Purple Products Pvt. Ltd vs Union Of India And 2 Others on 13 June, 2025

June 15, 2025

Bombay High Court

Purple Products Pvt. Ltd vs Union Of India And 2 Others on 13 June, 2025

1. Heard learned Counsel for the parties and with their
consent, the matters are taken up for final disposal. Since
there is no clarity on the Rule, we formally issue the Rule, and
with the consent of and at the request of the learned Counsel
for the parties, make it returnable immediately.

2. By judgment and order dated July 9, 2019, these
Petitions, along with two others, were dismissed, relegating
the Petitioners to respond to the impugned show cause notices
and participate in the proceedings initiated.

3. The Petitioners in Writ Petition No. 2491 of 2018
(Kothari Metals Ltd) and Writ Petition No. 2831 of 2018
(Purple Products Pvt Ltd) challenged the order dated 9 July
2019 vide Civil Appeal Nos. 9010 of 2019 and 3011 of 2019.

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By a common order dated 25 November 2019, the Hon’ble
Supreme Court set aside the order dated 9 July 2019 and
restored the two Writ Petitions to their original numbers, to be
decided on their own merits in accordance with the law,
leaving all questions open.

4. By order dated 27 February 2020, this Court, after
taking cognizance of the Hon’ble Supreme Court’s order dated
25 November 2019 and the fact that the Petitioner in Writ
Petition No. 3023 of 2018 (Sri Bhavani Metals Pvt Ltd) and
Writ Petition No. 3474 of 2018 (Sizer Metals Pvt Ltd) had not
challenged this Court’s order dated 9 July 2019 dismissing the
said two Petitions, held that only Writ Petition No. 2491 of
2018 instituted by Kothari Metals Ltd and Writ Petition No.
2831 of 2018 instituted by Purple Products Pvt Ltd remain for
consideration. Mr Nankani and Mr Choudhary appeared for
the Petitioners in the said two Petitions and were heard
exhaustively. They also submitted a written synopsis of their
arguments at the conclusion of their oral submissions.

5. In both these Petitions, the Petitioners essentially
challenge the show cause-cum-demand notices issued under
Section 28 of the Customs Act, 1962 (Customs Act), in the
context of benefits under Customs Notification No. 46/11
dated 1 June 2011 concerning the import of “Tin Ingots” from
Malaysia. The impugned show cause notices, inter alia,
alleged that the Petitioners had secured benefits under
Customs Exemption No. 46 of 2011 by misrepresenting that

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the Regional Value Content (RVC) of the Tin Ingots was more
than 35% when it was not.

6. The Petitioners’ main contention in these Petitions is
that a Free Trade Agreement dated August 30, 2009 (AIFTA)
between the Republic of India and the Association of
Southeast Asian Nations (ASEAN), governs the subject
transaction. Accordingly, the Petitioners contend that the
initiation of any adjudication proceedings under the Customs
Act without observing the due process of law and as
prescribed in the treaty, which would include the specific
dispute resolution mechanism provided under Article 24, is
wholly without jurisdiction and unsustainable.

7. After these Petitions were dismissed on 9 July 2019, the
Petitioners, in the Appeals instituted by them before the
Hon’ble Supreme Court had urged that the issue about the
efficacy of Article 24 of Appendix ‘D’ to the treaty cannot be
adjudicated by the authorities under the Customs Act and
therefore, this Court was not justified in dismissing the
Petitions by relegating the Petitioners to avail of the alternate
remedies. The Hon’ble Supreme Court accepted this
contention, and this Court’s order dated 9 July 2019 was set
aside, and these Petitions were restored to this Court’s file.

8. The above is evident from the Hon’ble Supreme Court’s
order dated 25 November 2019 disposing of Civil Appeal Nos.
9010 of 2019 and 9011 of 2019, which is now transcribed
below for the convenience of reference: –

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ORDER

1. Leave granted.

2. These appeals take exception to the judgment and
order dated 09th July, 2019 passed by the High Court of
Judicature at Bombay in Writ Petition Nos.2491 of 2018
and 2831 of 2018 respectively.

3. The appellant(s) by way of writ petition(s)
challenged the show cause-cum-demand notices issued
by the Officers of Customs under Section 28 of the
Customs Act, 1962 concerning Mumbai, Delhi and other
ports.

4. As regards appeal by Kothari Metals Limited, the
notices pertain to more than one port. The show cause
notice issued in respect of imports concerning Delhi port
has since been dropped by the Department. However, the
show cause notice(s) regarding Mumbai and other ports
against the said appellant(s) still continue.

