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Collector of Customs Vs. New India Industries - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1985)(21)ELT159TriDel
AppellantCollector of Customs
RespondentNew India Industries
Excerpt:
.....that requirement of clause-(b) of sub-section (1) of section 15 of the act is that rate of duty, rate of exchange and tariff valuation applicable on any imported goods shall be the rate of and valuation in force on the date on which the warehouse goods are actually removed from the warehouse, shri sundar rajan, also drew our attention towards various other decisions of bombay high court, delhi high court, kerala high court and madras high court.10. in synthetics & chemicals limited v. s.c. coutinho and ors. (1981 e.l.t. 414) a division bench of bombay high court held that once the goods arc chargeable to duty on importation the rate of duty chargeable was the one prevalent on the date of their clearance from the customs warehouse. in jain shudh vanaspati limited v. union of.....
Judgment:
1. In all these four appeals the subject-matter is identical, the parties are the same and hence we are disposing of all these appeals by this commoner order.

2. Briefly stated the facts of the case as are apparent on record are that M/s. New India Industries Bombay (hereinafter called the respondents) imported and cleared four consignments of photographic materials under Bills of Entry Cash No. 4279 dated 21-4-1979, No. 5470 dated 26-4-1979, No. 1108 dated 5-4-1979 and 1795 dated 8-3-1979 on payment of basic customs duty, auxiliary duty and c.v. duly.

3. At the time of their import, i.e. when the goods entered the territorial waters of India, these goods were exempt from payment of c.v. duty vide exemption Notification No. 364, dated 2-8-1976 but the exemption notification was rescinded by subsequent Notification No. 63, dated 1-3-1979 and thus in effect c.v. duty became chargeable on these goods w.e.f. 1-3-1979. As the goods were removed from the bonded warehouse after 1-3-1979, so the customs authorities also charged the c.v. duty on these goods. The respondents did not dispute the levy of basic customs duty and auxiliary duty but impugned the levy of c.v.duty and filed their claims for refund of c.v. duty that was paid by them at the rate of 8% in all these four cases. Their main contention was that when the goods were imported the same were fully exempt from the payment of c.v. duty although on the date of their ex-bond clearance the relevant exemption Notification No. 364, dated 2-8-1976 was rescinded by Notification No. 63 dated 1-3-1979.

4. The Assistant Collector of Customs, rejected their claims on. the ground that under Section 15(l)(b) of the Customs Act, 1962 the date of the actual removal of the goods, from the warehouse is the crucial date for the purpose of levy of duty. When the goods were cleared ex-bound in these four cases, c.v. duty was chargeable on the goods and as such, according to the Asstt. Collector the same was rightly charged. The Appellate Collector, however, allowed the appeals on the grounds that the relevant date in all these four cases should be the date of importation and since on the date of importation the c.v. duty was not chargeable, the same should not be levied on the goods that relates to the date on their ex-bond clearance in terms of the provisions of Section 15(l)(b) of the Customs Act.

5. The Government of India, did not find the orders passed by the Appellate Collector, legal and hence review proceedings were initiated against the said orders of the Appellate Collector and review show cause notice was served upon the respondents to show cause as to why the aforesaid order in appeal be not set aside 6. In reply to this review show cause notice, the respondents contended that a Division Bench of the Bombay High Court in the case of M.S.Sawhney v. Sylvania & Laxman Limited 1975 (Vol. 77) BLR 380 held that the question of applicability of exemption notification has to be viewed from the point of view of the state of affairs existing at the date of importation and in no other way. If on the date of importation that exemption notification was in operation, the goods would be entitled to the benefit to the said exemption notification, notwithstanding to the facts that at a subsequent date i.e. the date of the presentation of the Bill of Entry or the clearance of the goods on payment of duty the notification stood withdrawn and/or rescinded and/or expired. The payment of c.v. duty was fully exempt on the date of the importation of these goods and so by rescinding the exemption notification later on would not make an)' difference.

7. Their review proceedings have been transferred to this Tribunal under Section 131/8 (2) of the Customs Act, 1962 and are treated as appeals.

