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1988 Supreme(Cal) 457
High Court Of Calcutta
Ajit Kumar Sengupta
ASSOCIATED FOREST PRODUCTS (P) LTD. - Appellant
Versus
ASSTT.COLLR.OF CUSTOMS - Respondent
Matter 506 Of 1987
Decided On : 12/16/1988
Headnote:
CUSTOMS ACT, 1962 - SECTION 15(1)(A) - NOTIFICATION NO. 62/85-CUS. , DATED MARCH 17, 1985 - NOTIFICATION NO. 311/86-CUS. , DATED MAY 13, 1986 - NOTIFICATION NO. 439/86, DATED OCTOBER 6, 1986 - NOTIFICATION NO. 440/86, DATED OCTOBER 6, 1986 - NOTIFICATION NO. 459/86-CUS. , DATED NOVEMBER 12, 1986 - TIMBER LOGS - IMPORT - LEVY OF ADDITIONAL OR AUXILIARY DUTY OF CUSTOMS - NOTIFICATION DATED OCTOBER 6, 1986 LEVYING ADDITIONAL OR AUXILIARY DUTY OF CUSTOMS - APPLICABILITY TO IMPORTED GOODS - DETERMINATION.
Fact of the Case:
The petitioner imported timber logs from Malaysia on October 2, 1986. On that day, the basic customs duty was 10% ad valorem by virtue of exemption Notification No. 62/85-Cus. , dated March 17, 1985. Auxiliary duty and additional duty were wholly exempt by virtue of Notification No. 311/86-Cus. , dated May 13, 1986, and Notification No. 62/85-Cus. , dated March 17, 1985, respectively. On October 6, 1986, exemption Notification No. 62/85-Cus. , dated March 17, 1985, in respect of basic customs duty was withdrawn by Notification No. 439/86, dated October 6, 1986, whereby basic customs duty was raised to 60%. Similarly, the Notification No. 311/86-Cus. , dated May 13, 1986, exempting auxiliary duty was also withdrawn by a Notification No. 440/86, dated October 6, 1986, and the goods became chargeable to auxiliary duty at the rate of 40% ad valorem. On November 12, 1986, the basic customs duty was again reduced to 10% ad valorem by Notification No. 459/86-Cus. The petitioner contended that Section 15(1) of the Customs Act is beyond the legislative competence of Parliament and ultra vires the Constitution of India and in particular Article 14 thereof. It was also contended that the date of presentation of the Bill of Entry is wholly unconnected with the taxable event. The counsel for the petitioner submitted that the taxable event being the importation and the date of importation being the date on which the goods enter the territorial waters of India, the duty chargeable can only be at the rate prevailing on that date and cannot be made dependent on any subsequent event, e. g. , filing of Bill of Entry.
Finding of the Court:
The Court held that the taxable event occurs when the goods enter the territorial waters of India and since “india” includes its territorial waters, the taxable event occurs no sooner than the goods enter the territorial waters of India and does not postpone till they are actually off-loaded on the land mass or till the goods are valued under Section 14 or, till the date for determining the rate at which the customs duty should be levied under Section 15 arrives. The Court further held that the goods become imported goods no sooner than they enter into the territorial waters of India.
Issues: Whether the Notification dated October 6, 1986 levying additional or auxiliary duty of customs would be applicable to the subject goods imported by the petitioners.
Ratio Decidendi: The Court held that the taxable event occurs when the goods enter the territorial waters of India and since “india” includes its territorial waters, the taxable event occurs no sooner than the goods enter the territorial waters of India and does not postpone till they are actually off-loaded on the land mass or till the goods are valued under Section 14 or, till the date for determining the rate at which the customs duty should be levied under Section 15 arrives. The Court further held that the goods become imported goods no sooner than they enter into the territorial waters of India.
