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1992 Supreme(Cal) 318
High Court Of Calcutta
SUBHAS CHANDRA SEN
DEBABRATA GHOSH - Appellant
Versus
ASSISTANT COLLECTOR OF CUSTOMS - Respondent
Matter 2231 Of 1992
Decided On : 08/06/1992
ABHIJIT CHATTERJI, BHASKAR PRASAD GUPTA, N.C.ROY CHAUDHARY, SHIBAJI MITRA, Tilak Bose
Section 14(1) of the Customs Act prevails over Rule 8 of the Customs Valuation Rules, 1988, and the long-standing practice of the Department cannot override the provisions of an Act of Parliament.
Headnote:
CUSTOMS ACT - SECTION 14(1) AND CUSTOMS VALUATION RULES, 1988 - RULE 8 - VALUATION OF IMPORTED GOODS - SECOND-HAND CAR - STARTING POINT FOR VALUATION - PRICE AT WHICH SUCH OR LIKE GOODS ARE ORDINARILY SOLD OR OFFERED FOR SALE IN COURSE OF INTERNATIONAL TRADE - LIST PRICE OF MANUFACTURER OR AUCTION PRICE PAID BY IMPORTER - SECTION 14(1) OF CUSTOMS ACT PREVAILS OVER RULE 8 OF CUSTOMS VALUATION RULES - LONG STANDING PRACTICE OF DEPARTMENT CANNOT OVERRIDE PROVISIONS OF ACT OF PARLIAMENT.
Fact of the Case:
Petitioner purchased a second-hand Jaguar car at a public auction in the United Kingdom and brought it to India. The Customs Department assessed import duty on the car based on the list price of a new car, rather than the auction price paid by the petitioner. The petitioner challenged the assessment, arguing that the Department had ignored the provisions of Section 14(1) of the Customs Act, which requires valuation based on the price at which such or like goods are ordinarily sold or offered for sale in the course of international trade.
Finding of the Court:
The court held that the starting point for valuation of the imported car should be the auction price paid by the petitioner, rather than the list price of the manufacturer. The court found that Section 14(1) of the Customs Act is clear and must be followed, and that Rule 8 of the Customs Valuation Rules, which allows for valuation based on reasonable means consistent with the principles of Section 14(1), cannot be used to override the provisions of the Act. The court also held that the long-standing practice of the Department of assessing duty on second-hand cars based on the list price of new cars cannot override the provisions of the Act.
Issues: 1. Whether the starting point for valuation of an imported second-hand car is the list price of the manufacturer or the auction price paid by the importer. 2. Whether Rule 8 of the Customs Valuation Rules, 1988, which allows for valuation based on reasonable means consistent with the principles of Section 14(1) of the Customs Act, can be used to override the provisions of the Act. 3. Whether the long-standing practice of the Department of assessing duty on second-hand cars based on the list price of new cars can override the provisions of the Act.
Ratio Decidendi: 1. The starting point for valuation of an imported second-hand car is the auction price paid by the importer, rather than the list price of the manufacturer. 2. Rule 8 of the Customs Valuation Rules, 1988, which allows for valuation based on reasonable means consistent with the principles of Section 14(1) of the Customs Act, cannot be used to override the provisions of the Act. 3. The long-standing practice of the Department of assessing duty on second-hand cars based on the list price of new cars cannot override the provisions of the Act.
Final Decision: The court set aside the assessment order of the Customs Department and directed the Assistant Collector of Customs to make a fresh assessment in conformity with the provisions of Section 14(1) of the Customs Act and Rule 8 of the Customs Valuation Rules, 1988.
( 1 ) THE petitioner used to stay in the United Kingdom. He purchased a second hand Jaguar car at a price of 1323 at a public auction on 4th August, 1988. The petitioner has described the price of the car as bargain price. The auction receipt for the purchase price of the car was produced before the Customs authorities and has also been annexed to this writ petition. The description of the car has been given as 'second hand Jaguar of 1985 - Model Sovereign 4. 2 Auto 4 door Saloon Cylinder, capacity 4235 CC.
( 2 ) THE petitioner has stated in the petition that this car was purchased as a part of his plan to return to India. The petitioner was working in the United Kingdom and he retired in 1991. After retirement he came back to India along with his wife. The petitioner has brought in unaccompanied goods belonging to the petitioner which included the Jaguar car in a container. The case of the petitioner is that the car was purchased for the purpose of bringing it to India. The Department has contested the said stand of the petitioner. The petitioner's contention that the car was purchased at a bargain price was also disputed by the Department. The dispute is about the way the car is to be valued for the purpose of charging import duty. The Assistant Collector of Customs informed the petitioner that the import duty in respect of the said car had been fixed at Rs. 13 lakhs. The petitioner was not in a position to pay this large sum of money and requested the Assistant Collector of Customs to give the order of assessment in writing. Thereupon on 1st April, 1992 that is 10 weeks after the arrival of the car at the dock site, the Assistant Collector of Customs gave the petitioner a written order, assessing the duty on the said imported car at Rs. 13 lakhs. Further duty was imposed on various accessories of the car amounting to a sum of Rs. 2,07. 50 paise. The auction price of the car was not taken into account for the purpose of calculation of the duty but a price of 18,999 on the basis of a World Car Catalogue was taken into account. The claim of the petitioner for trade discount, freight, insurance etc. was also rejected.
( 3 ) THE petitioner preferred an appeal to the Collector of Customs (Appeals) against the said order. The Collector of Customs (Appeals) by an order dated 3rd April, 1992 held that the price of 18,995 adopted by the Assistant Collector of Customs as the price of the Jaguar car was the correct price and that the Assistant Collector of Customs was right in applying the provisions of Rule 8 of the Customs Valuation Rules, 1988. The Collector of Customs (Appeals) further held that the Assistant Collector of Customs had not supplied the petitioner the World Car Catalogue and therefore there was violation of the principles of natural justice. The Assistant Collector of Customs was directed to re-hear the case after giving a notice of hearing to the petitioner. The case was heard again. At the time of re-hearing, a photo copy of page 153 of the purported World Car Catalogue (as was directed by the Appellate Collector) was handed over to the petitioner and in the copy the words 'worlds Car 1985' were written in hand at the top in which the ex-works price of a Jaguar Sovereign HE was shown as 18,999. It has been further stated that the said copy does not contain any title or the date of publication. Besides, according to the Appraiser who assisted the Assistant Collector in arriving at his decision, the said publication had ceased to exist after 1985, even before the date of manufacture of the car which was 1st August, 1985 and they had no access to any later edition of the said publication because there was none. The petitioner by letter dated 21st April, 1992 recorded his objection to undue reliance being placed on a publication about the title or existence of which the Assistant Collector of Customs himself was not sure and on demand the Assistant Collector of Customs failed to produce physical