5. The appellant(s) had challenged the show cause
notice(s) not only on merits but had raised foundational
issue of the competence of the concerned authority to
proceed in the matter in the context of Article 24 of the
Appendix ‘D’ to the Treaty dated 30.08.2009 between the
Republic of India and the Association of South East Asia
Countries (ASEAN).

6. The High Court took notice of that plea in paragraph
6 of the impugned judgment and yet proceeded to
dispose of the writ petition(s) on the ground that the
appellant(s) could invoke efficacious alternative remedy.

7. Needless to observe that the issue raised by the
appellant(s) regarding the efficacy of Article 24 of the
Appendix ‘D’ to the Treaty cannot be adjudicated by the
competent authority. That issue needs to be addressed by
the High Court in the Writ Petition(s) filed by the
concerned appellant(s).

8. In this view of the matter, we set aside the impugned
judgment and order and relegate the parties before the
High Court by restoring the concerned writ petition(s) to
their original number(s), to be decided on their own
merits in accordance with law. All questions are left
open.

9. The appeal(s) and pending application(s) are
accordingly disposed of. No costs.

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PETITIONERS CONTENTIONS

9. Given the above order made by the Hon’ble Supreme
Court, quite correctly, Mr Nankani, the learned counsel for the
Petitioners, stressed on the efficacy and the invocability of
Article 24 of AIFTA, which, according to him, provided a
special dispute resolution mechanism. He contended that
without resort to such a special dispute resolution mechanism,
the customs authorities lacked jurisdiction to exercise any
powers under the Customs Act qua the transactions of import
of Tin Ingots, which were the subject matter of these Petitions.
He contended that the assumption of jurisdiction by the
customs authorities was improper and therefore, the
impugned show cause notices and the adjudication
proceedings in pursuance thereof were wholly without
jurisdiction, null and void.

10. Mr Nankani elaborated that in terms of Article 24 of
AIFTA in case of a dispute concerning origin determination,
classification of products, or other related matters, the
governmental authorities involved in the importing and
exporting parties shall consult each other to resolve the
dispute, and the result shall be communicated to the other
parties. However, if no mutually satisfactory solution to the
dispute is reached through the consultations, the party
concerned may invoke the dispute settlement procedures
under the ASEAN-India DSM Agreement. He submitted that in
this case, a dispute as contemplated by Article 24 had arisen

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between the Republic of India and Malaysia, the contracting
parties to the treaty. Efforts to resolve such disputes mutually
were attempted but had failed. Therefore, the only option
permissible to the Indian authorities was to seek a resolution
of the dispute under the ASEAN-India DSM Agreement, a
specialized dispute resolution mechanism agreed upon
between the contracting parties. Without resorting to such a
mechanism, the customs authorities lacked jurisdiction to
issue the impugned show cause notices or to allege that there
was some issue with the Certificate of Origin (“COO”)
concerning the imported Tin Ingots for the Regional Value
Content of the imported Tin Ingots.

11. Mr Nankani submitted that since there was no contrary
provision in the Customs Act or Rules, the provisions of the
treaty, including Article 24 must prevail and had to be
adhered to. He submitted that in such a situation, it was for
the Republic of India to file a complaint before the Arbitral
Panel constituted in terms of the ASEAN-India DSM
Agreement, and only on adjudication of the said complaint
and filing of final report by the said arbitral panel, could the
dispute be resolved. He submitted that only if the final report
of the arbitral panel favoured the Republic of India, could the
COOs issued by the competent issuing authorities be regarded
as affected, cancelled or nullified, but not otherwise. He
submitted that since this specialised dispute redressal
mechanism had never been resorted to, the invocation of the
provisions of the Customs Act by the customs authorities for

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the resolution of such a dispute was entirely without
jurisdiction and unconstitutional.

12. Mr Nankani submitted that Article 9 of the treaty does
not permit any unilateral modification, nullification or
impairment of the concessions. He submitted that if the
customs authorities are allowed to proceed, it would virtually
amount to nullifying the benefits under the treaty, except
through the procedure prescribed under the treaty. Such an
attempt is wholly without jurisdiction and even
unconstitutional.

13. Mr Nankani submitted that all efforts should be made to
enforce and honour the treaty provisions and the obligations
solemnly undertaken thereunder. He submitted that only the
parliament is competent under our constitutional scheme to
enact any law to dilute or otherwise rescind the provisions of
international treaties. He submitted that the provisions of
international treaties can never be diluted by any delegated
legislation, such as rules etc.

