IN THE SUPREME COURT OF INDIA
Kuldip Singh, V. Ramaswami and K. Ramaswamy, JJ.
DHIRAJ LAL R. VOHRA
Versus
UNION OF INDIA
Civil Writ Petition No. 392 of 1989, decided on 9-12-1992
Rate of duty and tariff valuation (Customs) - Relevant date for - Section 15(1) of Customs Act, 1962 is valid and constitutional - Articles 14, 19(l)(g), 21, 265 and 300A of Constitution of India.
-The contention of the petitioner that Section 15(1) of the Act is ultra vires of the provisions of the Constitution is no longer res integra. A Constitution Bench of this Court in M. Jhangir Bhatusha etc. etc. v. Union of India & Ors. etc. etc. upheld the validity of Section 15(1) and we do not find it necessary to once again traverse the contention de novo. [para 5]
Rate of duty and tariff valuation (Customs) - Relevant date for imported goods is the date of presentation of bill of entry and in case the bill of entry is presented before the date of entry inwards of the vessel, it is the date of such entry inwards - Any other date irrelevant - Sections 15(1), 31 and 46 of Customs Act, 1962.
- It is clear from bare reading of these relevant provisions that the due date to calculate the rate of duty applicable to any imported goods shall be the rate and valuation in force, in the case of the goods entered for home consumption under Section 46, is the date on which the bill of entry in respect of such goods is presented under that section and in the case of goods cleared from a warehouse under Section 68, the date on which the goods are actually removed from the warehouse. By operation of the proviso if a bill of entry has been presented, before the date of entry inwards the bill of entry shall be deemed to have been presented “on the date of such entry inwards” but would be subject to the operation of Sections 46 and 31(1) of the Act. Granting entry inward on delivery of import manifest and the date of arrival of the vessel into port admittedly are on March 2, 1989 and the Master of the vessel made a declaration in this behalf that they would discharge the cargo on March 2, 1989. Therefore, the relevant date under Section 15(1)(a) is the date on which entry inwards after delivery of import manifest was granted to discharge the cargo for the purpose of the levy of the customs duty and rate of tariff. The contention, therefore, that the ship entered Indian territorial waters on February 20, 1989 and was ready to discharge the cargo is not relevant for the purpose of Section 15(1) read with Sections 46 and 31 of the Act. The prior entries regarding presentation of the bill of entry for clearance of the goods on February 27, 1989 and their receipt in the appraising section on February 28, 1989 also are irrelevant. The relevant date to fix the rate of customs duty, therefore, is March 2, 1989. The rate prevailed as on that date would be the duty to which the goods imported are liable to the impost and the goods would be cleared on its payment in accordance with the rate of levy of customs prevailing as on March 2, 1989. [para 3]
Rate of duty and tariff valuation (Customs) - Relevant date for - Goods released conditionally and ordered to be kept in importer’s godown under Customs lock by interim directions of the Court in order to save demurrage - Goods not treatable as warehoused goods for determining rate of import duty applicable thereto under Section 15(l)(b) read with Section 68 of Customs Act, 1962 - Open to Government, however, to consider the case sympathetically in pursuance of Court’s earlier interim directions.
-It would be clear that the rate of duty and tariff valuation on the imported goods covered under Section 15(1)(a) is the date on which the bill of entry is presented under Section 46 read with Section 31 while the rate of duty and tariff valuation in respect of the goods covered under Section 15(1)(b) is the date on which the goods are actually removed from the warehouse under Section 68. The manifest intention would, therefore, be clear that there should be a declaration in the prescribed form by the importer of his intention to clear the goods either for home consumption or keep the goods in public warehouse. The purpose of granting interim directions was to relieve the petitioner from payment of needless demurrage which would not be converted as a substitute to statutory compliance of the operation of Section 15(1)(a) read with Section 46 or Section 15(1)(b) read with Section 68 of the Act, as the case may be. Once statutory declaration required either under Section 15(1)(a) or 15(1)(b) has been made, it is determinative and the due date is the relevant date mentioned in the relevant provision for imposition of customs duty and rate of tariff. If the interim directions of the court are taken to be substitute for the statutory operation of the relevant provisions, the interest of the revenue would be prejudicially affected and the fraudulent conduct and acts done in furtherance thereof would get legitimacy to avoid payment of duty and tariff prevailing as on either dates on which the bill of entry was presented or the goods are actually removed from the warehouse. It would be easy for an importer to have the goods imported, get an order from the court to keep them in private warehouse till either the rate of tariff is reduced or the prices of the goods are substantially increased by creating artificial scarcity in the market which would jeopardise the economy of the country. Accordingly we are of the considered opinion that the importer cannot be permitted to circumvent the law through judicial process which is otherwise impermissible under the Act. However, this Court, as seen by order dated August 11, 1992 directed that the respondent may consider the case sympathetically. It is open to the Government to consider the same and pass an appropriate order. Subject to the above observations the writ petitions are dismissed but, however, without costs. [paras 4, 5]
Warehousing (Customs) - Allowing storage of imported goods in a private warehouse is an exception - Normal rule is that they shall be kept in public warehouse - Section 58 of Customs Act, 1962.
