M/S. Pankaj Jain Agencies v. Union of India (1995 AIR 360)

M/S. PANKAJ JAIN AGENCIES V. UNION OF INDIA

ISSUE:

Whether the impugned notification (No. 142/86-Cus.) was validly promulgated and enforceable, given the alleged delay in making it known to the affected parties?
Whether the notification violated the conditions prescribed under Section 25(3) of the Customs Act, 1962, by effectively imposing a new duty not provided for under the statutory provisions?
Whether the enhanced duty constituted an unreasonable restriction on the petitioner’s fundamental rights under Article 19(1)(g) of the Constitution?

RULE:

A notification or subordinate legislation acquires enforceability upon its publication in the Official Gazette, which is deemed sufficient for making the law known within the territory it operates.
Taxes or duties, including customs duties, are not per se violative of Article 19(1)(g) unless they destroy the right to carry on trade or business, with excessiveness alone not constituting a violation.

FACTS:

M/s Pankaj Jain Agencies, the petitioner, was engaged in importing components of ball and roller bearings, specifically “cups,” which were categorized as parts of ball bearings under the Customs Tariff Act, 1975.
The petitioner acquired replenishment licenses from M/s Geo Millers & Co. Pvt. Ltd., which were subsequently transferred to M/s Ashoka Enterprises and later assigned to the petitioner. These licenses were used to import goods under concessional duty rates.
An agreement was entered into with M/s Business Birds, Singapore, for the supply of “cups” of Chinese origin. The goods were shipped in three consignments to Bombay Port in early 1986.
The first consignment of 8,600 pieces arrived on January 15, 1986, and was cleared by the customs authorities under the existing Notification No. 70/85-Cus., dated March 17, 1985, which granted reduced duty rates. The controversy for this consignment was limited to its assessable value.
The second and third consignments, consisting of 5,000 and 13,000 pieces, arrived on February 10, 1986. The Bills of Entry for home consumption were filed on February 19, 1986.
On February 13, 1986, the Central Government issued Notification No. 142/86-Cus., amending the earlier notification and substantially increasing the duty on parts and components of ball bearings.
The petitioner argued that the increased duty was inapplicable to the two consignments as the notification was not made known in Bombay until February 19, 1986, when the Bills of Entry were filed.
The petitioner further claimed that the notification exceeded the powers under Section 25(1) of the Customs Act, 1962, as it effectively imposed a new duty, which was not statutorily contemplated for parts of ball bearings under the Customs Tariff Act, 1975.
Additionally, the petitioner contended that the significant increase in duty, which raised their liability from ₹1,84,341 to ₹6,42,065, was an unreasonable restriction on their fundamental right to trade under Article 19(1)(g) of the Constitution.
Challenging the vires and applicability of the notification, the petitioner filed a writ petition under Article 32 of the Constitution, making the Union of India and other concerned authorities the respondents.

HELD:

The Supreme Court held that the impugned notification became enforceable upon its publication in the Official Gazette on February 13, 1986, as per the requirements of Section 25(1) of the Customs Act, 1962. It ruled that the notification was validly promulgated and enforceable from that date.
The Court ruled that physical availability or knowledge of the notification in Bombay was not a prerequisite for its enforceability. Publication in the Official Gazette was deemed sufficient to bring the notification into effect within the country.
The Court rejected the petitioner’s argument that the notification imposed a new duty, clarifying that it merely modified the scope of the exemption under an existing framework, without exceeding the statutory duty rates provided under the Customs Tariff Act, 1975.
Addressing the contention under Article 19(1)(g), the Court held that duties of customs, even if high, do not per se constitute an unreasonable restriction on the right to trade or business. Excessiveness alone does not violate constitutional rights unless it destroys the right to carry on trade, which was not demonstrated in this case.
The Court concluded that the petitioner failed to establish any procedural or substantive infirmities in the notification. Consequently, the writ petition was dismissed, and the increased duty was upheld as valid and applicable.