14. Mr Nankani submitted that the reasoning of the Gujarat
High Court in the case of Trafigura India Private Limited V/s.
Union of India1 is quite fallacious since it has missed this
crucial distinction about only the subordinate rules omitting
reference to Article 24 and not some Parliamentary legislation.
He submitted that the non-incorporation of Article 24 in the
subordinate legislation like the Customs Tariff (DOGPTA)

1
R/Special Civil Application No.14028/2020 & Ors.

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between ASEAN and Republic of India, Rules 2009, in no
manner, dilutes or renders inapplicable the provisions of
Article 24 of the AIFTA.

15. Mr Nankani submitted that Parliament amended the
Customs Act, effective from 27 March 2020, by adding
Chapter VAA, which includes Section 28DA. He pointed out
that this was a special provision relating to disputes
concerning the Country-of-Origin Criteria/Certificate. He
submitted that after the introduction of this Chapter, the
customs authorities might have jurisdiction to adjudicate
disputes regarding Country of Origin, etc. However, these
provisions have not been given any retrospective effect, and
furthermore, they indicate that prior to the introduction of
this Chapter, the customs authorities lacked jurisdiction to
adjudicate such disputes. He submitted that even this aspect
was never considered by the Gujarat High Court in the
Trafigura (supra).

16. For all these reasons, Mr Nankani submitted that we
should place no reliance on the decision of the Gujarat High
court in the case of Trafigura (supra). He pointed out that in
any event, the said decision was already challenged before the
Supreme Court and a notice has been issued in the special
leave petition already instituted.

17. Mr Nankani finally submitted that as long as the COOs
were not rescinded or withdrawn by the Malaysian
counterparts, the Petitioners were entitled to the benefits

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under the Customs Notification No. 46 of 2011 dated 01 June
2011. Such benefits could not be denied or recovered based
on some unilateral investigations, either by the Indian
counterparts or the customs authorities of India.

18. Mr Nankani relied upon Commissioner of Customs,
Bangalore V/s. G. M. Exports And Ors., 2 Gramophone
Company of India Ltd. V/s. Birendra Bahadur Pandey, 3 East
India Commercial Co. Ltd., Calcutta V/s Collector of Customs,
Calcutta4, and Bombay Chemicals Pvt. Ltd. V/s. Union of India
And 14 Ors.5, 1982 (10) ULT 171 (BOI) in support of his
submission.

19. Based on the above submissions and contentions that we
have now exhaustively referred to, learned Counsel for the
Petitioner submitted that the impugned show cause notices be
quashed, and the Rule made absolute in both these Petitions.

RESPONDENT’S CONTENTIONS

20. Mr Mishra, the learned counsel for the Respondents,
submitted that the provisions of an international treaty, unless
incorporated into or transformed into Municipal laws or the
State laws, cannot be directly enforced in the Court. He
submitted that, therefore, to give effect to some of the
provisions of AIFTA, the Customs Tariff (DOGPTA) Rules 2009
were enacted. However, he pointed out that there was no

2
(2016) 1 SCC 91
3
(1984) 2 SCC 534
4
1983(13) E.L.T. 1342 (S.C.)
5
1982 (10) E.L.T. 171(Bom.)

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reference to Article 24 in the document. He therefore
submitted that the Petitioners’ attempt to seek enforcement of
Article 24 through these Petitions was entirely misconceived.

21. Mr Mishra submitted that the impugned notices have
been issued under the provisions of the Customs Act because
there was substantial material on record suggesting
suppression and fraud, particularly regarding the RVC of the
imported Tin Ingots. He submitted that there are ample
provisions under the Customs Act empowering the Customs
Authorities to issue such show cause notices. Based on treaty
provisions not incorporated into municipal laws, customs
authorities cannot be deprived of their powers to adjudicate
on issues such as potential misrepresentation, suppression, or
fraud. He submitted that the impugned show cause notices
are therefore legal and valid, and the petitioners’ attempts to
stall adjudication should not be encouraged.

22. Mr Mishra submitted that neither the provisions of
Article 24 of the treaty nor the provisions of Chapter VAA
render the impugned show cause notices without jurisdiction,
or otherwise legally infirm. He submitted that the Petitioners
can always urge during the adjudication proceedings how
none of the prima facie issues flagged in the impugned show
cause notices apply and there was no misrepresentation, etc.
However, he submitted that by relying on the treaty
provisions, there was no case to interdict the proceedings or
stall the adjudication.

