections (3) and (4) of section 7 shall apply to any notification issued under sub-section (1) as they apply in relation to

any notification increasing duty issued under sub-section (2) of section 7.

Since sub-section (2) of section 8A of the Customs Tariff Act, 1975 prescribes the following of certain procedure as contemplated under sub-

sections (3) and (4) of section 7 of the Customs Tariff Act 1975, it is relevant to reproduce sub-sections (3) and (4) of section 7 of the Customs

Tariff Act, 1975, which read as under:

Duration of protective duties and power of Central Government to alter them.--

(3) Every notification under sub-section (2); in so far as it relates to increase of such duty, shall be laid before each house of Parliament if it is sitting

as soon as may be after the issue of the notification, and if it is not sitting within seven days of its re-assembly, and the Central Government shall

seek the approval of Parliament to the notification by a resolution moved within a period of fifteen days beginning with the day on which the

notification is so laid before the house of the people and if Parliament makes any modification in the notification or directs that the notification

should cease to have effect, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be, but

without prejudice to the validity of anything previously done thereunder.

(4) For the removal of doubts, it is hereby declared that any notification issued under sub-section (2), including any such notification approved or

modified under sub-section (3), may be rescinded by the Central Government at any time by notification in the Official Gazette.

From the little letter correspondence which are the materials produced subsequent to the direction of this court there can be no quarrel that the

notification was laid before Parliament. Therefore, the court is not going into the issue whether the notification was appropriately placed before

Parliament for its approval or not. The question for consideration is whether the Central Government at the time of issuing the notification invoking

the emergency power u/s 8A(1) of the Customs Tariff Act, 1975 was satisfied that the import duty leviable u/s 12 of the Customs Act, 1962

should be increased and that circumstances exist which rendered it necessary to take immediate action. The satisfaction of the two factors as

required u/s 8A(1) of the Customs Tariff Act, 1975 is the substantial issue that is raised before this court.

Mr. R. Thiagarajan, learned senior counsel by placing reliance on a decision of the Supreme Court in Indian Express Newspapers (Bombay)

Private Ltd. and Others Vs. Union of India and Others, , pleaded that notification is per se arbitrary and has been issued without there being

sufficient cause. Paragraphs 73, 74, 75, 78 and 79 are relied upon and they read as under (page 898 of 159 ITR):

We shall assume for purposes of these cases that the power to grant exemption u/s 25 of the Customs Act, 1962 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 one. The decision of this court in Municipal Corporation of Delhi Vs. Birla Cotton, Spinning and Weaving

Mills, Delhi and Another, has laid down the above principle. In that case Wanchoo, C.J. while upholding certain taxes levied by the Corporation of

Delhi u/s 150 of the Delhi Municipal Corporation Act, 1957 observed thus: ''Finally there is another check on the power of the Corporation which

is inherent in the matter of exercise of power by subordinate public representative bodies, such as municipal boards. In such cases if the act of such

a body in the exercise of the power conferred on it by the law is unreasonable, the courts can hold that such exercise is void for unreasonableness.

This principle was laid down as far back as 1898 in Kruse v. Johnson [1898] 2 QBD 91.

But it appears that the principle enunciated in Kruse v. Johnson [1898] 2 QBD 91, is not being applied so stringently in England now.

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 [1964] 1 QB 214, 237 thus:

The various special grounds on 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 of 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......

That subordinate legislation cannot be questioned on the ground of violation of principles of natural justice on which administrative action may be

questioned has been held in Tulsipur Sugar Co. Ltd. Vs. The Notified Area Committee, Tulsipur, , AIR 1981 1127 (SC) and in Bates v. Lord

Hailsham of St. Marylebone [1972] 1 WLR 1373. A distinction must be made between delegation of a legislative function in the case of which the

question of reasonableness cannot be enquired into and the investment by statute to exercise particular discretionary powers. In the latter case the

question may be considered on all grounds on which administrative action may be questioned, such as, non-application of mind, taking irrelevant

matters into consideration, failure to take relevant matters into consideration, etc., On the facts and circumstances of a case, a subordinate

legislation may be struck down as arbitrary or contrary to statute if it fails to take into account very vital facts which either expressly or by

necessary implication are required to be taken into consideration by the statute or, say, the Constitution. This can only be done on the ground that

it does not conform to the statutory or constitutional requirements or that it offends article 14 or article 19(1)(a) of the Constitution. It cannot, no

doubt, be done merely on the ground that it is not reasonable or that it has not taken into account relevant circumstances which the court considers

relevant.