-The arrangement under Section 58(1) appears to be to meet certain eventualities. To grant licence to private warehouse is an exception wherein dutiable goods or other imported goods may be kept in deposit. The normal rule is that they shall be kept in public warehouse. [para 4]
M. Jhangir Bhatusha v. U.O.I. — 1989 (42)E.L.T. 344
(SC)________[Para 5]
REPRESENTED BY: Shri Salve, Senior Advocate, for the
Petitioners.
[Judgment per: K. Ramaswamy, J.]. - These Writ Petitions under Article 32 raise common
question of law arising from same set of facts between the same parties though
for different consignments. Hence they are disposed of by common judgment. The
petitioner seeks writ of mandamus or any appropriate directions that the
component/parts of ball bearings imported from foreign supplier M/s. Impex Matel
Lucka, Sarszawa (Poland) are liable to excise duty prevalent as on February 20,
1989 and to release the goods on payment thereof or in the alternative to
declare Section 15(l)(a) ultra vires of Arts. 14, 19(l)(g), 21, 265 and 300A of
the Constitution. The facts are that the petitioner placed in January-February,
1988 an order with the Indian agent of the foreign supplier M/s. Impex Matel
Lucka, Warszawa, to supply ball bearings and irrevocable letters of credit were
opened on July 13, 1988 for Rs. 13,07,830/-. The foreign supplier shipped the
goods in M/s. Stefan Czarniecki under bill of landing No. 9 and invoice No.
06/222/71154 dated December 31, 1988. The ship arrived on February 20, 1988 at
Madras port and was ready to discharge the cargo. It delivered the import
manifest under No. 116 on the even date but due to continued strike the cargo
could not be handled. On February 27, 1989 the petitioner presented the bill of
entry “for clearance of goods for home consumption” and it was entered at No.
012036 which was received in the appraising section of the group on February 28,
1989. The ship arrived into the port and was berthed on March 2, 1989. The entry
inward was granted on March 2, 1989. From March 1, 1989 the rate of excise duty
was altered. It was increased at 150% ad valorem plus Rs. 300/- per piece for certain sizes
and for other sizes duty was raised to 150% ad valorem plus
weight based duty. The result was that pre-tariff duty was Rs. 15,73,611.05/-
while as per the new tariff levy effective from March 1, 1989, the difference
came to Rs. 1,80,46,092.64.
2. Shri Salve, learned senior counsel for the petitioner
contended that since the ship had entered into the Indian waters on February 20,
1989 and was ready to discharge the cargo, waiting clearance into the port and
due to reasons beyond the control of the ship or the petitioner the goods could
not be cleared until March 2, 1989 by which date the rate of levy was materially
changed. As the cargo was ready for discharge from the ship from the Indian
territorial waters from February 20, 1989 the duty prevailed as on that date
shall be the proper duty. The petitioner presented the bill of entry for
clearance of the goods for home consumption on February 27, 1989 which was
received by the appraising section on February 28, 1989, that would be at least
the proper date for determination of the rate of levy. We find no force in the
contention. Section 15 of the Customs Act, 1962 for short ‘the Act’ prescribes
the rate of duty and tariff valuation on imported goods thus:
“15(1) The rate of duty and tariff valuation, if any,
applicable to any imported goods, shall be the rate and valuation in force,
-
(a) in the case of goods entered for home consumption under
Section 46, on the date on which a bill of entry in respect of such goods is
presented under that section;
(b) in the case of goods cleared from a warehouse under
Section 68, on the date on which the goods are actually removed from the
warehouse;
(c) in the case of any other goods, on the date of payment
of duty:
Provided that if a bill of entry has been presented before
the date of entry inwards of the vessel by which the goods are imported, the
bill of entry shall
be deemed to have been presented on the date of such entry inwards. Section
15(2) is not relevant for the purpose of the case hence omitted.