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23. Mr Mishra pointed out that there were 10 to 12 cases
involving the import of Tin Ingots from Malaysia. In all such
matters, upon adjudication, it was found that there was
suppression, collusion, and fraud, particularly in the context
of Regional Value Content. He pointed out that the local
traders had filed complaints based upon which investigations
were carried out, and such investigations revealed that the
RVC of Tin Ingots was not more than 35%. Still, the benefits
under the Customs Exemption Notification No.46 of 2011
were obtained. He submitted that to the best of his
knowledge, in none of these matters, the orders made by the
adjudicating authorities were interfered with by the Courts of
law. He, therefore, submitted that the Petitioners may not be
allowed to interdict the adjudication proceedings by
questioning the impugned show cause notices on untenable
grounds.

24. Mr Mishra submitted that the issues and the contentions
now raised on behalf of the Petitioners have been squarely
answered against the Petitioners by the Gujarat High Court in
Trafigura (supra). Therefore, these Petitions may be
dismissed. He relied on Trafigura (supra) and the various
Supreme Court and High Court decisions referred to therein
in support of his contentions.

25. For all the above reasons, Mr Mishra submitted that
these Petitions may be dismissed.

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EVALUATION OF THE RIVAL CONTENTIONS

26. The rival contentions now fall for our determination.

27. The Petitioners are primarily engaged in the business of
importing and trading in various products, including Tin
Ingots.

28. The Government of India signed an agreement on Trade
in Goods under the Framework Agreement on Comprehensive
Economic Cooperation between the Republic of India and the
Association of Southeast Asian Nations in 2009 [AIFTA].
Malaysia is a member of the Association of Southeast Asian
Nations (ASEAN). According to AIFTA, India agreed to
provide preferential tariff treatment for imports of specified
goods, including tin ingots, from ASEAN countries, subject to
certain conditions being met. One of the critical conditions
was the fulfilment of the Regional Value Content (RVC). The
RVC, along with the formula and methodology for calculating
it, were prescribed in the provisions of AIFTA.

29. To implement the AIFTA provisions and related matters,
the Indian Government undertook several measures, including
the issuance of Customs Exemption Notification No. 46 of
2011, dated 1 June 2011, to provide preferential customs
tariffs as well as the Customs Tariff (DOGPTA) between
ASEAN and the Republic of India, Rules 2009. This was based
on the premise that the provisions of a treaty like AIFTA,
unless transformed into or incorporated into municipal laws,
cannot be enforced by the beneficiaries in the municipal or

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State Courts. Only after such transformation or incorporation,
and to the extent of it, could a beneficiary seek enforcement;
otherwise, they could not.

30. The Petitioners in these Petitions had imported Tin
Ingots manufactured by Malaysian Smelting Corporation
(MSC) under its brand name, from various traders located in
Singapore or Europe. The Petitioners have pleaded that these
imported Ingots were accompanied by a valid Certificate of
Origin (COO) issued by the Ministry of International Trade
and Industry, Malaysia (MITI). Based on such certification, the
Petitioners have claimed and availed themselves of the
benefits under Customs Exemption Notification No. 46 of
2011, dated June 1, 2011, from time to time.

31. Several domestic industries filed complaints or made
representations regarding the import of Tin Ingots from
Malaysia, alleging that they had been wrongly availing
themselves of the benefits under Exemption Notification No.
46 of 2011. The complaints alleged fraud, inter alia, by
misrepresenting the RVC as being above 35%, when in fact it
was significantly below 35%. The complaints and
representations pointed out that this was in breach of the
rules and conditions outlined in the Exemption Notification.

32. This issue was therefore taken up for investigation by
the Director of Revenue Intelligence (DRI) of the Mumbai
Zonal Unit. The DRI initiated the process of “Retroactive
Check” and noted that there was no cooperation from the

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Malaysian authorities. Finally, a team from DRI visited
Malaysia to examine the status of RVC and ascertain the
originating criteria for the Tin Ingots. The investigation
revealed prima facie substance in the complaints that the RVC
was inflated, when in fact, it was less than 35%. A detailed
affidavit is filed by the Respondents in this regard. However,
at this stage, it is not for this Court to go into such issues. If
the initiation of proceedings based on the prima facie material
is found to be without jurisdiction, then, of course, further
proceedings or adjudication may not be competent. However,
if there is no jurisdictional infirmity in the initiation, then all
such issues can be addressed by the customs adjudicating
authorities after providing a full opportunity to the
Petitioners.