8. We have read Shri A.S. Sundar Rajan, J.D.R. for the appellants and Shri P.J. Bhai, Advocate for the respondents and have gone through the record.

9. Shri Sundar Rajan, the departmental representative submitted that plain reading of Section 15(l)(b) of the Customs Act, makes it clear that the rate of duty is to be the rate in force on the date on which the Bill of entry is presented. According to him, admittedly Bills of Entry were presented on 21-4-1979, 26-4-1979, 5-4-1979 and 8-3-1979 when the Exemption Notification-No. 364, dated 2-8-1976 stood rescinded by subsequent Notification No. 63, dated 1-3-1979 and thus in effect c.v. duty became chargeable on these goods w.e.f. 1-3-1979. As these goods were removed from the bonded warehouse after 1-3-1979, so the customs authorities rightly charged the c.v. duty on these goods.

According to him, Section 12 of the Customs Act cannot be read in isolation but along with Sections 14 and 15 of the Customs Act, Section 15(1) of the Customs Act clearly lays down that the rate of duty and the tariff valuation, if any, applicable to any imported goods, shall be the rate and value in force, in the case of goods cleared from a warehouse under Section 68 of the Act, on the date on which the goods are actually removed from the warehouse. In these cases, the goods were actually removed from the warehouse after 1-3-1979 when these goods became liable to pay c.v. duty at the rate of 8% when admittedly the benefit of Notification No. 364, dated 2-8-1976 stood withdrawn and therefore, the assessment of these goods was rightly made as per the rates prevailing at that time. He cited a decision of Supreme Court in Prakash Cotton Milk (P) Ltd. v. B. Sen and Ors. 1979 E.L.T. J 241 wherein their Lordships of the Supreme Court observed that requirement of Clause-(b) of Sub-section (1) of Section 15 of the Act is that rate of duty, rate of exchange and tariff valuation applicable on any imported goods shall be the rate of and valuation in force on the date on which the warehouse goods are actually removed from the warehouse, Shri Sundar Rajan, also drew our attention towards various other decisions of Bombay High Court, Delhi High Court, Kerala High Court and Madras High Court.

10. In Synthetics & Chemicals Limited v. S.C. Coutinho and Ors. (1981 E.L.T. 414) a Division Bench of Bombay High Court held that once the goods arc chargeable to duty on importation the rate of duty chargeable was the one prevalent on the date of their clearance from the customs warehouse. In Jain Shudh Vanaspati Limited v. Union of India (1983 E.L.T. 1688) the Division Bench of Delhi High Court observed that levy is not confined only to the import of the goods but extends to assessment. Section 12 of the Customs Act cannot be read in isolation but along with Sections 14 and 15 of the Customs Act. Madras High Court in M. Jamal & Co. v. Union of India (1981 ECR 14D) held that the power to grant exemption under Section 25 of the Customs Act may be absolute or partial. The relevant date for the rate of duty is the date of the presentation of the Bill of Entry. Kerala High Court in the case of Aluminium Industries Limited v. Union of India 1984(16) E.L.T. 183 held that the exemption granted under Section 25(1) of the Customs Act does not have the effect of taking the goods out of the class of dutiable goods for placing them beyond the reach of Section 12. The exemption only suspends or eclipses chargeability which can be revived the moment exemption is lifted or withdrawn. In other words, exemption from duty can also be construed as chargeability under nil rate, if rate under Section 12 is the whole base for the chargeability. According to Shri Sundar Rajan, c.v. duty is also a customs duty as has been laid down in the case of Kirloskar. Cummins Ltd. v. Union of India (1980 CENCUS 21-D) and therefore, there is no reason why Section 15 (I )(b) of the Customs Act, 1962 should not apply with regard to the levy of c.v. duty as well. Shri Sundar Rajan also drew our attention towards the decision of this Tribunal in Bayer India Limited v. Collector of Customs, Bombay (1984)(16) E.L.T. 375 (CEGAT Order No. 54,8'549/1983-C, dated 25-11-1983) in support of his contention that the rate of duty applicable to imported goods is to be as per Section 15 of the Act, irrespective of the entry of the goods in the territorial waters of India. The rate of duty applicable to any imported goods shall be the rate in force on the date on which the warehoused goods are actually removed from the warehouse. Whether the goods were totally exempt from the payment of duty or partially exempt by a notification issued under Section 25 of the Customs Act makes no difference. If the goods are subject to payment of duty on the date when the Bill of Entry was presented or when the goods were removed from the bonded warehouse, it is that rate of duty which was prevalent on that date which would be applicable and not (he one which was at the date when the goods entered the territorial waters of India. The Appellate Collector has gone wrong while allowing the appeals ignoring the Jaw as laid down by Hon'ble The Supreme Court and various other High Courts and therefore, his orders are liable to be set aside.

