1983 (11) TMI 308 - AT - Customs

Summary

Issues Involved:
1. Entitlement to concessional customs duty rate at the time of import or at the time of removal from the warehouse.
2. Interpretation of the taxing event under Section 12 of the Customs Act, 1962.
3. Applicability of Section 15 of the Customs Act, 1962, in determining the rate of duty.

Issue-wise Detailed Analysis:

1. Entitlement to Concessional Customs Duty Rate at the Time of Import or at the Time of Removal from the Warehouse:
The appellants imported chemicals meant for manufacturing insecticides/pesticides, which were initially eligible for a concessional duty rate under Notification No. 26-Cus., dated 1-3-1968. However, this notification was rescinded before the goods were removed from the warehouse. The appellants argued that the concessional rate should apply as it was in force when the goods entered the territorial waters of India. The Assistant Collector levied duty at the full statutory rate prevailing at the time of removal from the warehouse, which was contested by the appellants.

2. Interpretation of the Taxing Event under Section 12 of the Customs Act, 1962:
The appellants contended that the taxable event is the import of goods into the territorial waters of India, and thus the duty rate applicable should be the one prevailing at that time. They cited various judgments, including the Bombay High Court case of M/s Sylvania & Laxman, to support their argument that "import" means bringing goods into the territorial waters of India and that the taxing event is the import itself.

3. Applicability of Section 15 of the Customs Act, 1962, in Determining the Rate of Duty:
The respondents argued that the rate of duty should be determined as per Section 15(1)(b) of the Customs Act, which specifies that the rate applicable is the one in force on the date the goods are actually removed from the warehouse. They cited judgments such as Prakash Cotton Mills and Synthetics and Chemicals Ltd., which upheld that the rate of duty must be determined based on the date of removal from the warehouse, not the date of entry into territorial waters.

Analysis and Conclusion:

Entitlement to Concessional Rate:
The Tribunal noted that the entire argument of the appellants was based on the decision in Sylvania & Laxman, where the Bombay High Court held that the taxable event occurred when the goods entered the territorial waters of India, and thus the duty rate applicable was the one prevailing at that time. However, this view was not upheld in later judgments, including those of the Delhi High Court and the Supreme Court.

Interpretation of Taxing Event:
The Tribunal referred to the judgment in Jain Sudh Vanaspati Ltd. v. Union of India, where it was held that the import is not complete for fiscal purposes until the goods are cleared for home consumption. The definition of "imported goods" under Section 2(25) indicates that goods remain imported until cleared for home consumption, necessitating compliance with Section 15.

Applicability of Section 15:
The Tribunal emphasized that Section 15(1)(b) of the Customs Act clearly states that the rate of duty applicable is the one in force on the date the goods are actually removed from the warehouse. This interpretation was supported by the Supreme Court in Prakash Cotton Mills, which concluded that the rate of duty must be determined as per Section 15, irrespective of the date of entry into territorial waters.

Conclusion:
The Tribunal found no merit in the appellants' argument that the rate of duty should be based on the date the goods entered the territorial waters. The authoritative pronouncements in Prakash Cotton Mills and Jain Sudh Vanaspati Ltd. established that the rate of duty applicable is the one in force on the date of removal from the warehouse. Consequently, the appeal was dismissed.