33. Accordingly, the Customs Authorities issued the
impugned show cause notices under Section 28 of the
Customs Act, requiring the Petitioners to show cause why the
benefits obtained by them through misrepresentation or
suppression of correct facts should not be recovered and a
penalty should not be imposed upon them.

34. The Petitioners, at this stage, instead of participating in
the adjudication proceedings under the impugned show cause
notices, instituted these Petitions questioning the jurisdiction
of the Customs Authorities primarily on the ground that the
Respondents needed to resort to the Special Dispute
Resolution Mechanism provided under Article 24 of the

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AIFTA. The Petitioners urged that the Customs Authorities
lacked jurisdiction to proceed under the Customs Act without
the treaty parties or countries first taking recourse to Article
24, which provides a Specialised Dispute Resolution
Mechanism. The Petitioners contend that the very issuance of
the show cause notices was therefore without jurisdiction. In
effect, thus, the Petitioners seek enforcement of Article 24 of
AIFTA before a municipal or national Court and contend that
without recourse to the Specialized Disputes Resolutions
Mechanism under Article 24, the Customs Authorities must
not be allowed to proceed with the adjudication.

35. In the context of applying treaties into National Legal
Systems, two aspects generally arise: (i) the applicability of
the international treaty in domestic law; and (ii) the
enforceability of the treaty in municipal law and before
municipal courts. In Union of India Vs. Agricas LLP6, the
Hon’ble Supreme Court explained the distinction between
‘direct application’ of treaties in domestic law, and national
legal systems that mandate and require ‘act of transformation’
for an international treaty to apply and be a part of domestic
law. ‘Direct application’ means and mandates that the treaty
norms, either wholly or to some extent, are directly treated as
norms of domestic law and enjoy the statutory law status by
default in the domestic legal system. The term ‘direct
application’ will also cover situations in which government or
different levels of government utilise treaty norms as part of
6
2020 (373) E.L.T. 752 (S.C.)

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domestic jurisprudence and is not limited to situations in
which private parties can sue based on the treaty norms.

36. As explained below, there is a distinction between direct
application and ‘invocability’. ‘Act of transformation’ principle
means and implies that an international treaty is not directly
applicable in the domestic law system and requires provision
in the domestic rules before it is applied. ‘Transformation’ is a
word of wide amplitude and does not refer to mere
implementation as it includes the right of the country to
adopt, amend or modify the treaty language into domestic
jurisprudence. The ‘act of transformation’ is different from
‘direct application’ as in the former, the treaty is not received
and treated as part of domestic jurisprudence until it is
published and made part of the domestic jurisdiction in the
same manner as other law.

37. The Hon’ble Supreme Court referred to the position in
several Commonwealth Countries, including the United
Kingdom, Canada and Australia, which are generally
considered to be prime examples of a “dualist system”. The
dualist position is that international municipal law operates
separately, and before any rule or principle of international
law can have effect within a domestic jurisdiction, it must be
expressly or transformed explicitly into municipal law by use
of appropriate constitutional machinery.

38. Dualism stresses that international law and municipal
law exist separately and cannot have effect on or overrule the

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other. Consequently, the municipal laws and international
laws can operate simultaneously as they regulate different
subject matters. International law applies between sovereign
States, while municipal law regulates legal relationships
within a state, including those between citizens, subjects, and
the State.

39. In Maclaine Watson & Co. Ltd. Vs. Department of Trade
and Industry & Anr.7, the House of Lords has held that as a
matter of the constitutional law of the United Kingdom, the
royal prerogative, whilst it embraces the making of treaties,
does not extend to altering the law or conferring rights on
individuals or depriving individuals of rights which they enjoy
in domestic law without the intervention of Parliament.
Treaties, as it is sometimes expressed, are not self-executing.
Quite simply, a treaty is not part of English law unless and
until it has been incorporated into the law by legislation.
Therefore, except to the extent that treaty becomes
incorporated into the laws by a statute, the Courts in United
Kingdom have no power to enforce treaty rights and
obligations at the behest of foreign government or even a
citizen of the United Kingdom. It was also held that the
decision as to whether the terms of the treaty have been
complied with are matters exclusively for the Crown as the
court must speak with the same voice as the executive (See
Lonrho Exports V. ECGD [1998] 3 W.L.R.394).

