1. The point of dispute involved in this appeal is whether customs duty assessed under the prior entry system in anticipation of the arrival of the importing vessel can be re-assessed in accordance with the provisions of Section 15 of the Customs Act, 1962 after arrival of the vessel or Section 17(4) of the Act bars such re-assessment.
2. The case was heard at length by us on 15-7-83, 26-7-83 and 9-8-83.
The facts, in brief, are that Exemption Notification No. 8/79-CUS dated 5-1-1979 fixed a concessional rate of import duty of Rs. 1.32 per kg.
for Viscose Staple Fibre. The appellants imported a consignment of this commodity. They presented a Bill of Entry under Section 46 on 25-9-1979 in anticipation of the arrival of the importing vessel. The proper officer assessed the duty on the consignment at the rate of Rs. 1.32 per kg. The appellants paid the duty so assessed on 9-10-1979. The ship carrying the consignment arrived at Sand Heads at the Port of Calcutta and within the territorial waters of India on 22-10-1979 and was given the entry inwards at the Port of Calcutta on 6-11-79. In between, on 30-10-1979, the rate of duty on Viscose Staple Fibre stood increased to Rs. 2.37 per kg. by issue of amending notification No. 208/79-CUS. The Assistant Collector of Customs demanded duty at the enhanced rate in Icrms of the proviso to Section 15 of the Customs Act, 1962 before the goods were allowed clearance. The appellants paid the differential duty demanded under protest on 13-11-1979 and cleared the goods. The Appellate Collector upheld the Assistant Collector's order. The appellant filed a revision application to the Central Government which, on transfer to this Tribunal, has been taken up as the subject appeal.
3. The main plea of the appellants before the lower authorities and in the revision application was that the exemption notification No.8/79-CUS applied the concessional rate of duty to Viscose Staple Fibre "when imported into India" and that since the goods were deemed to be imported into India when the ship carrying them entered the territorial waters of India on 22-10-79, the concessional rate of Rs. 1.32 then in force was the correct rate of duty for their consignment. For this, they relied on the Bombay High Court judgment in the case of M/s.
Sylvania & Laxman (1975 BLR 380). Another argument taken was that the Appellate Collector had violated the principle of natural justice as he had not granted a personal hearing to the appellants before deciding their appeal. On a query from the Bench the appellants were not in a position to say whether they had asked for a personal hearing before the Appellate Collector or not. As regards the Bombay High Court judgment referred to above, it was brought to the appellant's notice that there was a recent Division Bench judgment of Delhi High Court delivered on 11-5-1983 in civil writ No. 1507/1980 in the case of M/s.
Jain Shudh Vanaspati Ltd. v. Union of India, 1983 ELT 1688 (Del.) in which Delhi High Court, relying on the earlier Supreme Court judgment in the case of Prakash Cotton Mills, have differed with the Bombay High Court and held that rate of duty applicable to any imported goods had to be determined in accordance with the provisions of Section 15. The appellants sought time to study this judgment of Delhi High Court which was given. During the next hearing, the appellants stated that since this Tribunal was bound by the judgment of Delhi High Court, they would not press for their earlier arguments, without at the same time conceding them. Instead, they came out with a new plea that Section 17(4) of the Act barred re- opening of assessment already made unless it was shown that some statement made in the Bill of Entry was incorrect. They stated that there was no finding that any statement by the appellants in the Bill of Entry was incorrect. Therefore, they argued, the assessment already made in their case prior to 30-10-1979 could not be re-opened. This was the only argument they pressed for our consideration.
4. The Department's representative relied on Delhi High Court judgment in the case of Jain Shudh Vanaspati Ltd. and added that Section 17 did not override Section 15, that both these Sections had to be read together, that otherwise Section 15, and for that matter also Sections 27 and 28, would become nugatory, that according to the proviso to Section 15, the deemed date of importation of the appellants' consignment was 6-11-1979 when the ship carrying the goods was given entry inwards at the Port of Calcutta, that the duty assessed earlier on their goods under the prior entry system in advance of the arrival of the ship had to be re-assessed in accordance with the provisions of this proviso and, therefore, the order of the lower authorities upholding demand of duty at the increased rate of Rs. 2.37 per kg. as in force on 6-11-1979 was correct.
5. Availing their right of reply, the appellants stated that it was open to the Department to refrain from making the assessment till entry inwards was given to the vessel. In the alternative, the Department could have made a provisional assessment. If the Department had done that, Sections 15, 27 and 28 of the Act would not become nugatory. But in the present case the Department did neither. Instead, the Department chose to complete the assessment before arrival of the ship. In such a situation, and in the absence of any incorrect statement in the Bill of Entry, the prohibition of Section 17(4) applied.
6. We have carefully considered the matter. In order to appreciate the arguments of the parties, we re-produce below Sections 15 and 17 of the Customs Act, 1962 which are material to this case :- "15. Date for determination of rate of duty and tariff valuation of imported goods.-(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 Sec. 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 Sec. 68, on the date on which the goods are actually removed from the warehouse ; 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.
