1984 (8) TMI 348 - AT - Customs

Summary

Issues Involved:
1. Applicability of c.v. duty based on the date of importation versus the date of removal from the warehouse.
2. Interpretation of Section 15(1)(b) of the Customs Act, 1962.
3. Impact of exemption notifications and their rescission on duty liability.
4. Jurisdictional adherence to High Court decisions by Customs authorities.

Detailed Analysis:

1. Applicability of c.v. Duty Based on the Date of Importation versus the Date of Removal from the Warehouse:
The core issue revolves around whether the c.v. duty should be applicable based on the date of importation (when goods enter territorial waters) or the date of removal from the bonded warehouse. The respondents argued that the goods were exempt from c.v. duty at the time of importation under Exemption Notification No. 364, dated 2-8-1976, and thus should not be liable for c.v. duty even though the exemption was rescinded by Notification No. 63, dated 1-3-1979, before the goods were removed from the warehouse. The Customs authorities, however, charged c.v. duty based on the date of removal from the warehouse, citing Section 15(1)(b) of the Customs Act.

2. Interpretation of Section 15(1)(b) of the Customs Act, 1962:
The Customs authorities and the Departmental Representative argued that Section 15(1)(b) mandates that the rate of duty is to be the rate in force on the date on which the goods are actually removed from the warehouse. This interpretation was supported by the Supreme Court decision in M/s. Prakash Cotton Mills (P) Ltd. v. B. Sen and Others, which emphasized that the rate of duty applicable should be the rate in force on the date of removal from the warehouse.

3. Impact of Exemption Notifications and Their Rescission on Duty Liability:
The respondents cited the Division Bench of the Bombay High Court in M/S. Sawhney v. M/s. Sylvania & Laxman Limited, which held that the applicability of an exemption notification should be determined based on the state of affairs at the date of importation. They argued that the goods were exempt from c.v. duty at the time of importation, and the subsequent rescission of the exemption should not affect their duty liability. However, the Customs authorities contended that the exemption notification's rescission made the goods liable for c.v. duty at the time of their removal from the warehouse.

4. Jurisdictional Adherence to High Court Decisions by Customs Authorities:
The respondents argued that the Appellate Collector of Customs (Appeals), Bombay, was bound by the decisions of the Bombay High Court, specifically the decision in Sylvania & Laxman's case. The Supreme Court's decision in East India Commercial Co. Ltd. v. Collector of Customs was cited to support the argument that the Collector of Customs (Appeals) must adhere to the jurisdictional High Court's decisions. The Tribunal, however, noted that the latter decision of the Bombay High Court in Synthetics & Chemicals Limited v. S.C. Coutinho and Others, which accepted the principle that the rate of duty should be determined based on Section 15 of the Act, was not considered by the Appellate Collector.

Conclusion:
The Tribunal concluded that the Appellate Collector of Customs (Appeals), Bombay, erred in allowing the appeals based on the decision in Sylvania & Laxman's case without considering the latter decision in Synthetics & Chemicals and the Supreme Court's ruling in Prakash Cotton Mills. The Tribunal held that the rate of duty should be determined based on the date of removal from the warehouse as per Section 15(1)(b) of the Customs Act. Consequently, the Tribunal set aside the impugned order passed by the Collector of Customs (Appeals), Bombay, and accepted all four appeals, affirming the Customs authorities' imposition of c.v. duty based on the date of removal from the warehouse.