(1989) 3 AII ER 523

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40. In Agricas LLP (supra) the Hon’ble Supreme Court also
referred to and explained the principle of invocation or
invocability. The Court explained that, in simple terms
invocability refers to justiciability, admissibility of a claim
before the national Courts. It is not connected with the
defence or merits of the defence. In cases where an ‘act of
transformation’ is required, treaties may be partially or
entirely incorporated into domestic law. Where the treaty or
portion thereof becomes a part of the domestic law by ‘act of
transformation’, it is obvious that only the part incorporated
or transformed into domestic law is invocable and justiciable
and not the parts that are not codified into domestic law.

41. However, invocability can embrace several ideas which
are intertwined and are of specific concern in cases of
constitutions allowing direct application. Here, ‘invocability’ is
a generic term which means to embrace a small inventory of
means of judicial control over the use in a particular lawsuit
of the direct applicability of the treaty. As in the case of ‘act of
transformation’, even in direct application cases, some
jurisdictions accept the principle of partial direct application,
and therefore, the treaty is directly applicable for some
purposes but not others.

42. In Agricas LLP (supra) the Hon’ble Supreme Court after
adverting to various theories and the legal position in foreign
jurisdictions, explained the legal position in India in
paragraphs 34 to 46. The decisions in Gramophone Company

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of India Ltd. (supra); G. M. Exports (supra) and
Entertainment Network (India) Limited and Anr. Vs. Super
Cassette Industries Ltd and Ors.8 on which Mr Nankani laid
considerable emphasis were also considered by the Hon’ble
Supreme Court in paragraphs 38 to 45. By reference to these
and other decisions on the subject, the Hon’ble Supreme Court
noticed the distinction between (i) formation of a treaty; and

(ii) performance of the treaty obligations.

43. The Court explained that the first is an executive act and
the second a legal act if domestic law is required. Unless the
Parliament assents to the treaty and accords its approval to
the first executive act, the performance has no force of law
though the treaties created by the executive action bind the
contracting States and, therefore, means must be found for
their implementation within the law. Consequently, whenever
a treaty requires municipal execution, statutes must be
passed. The Court referred to Oppenheim’s International Law,
8th Edition, in which it was observed that binding treaties
which are part of International Law do not form part of the
law of the land unless expressly made so by the Legislature.
The binding force of a treaty concerns, in principle, the
contracting States only, and not their subjects.

44. The Hon’ble Supreme Court also referred to the
Constitution Bench decision in Maganbhai Ishwarbhai Patel
Etc. Vs. Union of India and anr. 9, in which it was held that
8
(2008) 13 SCC 30)
9
1970 (3) SCC 400

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obligations arising under agreements or treaties are not, by
their own force, binding upon Indian nationals. The power to
legislate in respect of treaties lies with the Parliament. But
making of law under that authority is necessary when the
treaty or agreement operates to restrict the rights of citizens
or others, or modifies the laws of the State.

45. The Hon’ble Supreme Court also referred to its decision
in Gramophone Company of India Ltd. (supra) in which it was
held that Comity of Nations or no, Municipal Law must
prevail in the case of a conflict with an international treaty.
National Courts cannot say yes if the Parliament has said no to
a principle of international law. National Courts will endorse
international law but not if it conflicts with national law.
National courts, being organs of the National State and not
organs of international law, must perforce apply national law
if it conflicts with international law.

46. The Hon’ble Supreme Court held that the above-quoted
decisions are on the legal effect of international treaties in
domestic law in India. The ratio of these decisions primarily
relates to and is confined to the requirement and mandate of
the need for ‘act of transformation’ to be a part and parcel of
domestic law, which confers a right to invocability. Most
crucially, the Hon’ble Supreme Court noted in paragraph 40
that “the ratio of the above decisions has to be distinguished
from decisions interpreting domestic law after the ‘act of
transformation’ consequent to which the portions of GATT-

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1994 stand enacted thereby conferring right of invocability to
parties. The decisions referred to in paragraphs 41 to 44 and
relied upon by the importers fall in the second category.”

47. In paras 41 to 44, the Hon’ble Supreme Court has then
considered the decision in Associated Cement Companies Ltd.
Vs. Commissioner of Customs10; State of Punjab and Another
Vs. Devans Modern Breweries Ltd and Another 11 S&S
Enterprise Vs. Designated Authority and Others 12 and G. M.
Exports (Supra).

48. Thus, G.M. Exports (supra), upon which Mr Nankani
laid considerable emphasis, was a case belonging to the
second category concerning the construction of a statute made
in response to an international treaty obligation and to give
effect to the obligations in international law. In this context,
the Court held that the statutory language should be
construed in the same sense as that of the treaty if the words
of the statute are reasonably capable of bearing that meaning.
However, this decision does not establish authority to suggest
that a treaty provision can be directly enforced before a
Municipal Court in India, even though it may not have been
transformed into municipal law or incorporated into any
statutory provisions to give effect to the treaty obligations.