We do not, therefore, find much substance in the contention that the courts cannot at all exercise judicial control over the impugned notifications. In

cases where the power vested in the Government is a power which has got to be exercised in the public interest, as it happens to be here, the court

may require the Government to exercise that power in a reasonable way in accordance with the spirit of the Constitution. The fact that a

notification issued u/s 25(1) of the Customs Act, 1962 is required to be laid before Parliament u/s 159 thereof does not make any substantial

difference as regards the jurisdiction of the court to pronounce on its validity.

He contended that the notification under challenge does not conform to the statute under which it is made, besides being challenged on the ground

of unreasonableness and one issued without application of mind, as relevant materials were not considered before issuing the notification. He

further contended that circumstances did not exist for issuing the notification and there was no satisfaction by the Central Government before the

notification was issued and, therefore, the said notification can be challenged. He submitted that mere placing of the notification before Parliament

by itself will not cure the defect and consequently it will not oust the jurisdiction of this court to consider the validity of the notification under

challenge. He relied upon paragraph 79 of the above said judgment in support of the last contention raised. Even though Indian Express

Newspapers (Bombay) P. Ltd. [1986] 159 ITR 856 (SC) is a case of exemption u/s 25(2) of the Customs Act, 1962 and the case on hand

relates to a notification issued exercising the emergency power u/s 8A of the Customs Tariff Act, 1975, according to the learned senior counsel,

the principle laid down in the above decision will apply to this case as well.

Similarly, in another case of exemption u/s 25(2) of the Customs Tariff Act, 1975, namely, M. Jhangir Bhatusha and Others Vs. Union of India

(UOI) and Others, where exemption granted to State Trading Corporation was denied to private importers for importing the same commodity, the

Supreme Court observed as follows:

The contention of the petitioners is that the discriminatory treatment has no real or substantial nexus with the proposed object of the exemption

orders, having regard to the terms of section 25(2) under which the exemption orders in favour of the State Trading Corporation have been made

and, therefore, there is a violation of article 14 of the Constitution. Section 25(2) provides:

''(2) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case, exempt from the

payment of duty, under circumstances of an exceptional nature to be stated in such order, any goods on which duty is leviable.''

It is apparent that the power conferred on the Central Government u/s 25(2) of the Act is to be exercised by it in its subjective satisfaction. It

must be satisfied that it is necessary in the public interest to pass a special exemption order. The exercise of the power is controlled by the

requirement in the sub-section that the exemption order must contain a statement stating the circumstances of an exceptional nature under which the

special exemption order has been considered necessary. The requirement is intended by the statute to ensure that the satisfaction of the Central

Government concerning the necessity of the order is not reached arbitrarily but flows from material relevant to the object for which the power has

been conferred. The circumstances recited in the exemption orders are:

''In view of high international prices of vegetable oils and in order to keep the domestic prices of vanaspati at reasonable levels, it has been felt that

certain specified vegetable non-essential oils imported by the STC would need to be exempted from part of the customs duty.''

The reasons set forth in this statement have been analysed by learned counsel for the private importers and an attempt has been made to

establish that there is no justification for relying on the international prices of vegetable oils nor the stated desirability of keeping the domestic prices

of vanaspati at reasonable levels as grounds for making the impugned exemption orders in favour of the State Trading Corporation. In detailed

argument, learned counsel for the private importers urges that the public interest which could be contemplated u/s 25(2) must be the reduction of

the landed cost in order to reduce the domestic prices of the oils. That object, it is. said, is not served by conferring an advantage upon a particular

importer even if it be the State Trading Corporation, who is engaged in the same activity in respect of the same goods. It is pointed out that the

concession must relate to the goods and not to the personality of the importer. Further, it is argued, the allegation that the international prices of

edible oils were high is inconsistent with the reality of the situation; on the contrary, it is pointed out, there had been a fall in the international prices

of various oils. In support of the latter submission, reference has been made before us to the pleadings of the parties and a PAC report.

