1985 (10) TMI 273 - HC - Customs

Summary

Issues Involved:
1. When can the event of importation be said to occur under the Customs Act, 1962?
2. At what point of time or date should the rate of Customs duty be determined for imported goods under the Customs Act, 1962?
3. Does it make any difference to the answer to the second question if the goods were totally exempt from duty at the date of import?
4. Is the countervailing or additional duty payable u/s 2A of the Indian Tariff Act, 1934, or u/s 3 of the Customs Tariff Act, 1975, considered Customs duty u/s 12 of the Customs Act, 1962?

Summary:

Issue 1: Event of Importation
Under the Customs Act, the event of importation occurs when goods from a place outside India enter the territorial waters of India. The judgment clarified that goods become "imported goods" and are subject to customs duty as soon as they enter the territorial waters of India.

Issue 2: Determination of Customs Duty Rate
The rate at which imported goods are chargeable to customs duty is determined u/s 15 of the Customs Act, provided such goods were not wholly exempt from customs duty when they entered the territorial waters of India. Customs duty is charged at the rate in force on the date of presentation of the Bill of Entry or, if warehoused, at the rate in force on the date when the goods are cleared for home consumption. If the goods were wholly exempt from customs duty by a notification u/s 25(1) on the date of entry into territorial waters, no customs duty would be levied even if the exemption was withdrawn before the goods were cleared for home consumption.

Issue 3: Impact of Total Exemption at the Date of Import
If the goods were wholly exempt from basic customs duty when they entered the territorial waters of India, no basic duty of customs would be levied even if such exemption were withdrawn before the goods are released for home consumption. The exemption status at the time of entry into territorial waters is crucial.

Issue 4: Countervailing or Additional Duty
The countervailing duty u/s 2A of the Indian Tariff Act, 1934, and the additional duty u/s 3 of the Customs Tariff Act, 1975, are distinct from the basic customs duty levied u/s 12 of the Customs Act, 1962. Exemption from basic customs duty does not automatically exempt goods from countervailing or additional duties unless specifically stated in the exemption notification. The provisions of the Customs Act apply to these duties as well, but they are separate levies.

Conclusion:
The judgment upheld the view that importation occurs when goods enter the territorial waters of India, and the rate of duty is determined based on the date of clearance for home consumption unless the goods were wholly exempt at the time of entry. Countervailing and additional duties are distinct from basic customs duty, and exemptions must be explicitly stated.