11. Shri J.J. Bhat, learned counsel for the respondents contended that the imported goods were not liable for c.v. duty at the date of their importation as they were totally exempt under Notification No. 364, dated 2-8-1976, The main contention of the learned counsellor the respondents on the facts of these cases are that their goods were not liable to c.v. duty as they were fully exempt from payment of c.v. duty on the date of the importation of the goods, which according to him occurred when the goods crossed the ''territorial" waters of India and not when the goods were cleared from the Customs bonded warehouse or when the Bills of entry were presented as provided under Section 15(1) of the Customs Act. He drew our attention towards a decision of Division Bench of Bombay High Court in M.S. Sawhney v. Sylvania & Laxman Limited (Supra) wherein their Lordships after considering various provisions of the Customs Act held : (i) That under Section 12(1) of the Customs Act, 1962 chargeability of levy of customs duty arises when the goods are imported into India; (ii) that by the combined effect of the definition of words 'import' and 'India' under Sections 2(23) and 2(27) of the Customs Act, 1962, import takes place when the goods are brought into the territorial waters of India; and (iii) that there is nothing in the Customs Act which indicates that the chargeability is postponed until a Bill of Entry is presented.

12. According to Shri Bhat, their Lordships of Bombay High Court drew a clear distinction between the concept of chargeability in respect of the customs duty and the concept of assessment or quantification of the amount payable by way of customs duty. As these goods were fully exempt from payment of c.v. duty on the date of their importation, under the notification issued under Section 25 of the Customs Act, 1962, though on the date when the bill of entry was presented the exemption was withdrawn and the goods were fully liable to c.v. duty, the customs authorities could not demand the c.v. duty on these goods because they were fully exempt from payment of c.v. duty on the date of their importation. As per the contention of Shri Bhat, the Appellate Collector of Customs is fully justified in allowing all the font-appeals on the basis of the decision of the Bombay High Court in Sylvania &' Laxman's case (Supra), the facts of which squarely apply to these cases before this Tribunal.

13. Shri Bhat further contended that the facts of the case of Prakash Cotton Mills (supra) decided by the Hon'ble Supreme Court do not apply to these cases. The question of applicability of exemption notification issued under Section 25 of the Act did not fall for consideration of the Supreme Court and the question which was answered by the Division Bench of Bombay High Court in Sylvania & Laxman's case (supra) did not come for consideration before the Supreme Court. The decisions of other High Courts, namely Delhi High Court in Jain Shudh Vanaspati (supra), Kerala High Court in Aluminium Industries (supra) and that of Madras High Court in M. Jamal & Co. (supra) could not be made use of in preference to the decision of Bombay High Court by the Appellate Collector at Bombay, who was deciding the matter which had arisen within the jurisdiction of Bombay High Court.

14. Referring to the decision of Bombay High Court in Synthetics & Chemicals Ltd. v. S.C. Coutinho and Ors. (supra), Shri Bhat argued that in that case the goods imported were partially exempt from customs duty at the time of their import i.e. on the date of crossing the territorial waters but on the date on which they were cleared from the customs warehouse, the exemption was withdrawn and they had become liable for full customs duty, but in this case the goods were totally exempt from c.v. duty on the date when the goods were imported and therefore, the ratio of the decision of Synthetics case (supra) would not be applicable. Their Lordships of the Bombay High Court while deciding the case of Synthetics & Chemicals Limited (supra) did not overrule the ratio of the decision of Sylvania & Laxman's case (supra) which is still a good law as far as Bombay High Court is concerned and the ratio of that case squarely applies to the present appeals. Shri Bhat also submitted that (he e.v. duty or additional duty payable under Section 2-A of the Indian Tariff Act, 1934 or under Section 3 of 'the Customs Tariff Act, 1975 cannot be termed as customs duty referred to in the charging Section, namely Section 12 of the Customs Act, 1962.