Elaborating his submission in regard to the stated need for maintaining the domestic prices of vanaspati at reasonable levels, learned counsel for the

private importers urges that the oils which were being imported by private importers were intended for direct human consumption and could not

have been supplied to the vanaspati industry. Reference is made to the affidavits of the parties to show that the oils imported by the petitioners

could not be utilised in the manufacture of vanaspati as permission to do so had not been granted. Accordingly, the private importers say, there is

no basis for the differential duty set out in the exemption orders and no real or substantial nexus between the differentiation made and the object of

section 25(2). Then, it is also urged, there is no real or substantial distinction between the private importers and the State Trading Corporation

having regard to the object of the statute, the nature of customs duty, the rationale of section 25 and the professed object of the exemption orders

u/s 25(2). The State Trading Corporation, it is contended, cannot be equated with the Central Government, and we are referred to The State

Trading Corporation of India Ltd. and Others Vs. The Commercial Tax Officer, Visakhapatnam and Others, It is a private limited company

registered under the Companies Act, 1956 and liable to be wound up under that Act, and that although it functions under the supervision of the

Government of India and its directors, it is hot concerned with the performance of any governmental functions, its functions being entirely

commercial and in the nature of a trading activity. Reliance is also placed on Heavy Engineering Mazdoor Union Vs. State of Bihar and Others, ,

Andhra Pradesh State Road Transport Corporation Vs. Income Tax Officer, B-I B-ward, Hyderabad, and Another, and Vidarbha Housing

Board Vs. Income Tax Officer, City and Refund Circle, Nagpur and Others, ). Assuming the private importers contend, that the State Trading

Corporation can be equated with the Central Government or that it is acting on behalf of the Central Government; once the Government ventures

into the commercial field it dons the robes of a trader, and it cannot thereafter claim any special attribute or preference for differentiation from other

traders. The learned counsel has placed before us the observations of this court in Life Insurance Corporation of India Vs. Escorts Ltd. and

Others, There is no rational basis, it is urged, for making a distinction in the imposition of customs duty in respect of the goods imported by the

private importers and the State Trading Corporation as both purchased the same commodity in the open market for direct consumption, that the

sales effected by them are on a commercial basis, and there is nothing to show that the State Trading Corporation sold these oils at a price lower

than the market price or at subsidised prices. It is asserted that the Central Government, like any other importer, is liable to customs duty and we

are referred to section 12 of the Customs Act, It is also complained that the differential proceeds on excessive classification, and that results in

violating the doctrine of equality enshrined in article 14 of the Constitution. Reliance is placed on The State of Jammu and Kashmir Vs. Shri Triloki

Nath Khosa and Others, Mohammad Shujat Ali and Others Vs. Union of India (UOI) and Others, and Special Courts Bill, 1978, In Re: The

Special Courts Bill, 1978, And, finally, the private importers claim that inasmuch as approximately 17 lakh tonnes of oil were imported by the State

Trading Corporation as against a mere one lakh tonnes of oil imported by all the private importers together, and the exemption from duty has been

granted in the public interest, namely, to control or reduce the price of edible oils, the relief which should be granted is to include the imports made

by the private importers within the particular customs duty rate of five per cent, already extended to the oils imported by the State Trading

Corporation. In some cases, it is alleged that if the imports effected by the private importers has to bear the duty levied upon them, the impact of

the total duty would be so impossible that it would cripple the business of those private importers.

(emphasis Hear printed in italics supplied)

Though the writ petitions filed by individuals challenging the notification on the ground of discrimination were rejected by the Supreme Court, it was

pointed out by the learned senior counsel that the Supreme Court in the above said case found that there was material to show that exemption

should be granted in favour of the State Trading Corporation and not to individual importers and that is absent in the present case. The material

required for considering the increase in the import duty, namely, the satisfaction and circumstances required for invoking the emergency power u/s

8A of the Customs Tariff Act, 1975, is not explicitly revealed in the present case and, therefore, the notification could be challenged, inter alia,

contending as arbitrary and for failure to consider circumstance that there existed ground for revision of duty from five per cent to ten per cent.

