1981 (4) TMI 97 - CGOVT - Customs

Summary

Issues Involved:
1. Determination of the crucial date for the levy of customs duty on imported goods.
2. Applicability of Section 15 of the Customs Act, 1962.
3. Applicability of exemption notifications under Section 25 of the Customs Act.
4. Limitation period for issuing a show cause notice under Section 131(5) of the Customs Act.

Issue-wise Analysis:

1. Determination of the Crucial Date for Levy of Customs Duty:
The primary issue in these cases is whether the date of importation of goods (i.e., the date on which the goods entered the territorial waters of India) should be regarded as the crucial date for the levy of customs duty. The appellate orders held that the date of actual importation is crucial for the levy of customs duty. The Central Government, however, tentatively disagreed, suggesting that the statutory date under Section 15 of the Customs Act should be considered.

2. Applicability of Section 15 of the Customs Act, 1962:
Section 15 of the Customs Act specifies the date for determining the rate of duty applicable to imported goods. The appellate authority's orders were based on the premise that if customs duty was not chargeable on the date of importation, it could not be charged later based on Section 15. The Central Government, however, referred to the Supreme Court's observation in M/s. Prakash Cotton Mills (Pvt). Ltd. v. B. Sen and others, which emphasized that the rate of duty should be determined based on the date of removal from the warehouse, per Section 15(1)(b).

3. Applicability of Exemption Notifications under Section 25 of the Customs Act:
The importers argued that exemption notifications under Section 25 should be considered part of the statute, and if goods were exempted at the point of importation, they should not be liable for duty later. This argument was supported by judicial precedents, including the Supreme Court's observations in Kailash Nath v. State of U.P. and Orient Weaving Mills v. Union of India. The Central Government, however, observed that in the case of M/s. Jai Hind Oil Mills Ltd., additional duty was leviable on the date of importation, thus making Section 15 applicable.

4. Limitation Period for Issuing a Show Cause Notice under Section 131(5):
The importers contended that the show cause notice was time-barred as it was issued after six months from the date of the order-in-appeal. The Central Government, referring to the Supreme Court's decision in M/s. Geep Flash Light Industries Ltd. v. Union of India and others, clarified that the time limit for review does not apply to cases of erroneous refund, non-levy, or short-levy. The Government concluded that the show cause notice was not time-barred.

Case-specific Observations:

M/s. Jai Hind Oil Mills Ltd.:
The goods were imported before 1-3-1979, and the relevant exemption notification was deleted on 28-2-1979. The Custom House charged the new effective rate of duty at 12.5% ad valorem. The Government observed that additional duty was leviable on the date of importation, making Section 15 applicable. The order-in-appeal was set aside, and the original order was restored.

M/s. Vikas Woollen Mills, Delhi:
The goods were warehoused and removed on 18-8-1979, after the exemption notification was rescinded. The Government observed that basic customs and auxiliary duties were chargeable on the date of importation, making Section 15 applicable. The order-in-appeal was set aside, and the original order was restored.

M/s. Bayer (India) Ltd.:
The goods were warehoused and removed after the exemption notification was rescinded. The Government observed that customs duty was chargeable on the date of importation, making Section 15 applicable. The order-in-appeal was set aside, and the original order was restored.

Conclusion:
The Central Government set aside the appellate orders in all three cases, emphasizing the applicability of Section 15 of the Customs Act for determining the rate of duty based on the date of removal from the warehouse. The Government also clarified that the show cause notice was not time-barred and that exemption notifications under Section 25 should be considered part of the statute only if applicable at the point of importation.