According to Shri Bhat, in view of various conflicting decisions of various High Courts on this issue and in view of the interpretation of the decision of the Supreme Court in Prakash Cotton Mills (supra), the Bombay High Court in writ petition Nos. 774 of 1979, 1215 of 1979 (Apar Private Limited and Anr. v. Union of India and Ors.-1982 E.L.T. 364 (Bom.) and Century Spinning & Manufacturing Co. Ltd. and Anr. v. Union of India and Ors.) decided to refer these important points to the Full Bench for determination, and therefore, this matter be stayed till such time the Full Bench of the Bombay High Court, decides these points finally.

15. Regarding the plea of the learned counsel of the respondents that this matter be stayed till such time the full Bench of the Bombay High Court decides the points, in controversy finally, the learned counsel of the respondents stated that there is no stay order passed by the Bombay High Court in this respect. He also could not explain satisfactorily as to why these appeals be stayed when the decisions of the other High Courts and Supreme Court are available touching these points. We, therefore, decline this request of the learned counsel of the-respondents.

16. The question whether the Collector of Customs (Appeals) Bombay, who passed the impugned order was bound by the decision of the Bombay High Court finds its answer in the decision of the Supreme Court in the case of East India Commercial Co. Ltd. (AIR 1972 SC 1893) wherein the Hon'ble Judges of the Supreme Court held that under Article 227 of the Constitution of India, a High Court has jurisdiction over all the Courts and Tribunals throughout the territories in relation to which it exercises the jurisdictions. The Collector of Customs (Appeals), Bombay dealing with the matters arising within the territorial jurisdiction of Bombay High Court is bound by the decisions of the Bombay High Court.

The matter in dispute had arisen at Bombay and therefore, he was bound by the decisions of the Bombay High Court in the absence of any contrary decision of the Hon'ble Supreme Court.

17. No doubt, Delhi High Court in the case of Jain Shudh Vanaspati Limited (supra), Kerala High Court in the case of Aluminium Industries Ltd. (supra) and Madras High Court in the case of M. Jamal & Co.

(supra) have categorically laid down that levy is not confined only to the import of the goods but extends to assessment and that the relevant date is the presentation of the Bill of Entry or removal of the goods from the warehouse, but we have to find out as to what is the view of the Bombay High Court on this point and whether there is any decision of the Supreme Court dealing with this point to arrive at the correct conclusion. Kerala High Court in the case of Aluminium Industries Limited (supra) and Delhi High Court in the case of Jain Shudh.

Vanaspati (supra) have further laid down that an exemption granted under Section 25(1) of the Customs Act, 1962 does not have the effect of taking the goods out of the class of dutiable goods or placing them beyond the reach of Section 12. An exemption only suspends or eclipses chargeability which can be revived the moment the exemption is lifted or withdrawn. Exemption from duty can also be construed as chargeability under 'nil rate' if rate under Section 12 is the whole basis for the chargeability. According to these decisions of the Delhi High Court and Bombay High Court, it does not make any difference whether at the date of the import the goods were totally exempt from duty either basic or additional or were partially exempt from such duty.

18. Now, discussing the two Division Bench decisions of the Bombay High Court in the cases of M/s. Sylvania & Laxman (supra): and Synthetics & Chemicals (supra) which are relevant to these points, we find that the Bombay High Court in Synthetics & Chemical's case which is a latter decision, accepted that the date of import (in loose sense) in the sense of entering the territorial waters of India has no relevance for determining the rave of duty which must be worked out under Section 15 of the Act. The fact that the rate of duty is to be calculated with reference to the date and point of time, mentioned in Section 15 of the Act, stands concluded by the Supreme Court decision in Prakash Cotton Mills Ltd. v. B. Sen and Ors.