(2) The provisions of this Section shall not apply to baggage and goods imported by post.
17. Assessment of duty.--(l) After an importer has entered any imported goods under Sec. 46 or an exporter has entered any export goods under Sec. 50 the imported goods or the export goods, as the case may be, or such part thereof as may be necessary may, without undue delay, be examined and tested by the proper officer.
(2) After such examination and testing, the duty, if any leviable on such goods shall, save as otherwise provided in Sec. 85, be assessed.
(3) For the purpose of assessing duty under Sub-section (2), the proper officer may require the importer, exporter or any other person to produce any contract, broker's note, policy of insurance, catalogue or other document whereby the duty leviable on the imported goods or export goods, as the case may be, can be ascertained, and to furnish any information required for such ascertainment which it is in his power to produce or furnish, and thereupon the importer, exporter or such other person shall produce such document and furnish such information.
(4) Notwithstanding anything contained in this section, imported goods or export goods may, prior to the examination or testing thereof, be permitted by the proper officer to be assessed to duty on the basis of the statements made in the entry thereto and the documents produced and the information furnished under Sub-section (3) ; but if it is found subsequently on examination or testing of the goods or otherwise that any statement in such entry or documents or any information so furnished is not true in respect of any matter relevant to the assessment, the goods may, without prejudice to any other action which may be taken under this Act, be reassessed to duty." 7. A perusal of the above sections would show that Sec. 15 fixes the date for determination of rate of duty applicable to the imported goods (we will omit the reference to tariff value as it is not relevant to the present discussion). The section says emphatically that in respect of the goods for which a home consumption bill of entry is filed under section 46, the rate of duty "shall be" the rate in force on the date of presentation of the bill of entry. But if the bill of entry is filed before the arrival of the vessel, commonly known as the prior entry system, the proviso to Section 15 comes into play which says equally emphatically that such bill of entry "shall be deemed" to have been presented on the date of entry inwards of the vessel. In the appellants' case, a bill of entry for home consumption was filed under the prior entry system, so the proviso squarely applied in their case.
On the other hand, we notice that Section 17 fixes the sequence of procedural steps for examination and testing of the imported goods (we will omit reference to export goods as it is not relevant for the present case) and assessment of duty thereon and is thus a machinery provision. The section provides for two types of procedures -(1) either the goods may be examined and tested first and then the duty assessed thereon or (2) the goods may be assessed first on the basis of the importer's statement made in the bill of entry and the documents enclosed therewith and examined or tested later. For obvious reasons, the second procedure is subject to the condition that if the examination and testing done subsequent to the assessment show that some statement made in the bill of entry was incorrect, the goods may be re-assessed. We understand that the second procedure was introduced with a view to expediting the clearance of goods by cutting down avoidable to and for movement of import documents between the Custom House where the documents are processed and the Docks where the goods are kept and examined. The point to note is that Section 17 nowhere says that re-essessment of the goods can be made only for the reason stated in that section, that is, an incorrect statement made in the bill of entry, and for no other reason. We notice that the need for re-assessment of duty can arise for various other reasons and there are several other sections in the Act covering such situations. For example, the importer may dispute the valuation or tariff classification of the goods or may claim benefit of some exemption notification. Section 27 makes provision for refund claims to be filed by importers for these and other reasons. For similar reasons, the Department might feel that duty was short levied on some goods. Section 28 gives right to the Department to issue demands for the duty short-levied. Such refund claims and demands for duty short-levied, if found admissible, do involve re-assessment of the duty originally assessed. If the appellants' interpretation were to be followed, these sections would be rendered nugatory. We hardly need dwell on the point that my interpretation which renders other portions of the Act nugatory has to be rejected. Similar is the case with Section 15 in so far as prior entry cases are concerned. Duty assessed before entry inwards of the vessel is only an advance assessment, or a tentative assessment, and assessment proper has to be made only after the vessel is given entry inwards and the rate of duty as applicable to the goods on that date becomes known. It may be that in a great majority of the cases the advance assessment itself may become the final assessment if there is no change in the rate of duty in the meantime. But if there is such a change, the goods have to be re-assessed at the changed rate applicable. Otherwise, the proviso to Section 15 would become redundant. We have no doubt in our mind that various sections of the Act have to be construed harmoniously. In fact, there is no conflict between Section 17 and the other sections because each one of them covers a different type of situation. Section 17 does not over-ride Section 15 or for that matter any other section. On the contrary, Section 15 is a part of the charging provisions of the Act in as much as it lays down the crucial date, the rate of duty in force on which is to be applied to the goods and it has to be given full play.
8. Accordingly, we hold that the rate of duty as in force on 6-11-1979, the date on which the ship was granted entry inwards, was correctly applied to the goods imported by the appellants and, therefore, reject this appeal.