49. Even Entertainment Network (India) Limited (supra)
concerned interpretation of domestic/municipal laws and held

10
(2001) 4 SCC 593
11
(2004) 11 SCC 26
12
(2005) 3 SCC 337

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that international conventions can be relied as a means of
interpretations, justification or fortification of stance taken or
to fulfill spirit of international obligation which India has
entered into, when they are not in conflict with the existing
domestic law, to reflect international changes, to provide relief
contained in a covenant but not in a national law and to fill
gaps in the law. Again, this was in the context of the
interpretation of a municipal law and the impact of
international treaties on such interpretation.

50. The Petitioners’ contention about the enforceability of
Article 24 of AIFTA, even though the Petitioners were unable
to show any statute or even rules by which this treaty
provision had been transformed into municipal law, is
untenable. If accepted, this contention would run counter to
several decisions of the Hon’ble Supreme Court on the subject
and the principles of interplay between domestic law and
international law as explained by eminent authors and the
Hon’ble Supreme Court from time to time.

51. Incidentally, the Government of India did enact the
Customs Tariff (DOGPTA) between ASEAN and Republic of
India Rules 2009 to give effect to the provisions of AIFTA.
However, these rules provide no statutory recognition to
Article 24, which, according to the Petitioner, contains a
specialised dispute resolution mechanism intended to displace
the municipal or domestic laws already in force. Therefore, the
provisions of Article 24 of AIFTA cannot be said to have formed a

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part of the domestic or municipal laws or transformed into
domestic or municipal laws to seek their enforcement before a
domestic or municipal Court.

52. A Division Bench in the Gujarat High Court in Trafigura
(supra) has summarised the legal position precisely in the context
of the invocability of Article 24 of AIFTA by detailed reference to
the DOGPTA Rules of 2009. This decision affords answers to most
of the issues raised by the petitioners. Even the factual base in the
two matters does not differ significantly. In the Gujarat case, the
challenge was to the orders holding that there was fraud,
suppression and misrepresentation in availing the benefits of the
Customs exemption notification in respect of tin ingots imported
from Malaysia. Since there was ample material and the show cause
notices suffered from no infirmities, the orders were upheld. In the
cases at hand, the challenge is to the show cause notices making
the same or similar allegations. The allegations in the show-cause
notices have yet to be adjudicated. The primary challenge before
both courts was that the Customs authorities were denuded of
their statutory powers in such cases due to the specialised dispute
resolution mechanism outlined in Article 24 of the AIFTA.

53. Mr Nankani, however, submitted that the provisions of
international treaties cannot be displaced by “mere rules” and that
parliamentary legislation is a must for such displacement. He
submitted that since the parliament has made no law deviate from
the specialised dispute redressal mechanism provided in Article 24
of AIFTA, this procedure must be honoured and the customs
authorities, are denuded of their powers under the Customs Act,
until and unless the Republic of India follows the provisions of

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Article 24 of AIFTA. He submitted that the Gujarat judgment has
not considered this aspect.

54. The above contention begs the question. The Petitioners
were unable to identify any parliamentary statute that endorsed or
transformed the provisions of Article 24 of AIFTA into municipal or
domestic law. If such a statute were to exist, its effect could not be
undermined merely by rules. However, no national statute
incorporates or transforms the provisions of Article 24. The
petitioners cannot therefore, seek the enforcement of Article 24 of
AIFTA before the domestic or municipal Courts, as they now seek
to do. The petitioners, in fact, seek to suspend the provisions of the
national law i.e. the Customs Act and denude the customs
authorities of their statutory powers. This is impermissible.

55. Furthermore, the above contention was neither supported by
reference to a principle nor precedent. The circumstance that the
provisions of AIFTA were sought to be given effect to the 2009
Rules and the customs exemption notification is relevant. These
Rules or Notifications are conspicuous by their non-reference to
Article 24 of AIFTA. Thus, the absence of any statute transforming
Article 24 into domestic or municipal law coupled with the
omission to even refer to Article 24 in the 2009 Rules made to
implement the AIFTA makes it clear that the provisions of Article
24 of AIFTA cannot be sought to be enforced before this Court by
the Petitioners and based upon the same, the action of the customs
authorities cannot be questioned as being without jurisdiction.
Based on a treaty provision that is not transformed or incorporated
into the national law or statute, the provisions of the existing

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Customs Act cannot be undermined, or the powers and jurisdiction
of the customs authorities questioned.