He also relied upon the decision of the Supreme Court in S.R. Bommai and others Vs. Union of India and others etc. etc., , a case challenging

the Presidential Promulgation dissolving the Legislative Assembly of the State of Karnataka on the basis of the report of the Governor and on the

advise of the Union Council of Ministers. In that case, one of the questions that arose was whether the court had the power to interfere with the

Presidential Promulgation and to what extent judicial review is permissible. The Supreme Court was of the view that it can go into the fact whether

material relevant for the ministerial advise was available so as to enable the President to exercise the power. Paragraph 33 of the said decision,

which makes that proposition clear, is as under:

Before I deal with the said issue I may dispose of the question whether the provision of article 74(2) of the Constitution permits withholding of

the reasons and material forming the basis for the ministerial advice tendered to the President. Article 74(1) ordains that the President ''shall'' act in

accordance with the advice tendered by the Council of Ministers. The proviso, however, entitles him to require the Council of Ministers to

reconsider its advice if he has any doubts or reservation but once the Council of Ministers has reconsidered the advice, he is obliged to act in

accordance therewith. Article 74(2) then provides that ''the question whether any, and if so what, advice was tendered to the President shall not be

inquired into in any court. What this clause bars from being inquired into is ''whether any, and if so what, advice was tendered'' and nothing beyond

that. This question has been elaborately discussed by my learned colleagues who have examined in detail its pros and cons in their judgments and,

therefore, I do not consider it necessary to traverse the same path. It would suffice to say that since reasons would form part of the advice, the

court would be precluded from calling for their disclosure but I agree that article 74(2) is no bar to the production of all the material on which the

ministerial advice was based. Of course the privilege available under the Evidence Act, sections 123 and 124, would stand on a different footing

and can be claimed de hors article 74(2) of the Constitution. To the extent the decision in State of Rajasthan and Others Vs. Union of India and

Others, conflicts with this view, I respectfully disagree.

In the same decision, in paragraph 70, referring to the earlier cases of the Supreme Court, it was observed as follows:

70.... An action not based on circumstances suggesting an inference of the enumerated kind will not be valid. Although the formation of opinion is

subjective, the existence of circumstances relevant to the inference as the sine qua non for action, must be demonstrable. If their existence is

questioned, it has to be proved at least prima facie. It is not sufficient to assert that the circumstances exist and give no clue to what they are,

because the circumstances must be such as to lead to conclusions of certain definiteness.

(emphasis Hear printed in italics supplied)

This pronouncement of the Supreme Court makes it all the more clear that for issuing a notification invoking the emergency power u/s 8A of the

Customs Tariff Act, 1975 there should exist certain circumstances which require the issuing of notification, apart from the satisfaction of the Central

Government. On this plea the notification is challenged.

Prima facie, the contentions raised by the learned senior counsel and learned counsel for the petitioners appears to be justified, as the only

response from the Ministry of Finance, Department of Revenue appears to be that the notification has been placed before Parliament in

accordance with sub-section (2) of section 8A read with sub-sections (3) and (4) of section 7 of the Customs Tariff Act, 1975. There is no

answer forthcoming or explaining that the Central Government was satisfied that the import duty leviable u/s 12 of the Customs Act, 1962 should

be increased and that circumstances exist which render it necessary for taking immediate action for issuing the said notification for enhancement of

rate of duty. Despite ordering of Rule Nisi by this court, the Ministry of Finance, Department of Revenue is not in a position to satisfy this court

that the above two contingencies required u/s 8A(1) of the Customs Tariff Act, 1975 existed for issuance of the notification in question.