“Section 31. Imported goods not to be unloaded from vessel
until entry inwards granted. -
(1) The master of a vessel shall not permit the unloading
of any imported goods until an order has been given by the proper officer
granting entry inwards to such vessel.
(2) No order under sub-section (1) shall be given until an
import manifest has been delivered or the proper officer is satisfied that
there was sufficient cause for not delivering it.
(3) Nothing in this section shall apply to the unloading of
baggage accompanying a passenger or a member of the crew, mail bags, animals,
perishable goods and hazardous goods."
(1) The importer of any goods, other than goods intended
for transit or transhipment, shall make entry thereof by presenting to the
proper officer a bill of entry for home consumption or warehousing in the
prescribed form:
Provided that if the importer makes and subscribes to a
declaration before the proper officer, to the effect that he is unable for want
of full information to furnish all the particulars of the goods required under
this sub-section, the proper officer may, pending the production of such
information, permit him, previous to the entry thereof:
(a) to examine the goods in the presence of an officer of
customs, or (b) to deposit the goods in a public warehouse appointed under
Section 57 without warehousing the same.
(3) A bill of entry under sub-section (1) may be presented
at any time after the delivery of the import manifest or import report as the case may be.
(5) If the proper officer is satisfied that the interests
of revenue are not prejudicially affected and that there was no fraudulent
intention, he may permit substitution of a bill of entry for home consumption
for a bill of entry for warehousing or vice versa."
Sub-sections (2) and (4) are omitted as being
irrelevant.
3. It is clear from bare reading of these relevant provisions
that the due date to calculate the rate of duty applicable to any imported goods
shall be the rate and valuation in force, in the case of the goods entered for
home consumption under Section 46, is the date on which the bill of entry in
respect of such goods is presented under that section and in the case of goods
cleared from a warehouse under Section 68, the date on which the goods are
actually removed from the warehouse. By operation of the proviso if a bill of
entry has been presented before the date of entry inwards the bill of entry
shall be deemed to have been presented “on the date of such entry inwards” but
would be subject to the operation of Sections 46 and 31(1) of the Act. Section
46(1) provides that the importer of any goods, other than goods intended for
transit or transhipment, shall make entry thereof by presenting to the proper
officer a bill of entry for home consumption or warehousing in the prescribed
form and it may be presented under sub-section (3) thereof at any time after
delivery of the import manifest. Section 31(1) provides that the Master of the
vessel shall not permit the unloading of any imported goods until an order has
been given by the proper officer “granting entry inwards” to such vessel and no
order under sub-section (1) shall be given until an import manifest has been
delivered or the proper officer is satisfied that there was sufficient cause for
not delivering it. Granting entry inward on delivery of import manifest and the
date of arrival of the vessel into port admittedly are on March 2, 1989 and the
Master of the vessel made a declaration in this behalf that they would discharge
the cargo on March 2, 1989. Therefore, the relevant date under Section 15(l)(a)
is the date on which entry inwards after delivery of import manifest was granted
to discharge the cargo for the purpose of the levy of the customs duty and rate
of tariff. The contention, therefore that the ship entered Indian territorial
waters on February 20, 1989 and was ready to discharge the cargo is not relevant
for the purpose of Section 15(1) read with Sections 46 and 31 of the Act. The
prior entries regarding presentation of the bill of entry for clearance of the
goods on February 27, 1989 and their receipt in the appraising section on
February 28, 1989 also are irrelevant. The relevant date to fix the rate of
customs duty, therefore, is March 2, 1989. The rate prevailed as on that date
would be the duty to which the goods imported are liable to the impost and the
goods would be cleared on its payment in accordance with the rate of levy of
customs prevailing as on March 2, 1989.