56. Section 28 of the Customs Act confers ample powers upon
the Customs authorities to investigate into and adjudicate upon
violations due to misrepresentation, suppression or fraud. Based on
the material collected by the Customs authorities, a show cause
notice has been issued to the Petitioners giving them full
opportunity to explain how there was misrepresentation,
suppression or fraud on the issue of RCV. There is no legal or
jurisdictional infirmity in the issue of such show cause notices. The
provisions of Article 24 of AIFTA do not deprive the customs
authorities of their powers or jurisdiction to issue such show cause
notices. The Petitioners virtually insist that the treaty provisions
prevail over national laws, even though the treaty provisions on
which they rely have not been incorporated into any national law.
This is clearly impermissible, and the challenge on the lack of
jurisdiction to issue the show cause notices cannot be sustained.

57. Incidentally, we must note the observations made by the
Gujarat High Court in Trafigura (supra), which express doubts
about whether the provisions of Article 24 of the AIFTA would
apply at all, given that there was no dispute about the origin
of the goods being from Malaysia. The Court noted that the
misrepresentation and fraud were not about the origin of the
goods, but rather the core aspect related to the
misrepresentation and fraud concerning the RCV content. In
any event, the decision proceeds to reason that even

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otherwise, the Article could not be invoked to scuttle the
operation of the national laws.

58. The argument based on the introduction of Chapter VAA
in the Customs Act, effective from 27 March 2020, cannot be
accepted. Based on the provisions of Section 28DA, we cannot
infer that the pre-amended provisions of the Customs Act,
1962, prevented the Customs Authorities from exercising
powers under Section 28 of the Customs Act and investigating
cases of misrepresentation, suppression, or fraud. Certain
additional powers have now been conferred upon the Customs
authorities. But an inference that the earlier powers were
insufficient to deal with cases of fraud, suppression or
misrepresentation is untenable. This was not even a
contention raised initially in the petitions, but is now put forth
in an attempt to persuade us not to follow the reasoning of
the Gujarat Judgment.

59. Section 28 of the Customs Act is quite exhaustive, it
provides that where any duty has not been levied or paid etc.
on account of collusion, willful mis-statement, suppression of
facts by importer or exporter etc., the competent officer may
act within five years from the relevant date and serve a notice
on the person chargeable with duty or interest, which has not
been paid, the Gujarat High Court has interpreted the
provisions of Section 28 and concluded that suppression of
facts implicatory can be a ground for invocation of the said
provision.

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60. The arguments about COO being conclusive, etc., have
never been elaborated in the pleadings. If Mr Mishra’s
submission is correct, then, in several matters concerning
imports of Tin Ingots from Malaysia, a detailed investigation
revealed the extent of misrepresentation, suppression and
fraud. In Trafigura (supra), the Gujarat High Court was
dealing with a final order made by the Customs Authorities.
Based on the materials on record, the Gujarat High Court
found no reason to interfere with the factual findings
recorded by the authorities and declined to interfere.

61. In the present case, the Customs Authorities are yet to
adjudicate the matter, and therefore, it is not for this Court to
make any observations that would even remotely prejudice
the interest of the Petitioners or the Respondents. However,
attempts to stall or prevent the adjudication proceedings, as
outlined in the impugned show cause notices, cannot be
encouraged when exercising our extraordinary and equitable
jurisdiction under Article 226 of the Constitution.

62. The primary argument that the impugned show cause
notices are ultra vires for failing to comply with the provisions
of Article 24 of AIFTA lacks merit. The Gujarat High Court has
addressed this issue in detail and rejected the identical
contention regarding the importation of tin ingots from
Malaysia. Mr Nankani’s assertion that the Gujarat High Court
failed to consider certain matters is untenable. In any event,
even when considering those matters, we see no reason to

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adopt a view different from that taken by the Gujarat High
Court.

63. For all these reasons, we see no merit in these Petitions,
or the contentions raised in support of these Petitions.
Accordingly, we discharge the Rule and dismiss these
Petitions. Interim Orders, if any, are vacated.

64. Interim Application (L) No.6631 of 2020 is disposed of.

 (Jitendra Jain, J)                                     (M.S. Sonak, J)




                               Page 31 of 31



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Author: M. S. Sonak

Bench: M.S. Sonak

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