Though the decisions of the Supreme Court in M. Jhangir Bhatusha and Others Vs. Union of India (UOI) and Others, , are relating to

exemption u/s 25(2) of the Customs Act, 1962, the principle laid down in those decisions that there should be materials available for the

Government while exercising its power to grant or not to grant exemption under the notification is squarely applicable to the case on hand. These

decisions also lay down the proposition that the requirement under the statute should be satisfied before ever such notification is issued. In the case

on hand, when a specific challenge has been made, the first respondent is unable to satisfy the court that there was sufficient material before the

Central Government to satisfy itself that import duty leviable u/s 12 of the Customs Act, 1962 should be increased and circumstances did exist

rendering it necessary for immediate action. Since the Ministry of Finance, Department of Revenue had failed to satisfy this court that such a

contingency did exist, the court is inclined to interfere with the notification, as has been laid down in decisions, referred to above. It is trite law that

courts will not interfere with the decision taken by Department concerned one way or the other, but it can certainly interfere if the decision making

process does not satisfy the requirement of the statute or if it is arbitrary and irrational or that it is based on no material.

In the present case, section 8A(1) of the Customs Tariff Act 1975 mandates the satisfaction of the Central Government coupled with the

existence of circumstances. Both the ingredients it is alleged as being absent in this case and the Ministry of Finance, Department of Revenue has

failed to satisfy this court by records that the said allegation is baseless. It is amply clear that such a decision was taken not on the basis of

materials, but in an arbitrary manner. Mere placing of the notification before Parliament and approval u/s 8A(2) read with section 7(3) and (4) of

the Customs Tariff Act, 1975 is of no avail, as is stated in the decision in S.R. Bommai and others Vs. Union of India and others etc. etc., wherein

it was held that mere Parliamentary approval does not have the effect of excluding judicial review to the extent permissible, if there is gross

violation of the provisions of the Act. The present case falls squarely within the reasoning given in S.R. Bommai and others Vs. Union of India and

others etc. etc.,

The learned standing counsel appearing for the respondents submit that the Customs Department has filed a detailed counter-affidavit

explaining the situation under which the notification was issued and, therefore, the notification is valid. I am unable to accept such a plea. It is trite

law that the case of the respondents cannot be improved on the basis of the counter-affidavit or the written submissions vide Mohinder Singh Gill

and Another Vs. The Chief Election Commissioner, New Delhi and Others, and the case of S.N. Mukherjee Vs. Union of India, .

In paragraph (8) of the decision in Mohinder Singh Gill and Another Vs. The Chief Election Commissioner, New Delhi and Others, the

Supreme Court held as follows:

The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by

the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the

beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out. We may here draw

attention to the observations of Bose, J. in Commissioner of Police, Bombay Vs. Gordhandas Bhanji,

''Public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer

making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to

have public effect and are intended to affect the acting and conduct of those to whom they are addressed and must be construed objectively with

reference to the language used in the order itself.''

Orders are not like old wine becoming better as they grow older.

Paragraph 36 of the decision in S.N. Mukherjee Vs. Union of India, reads thus:

Reasons, when recorded by an administrative authority in an order passed by it while exercising quasi-judicial functions, would no doubt

facilitate the exercise of its jurisdiction by the appellate or supervisory authority. But the other considerations, referred to above, which have also

weighed with this court in holding that an administrative authority must record reasons for its decision, are of no less significance. These

considerations show that the recording of reasons by an administrative authority serves a salutary purpose, namely, it excludes chances of

arbitrariness and ensures a degree of fairness in the process of decision-making. The said purpose would apply equally to all decisions and its

application cannot be confined to decisions which are subject to appeal, revision or judicial review. In our opinion, therefore, the requirement that

reasons be recorded should govern the decisions of an administrative authority exercising quasi-judicial functions irrespective of the fact whether

the decision is subject to appeal, revision or judicial review. It may, however, be added that it is not required that the reasons should be as

elaborate as in the decision of a court of law. The extent and nature of the reasons would depend on particular facts and circumstances. What is

necessary is that the reasons are clear and explicit so as to indicate that the authority has given due consideration to the points in controversy. The

need for recording of reasons is greater in a case where the order is passed at the original stage. The appellate or revisional authority, if it affirms

such an order, need not give separate reasons if the appellate or revisional authority agrees with the reasons contained in the order under challenge.

There is no reason given by the first respondent in response to the notice in the writ petitions contradicting the facts.

For the foregoing reasons, these writ petitions are allowed and the notification under challenge is set aside, holding that it does not satisfy the

requirements of section 8A(1) of the Customs Tariff Act, 1975. No costs. Consequently, the connected miscellaneous petitions are closed.