"It is thus clear requirement of Clause B of Sub-section (I) of Section 15 of the Act, that the rate of duty, rate of exchange, and tariff valuation applicable to any imported goods shall be the rate and valuation inforce on the date on which the warehoused goods are actually removed from the warehouse." 19. Supreme Court in another decision in the case of Gangadhar Narsingh alias Agarwal v. P.S. Thrivikraman and Anr. 1983 E.L.T. 1491 also upheld this point of law that the relevant date for determination of rate of duty and tariff valuation for export of goods is the date of the presentation of the shipping bill as provided under Section 16 of the Customs Act, 1962, Though it is a case of export but the principle underlying is the same that entry in the territorial waters though amounting to import, yet will not, for fiscal purposes determine the date and time for the purpose of calculating the rate of duty which is leviable under the provisions of the Customs Act.

20. In view of these judicial pronouncements by the highest Court of the Land i.e. the Supreme Court, the Collector of Customs (Appeals), Bombay, who decided these appeals has gone wrong in holding that the goods which were not liable to duty when imported could not be subject to duty by procedure under Section 15 of the Customs Act. The decision of the Supreme Court is not distinguishable on this point as the Supreme Court has categorically laid down that the rate of duty, rate of exchange and tariff valuation applicable to any imported goods shall be the rate and valuation in force on the date on which the warehouse goods are actually removed from the warehouse.

21. In these cases the goods were actually removed from the warehouse after 1-3-1979, when they were subject to levy of c.v. duty at the rate of 8%-Whether the goods were partially exempted or totally exempted on the dale of importation makes no difference as far as the chargeability of the duty is concerned. The notification under Section 25(1) of the Customs Act, 1962 is issued precisely because the goods are covered by First Schedule of the Customs Tariff Act and are subjected to duty of customs. The only effect of notification issued under Section 25(1) is to reduce the effective rate of duty leviable but goods continue to be dutiable. Therefore, the issue of notification under Section 25(1) of the Customs Act, 1962, does not mean that the goods in question arc not chargeable to levy of duty under Section 12 of the Customs Act, 1962.

Even otherwise the ratio of the decision of the Bombay High Court in M/s. Synthetics & Chemicals Limited (supra) squarely covers this case.

In these appeals before us, on the date of importation customs duties viz. basic and auxiliary were chargeable on the imported goods and it is only the c.v. duty which was exempt by the exemption notification issued under Section 25 of the Customs Act, 1962. Their Lordship of the Bombay High Court in Synthetics & Chemicals case observed that where there was no chargeability on the date of importation, the goods were not liable to duty even though they became so liable by virtue of the fact that the exemption came to an end. But whether there was initial chargeability, whether as per rates in the Tariff Act or the reduced rates under an exemption notification issued under Section 25 of the Customs Act, 1962, Section 15 of the Act would apply for the purpose of determination of the rate of duty. Here the goods were subject to levy of customs duties i.e. basic and auxiliary and it cannot be said that the goods were totally exempt from payment of customs duty. c.v. duty is also a customs duty as has been laid down in the case of Kirloskar Cummins Limited v. Union of India (1980 CENCUS 21-D, Jan.). The plea of the learned counsel of the respondents that c.v. duty cannot be said to be customs duty as referred in this charging section, namely Section 12 of the Customs Act, 1962 is not sustainable, c.v. duty is as much a customs duty as basic customs duty and auxiliary duty, though under different Sections/Acts.

22. The Collector of Customs (Appeals), Bombay, has gone wrong while ignoring the latter Division Bench Decision of the Bombay High Court in Synthetics & Chemicals (supra) and also the decision of the Supreme Court in Prakash Cotton Mills (supra) touching the same point though they were available to him to arrive at the correct conclusion of the matter and therefore, we have no alternative but to set aside the impugned order passed by the Collector of Customs (Appeals), Bombay and to accept all these four appeals, we, therefore, set aside the Order No. S/49-213, 214, 240 and 241/80-R, dated 26-2-1980 passed by the Collector of Customs (Appeals), Bombay and accept all these four appeals.


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