4. It is next contended by Shri Salve that this court by
order dated April 11, 1989 directed to release the goods subject to certain
conditions and directed the petitioner to keep them in the petitioner’s godown
and by further order dated September 12, 1989 this court directed the customs
authorities to put lock and key to the godown of the petitioner in which the
goods were stored. This court by further order dated May 11, 1992 directed the
respondents to release the goods on certain conditions i.e. the petitioner’s
paying an amount equal to twice the invoice value of the goods or to furnish
bank guarantee for the same. This court by further order dated August 11, 1992
directed the government to consider sympathetically the facts and circumstances
of the case and if possible to scale down the duty to a figure bearing a
reasonable correlation to the value of the goods imported and that the
representation is still pending consideration. Based on these subsequent events
a further contention has been raised that by operation of sub-section (5) of
Section 46 this court could give a proper direction to slash down the rate of
duty or may direct to levy the duty prevailing as on the date of the release
treating the goods under Section 15(l)(b) of the Act read with Section 68 of the
Act. We have given our due consideration but find it difficult to accede to the
contention. It would be clear that the rate of duty and tariff valuation on the
imported goods covered under Section 15( l)(a) is the date on which the bill of
entry is presented under Section 46 read with Section 31 while the rate of duty
and tariff valuation in respect of the goods covered under Section 15(l)(b) is
the date on which the goods are actually removed from the warehouse under
Section 68. The manifest intention would, therefore, be dear that there should
be a declaration in the prescribed form by the importer of his intention to
clear the goods either for home consumption or keep the goods in public
warehouse. The purpose of granting interim directions was to relieve the
petitioner from payment of needless demurrage which would not be converted as a
substitute to statutory compliance of the operation of Section 15(l)(a) read
with Section 46 or Section 15(l)(b) read with Section 68 of the Act, as the case
may be. Once statutory declaration required either under Section 15(l)(a) or
15(l)(b) has been made, it is determinative and the due date is the relevant
..date mentioned in the relevant provision for imposition of customs duty and
rate of tariff. In this behalf a contention has been raised by Shri Salve that
under Section 58 of the Act it is permissible, to the Customs Collector to grant
licence to a private warehouse wherein the, dutiable goods imported by or on
behalf of the licensee or any other imported goods in respect, of which
facilities for deposit in a public warehousing are not available may be
deposited without payment of duty. The directions of this court may be treated
to be under Section 58. The arrangement under Section 58(1) appears to be to
meet certain eventualities. To grant licence to private warehouse is an
exception wherein dutiable goods or other imported goods may be kept in deposit.
The normal rule is that they shall be kept in public warehouse. If the interim
directions of the court are taken to be substitute for the statutory operation
of the relevant provisions, the interest of the revenue would be prejudicially
affected and the fraudulent conduct and acts done in furtherance thereof would
get legitimacy to avoid payment of duty and tariff prevailing as on either dates
on which the bill of entry was presented or the goods are actually removed from
the warehouse. It would be easy for an importer to have the goods imported, get
an order from the court to keep them in private warehousing till either the rate
of tariff is reduced or the price of the goods are substantially increased by
creating artificial scarcity in the market which would jeopardise the economy of
the country. Accordingly we are of the considered opinion that the importer
cannot be permitted to circumvent the law through judicial process which is
otherwise impermissible under the Act.
5. Accordingly we find no force in the contention and is
rejected. The contention of the petitioner that Section 15(1) of the Act is ultra vires of the
provisions of the Constitution is no longer res integra. A Constitution Bench of
this Court in M.
Jhangir Bhatusha etc. etc. v. Union of India & Ors. etc. etc. (1989) 3 SCR 356 =
1989 (42) E.L.T. 344 (SC)
upheld the validity of Section 15(1) and we do not find it necessary to once
again traverse the contention de novo. This court, as seen, by order dated August
11, 1992 directed that the respondent may consider the case sympathetically. It
is open to the Government to consider the same and pass an appropriate order.
Subject to the above observations the writ petitions are dismissed but, however,
without costs.