Final Decision: The Court allowed the petition and set aside the order of assessment already made. The respondents were directed to make a fresh assessment within one week from the date of communication of this order at the rate applicable in respect of the subject goods on the date when the goods entered the territorial waters of India, i. e. , October 2, 1986. The respondents were also directed to refund the excess duty paid by the petitioner.
( 1 ) THE short question which calls for determination in this case is whether the Notification dated 6th October; 1986 levying additional or auxiliary duty of customs would be applicable to the subject goods imported by the petitioners.
( 2 ) THE facts shortly stated are that the petitioner imported diverse quantities of Timber logs from Malaysia on the vessel Clipper Flame which came into Calcutta Port on 2nd October, 1986. On that day basic customs duty chargeable was 10 per cent ad valorem by virtue of exemption Notification No. 62/85-Cus. , dated 17-3-1985. Auxiliary duty and additional duty were wholly exempt by virtue of Notification No. 311/86-Cus. , dated 13-5-1986 and Notification No. 62/85-Cus. , dated 17-3-1985 respectively.
( 3 ) ON 3rd October, 1986, import manifest was delivered by the Steamer Agent to the Customs-Authorities under Section 31 (2) of the Customs Act, 1962 (hereinafter referred to as the Act ). According to the petitioner, order was given by proper officer granting "entry Inwards" to vessel under Section 31 (3) of the Act. The petitioner filed the Bill of Entry for Home Consumption under Section 46 (1) of the Act. The said Bill of Entry was not accepted on the ground that the manifest did not contain the name of the importer and as such was incomplete. On 4th and 5th October, 1986 being Saturday and Sunday respectively Customs Department was closed. On 6th October, 1986, supplementary manifest was filed by the Steamer Agent. Exemption Notification No. 62/85-Cus. , dated 17-3-1985 in respect of basic customs duty was withdrawn by Notification No. 439/86, dated 6-10-1986 whereby basic customs duty was raised to 60%. Similarly, the Notification No. 311/86-Cus. , dated 13-5-1986 exempting auxiliary duty was also withdrawn by a Notification No. 440/86, dated 6-10-1986 and the goods became chargeable to auxiliary duty at the rate of 40 per cent.
( 4 ) ON 7th October, 1986, Bill of Entry was assessed on the basis of 10 per cent basic customs duty.
( 5 ) ON 31st October, 1986, public notice regarding withdrawal of aforesaid exemptions was issued by the Calcutta Customs.
( 6 ) ON 12th November, 1986, basic customs duty was again reduced to 10 per cent ad valorem by Notification No. 459/86-Cus.
( 7 ) ON or about 24th November, 1986, the petitioner paid the duty on the basis of the assessment made on the Bill of Entry on 7-10-1986 at the rate of 10 per cent. According to the petitioner till today this assessment order stands and has not been revised or reviewed.
( 8 ) ON 12th January, 1987, this writ petition was filed, inter alia, praying for release of the goods without payment of any duty in terms of Notification dated 6th October, 1986: Upon the said application on 14th January, 1987, an interim order was passed directing clearance of the goods upon securing the difference in duty i. e. 50% on account of basic duty and 40% on account of auxiliary duty by furnishing a personal bond for 50% and on payment of 50% in cash.
( 9 ) IN January, 1987 the petitioner paid a sum of Rs. 10,74,205. 10 being 50% of the difference in duty in cash in terms of the said order passed on 14th January, 1987 and also executed personal bond for the equivalent amount. Thereupon the goods were released.
( 10 ) ON 11th May, 1988, the petitioner made an application claiming refund of the said sum with interest in the event it is held that the impugned notification will have no application to the facts of this case.
( 11 ) IT may be mentioned that the petitioner made the said application for refund in view of certain orders passed by the Supreme Court where in similar cases it was directed that the main writ application should be heard.
( 12 ) AFTER affidavits have been completed, this matter came up for hearing.
( 13 ) THE learned counsel appearing for the petitioner submits that Section 15 (1) of the Customs Act is beyond the legislative competence of Parliament and ultra vires the Constitution of
