1981 (7) TMI 72 - CGOVT - Customs

Import of goods - Chargeability to duty - Guidelines for - Endosulfan Technical - Applicability of rate of duty - Interpretation - Relevant date

Issues Involved:
1. Determination of the applicable date for customs duty levy.
2. Interpretation of exemption notification applicability.
3. Relevance of Section 12 and Section 15 of the Customs Act, 1962.
4. Application of the Bombay High Court and Supreme Court judgments.

Issue-wise Detailed Analysis:

1. Determination of the applicable date for customs duty levy:
The primary issue was whether the crucial date for the levy of customs duty on imported goods should be the date the goods entered the territorial waters of India or the date determined under Section 15(1) of the Customs Act. The petitioners argued that the duty should be based on the date of importation when the exemption was in force. However, the Government observed that Section 15(1)(b) specifies that the rate of duty applicable is the one in force on the date the goods are removed from the warehouse. The Supreme Court's decision in M/s. Prakash Cotton Mills (P) Ltd. v. B. Sen and others supported this interpretation, emphasizing that the rate of duty is determined by the date of ex-bond clearance.

2. Interpretation of exemption notification applicability:
The petitioners contended that the goods should be assessed at the rate applicable when the consignment was imported, based on the exemption notification No. 59-Cus. I, dated 9-6-1975. This notification granted partial exemption to Endosulfan Technical, reducing the duty to 35% + 5%. However, this exemption was valid only until 31-3-1976, and the goods were cleared on 16-7-1976, when the exemption was no longer in force. The Government upheld the view that the duty rate applicable is the one in force on the date of clearance from the warehouse, as per Section 15(1)(b) of the Customs Act.

3. Relevance of Section 12 and Section 15 of the Customs Act, 1962:
Section 12 is the charging section, stating that duties of customs shall be levied at rates specified under the Indian Tariff Act, 1934. Section 15 determines the date for the rate of duty and tariff valuation. The Government emphasized that Section 15(1)(b) clearly stipulates that the rate of duty applicable is the one in force on the date the goods are removed from the warehouse. The petitioners' argument that Section 12 determines chargeability and Section 15 only quantifies the amount was rejected, as it would render Section 15(1) redundant.

4. Application of the Bombay High Court and Supreme Court judgments:
The petitioners relied on the Bombay High Court's pronouncement in M/s. Synthetic and Chemical Ltd. and M.M. Sawhney v. M/s. Sylvania & Laxman Ltd., arguing that the goods were entitled to the exemption as it was in force when the goods entered territorial waters. However, the Government observed that the Supreme Court in M/s. Prakash Cotton Mills (P) Ltd. v. B. Sen and others had clarified that the rate of duty is determined by the date of ex-bond clearance, regardless of the rate at the time of importation. The Government also noted that the Division Bench judgment of the Bombay High Court applied only when there was total exemption at the time of importation, which was not the case here.

Conclusion:
The Government rejected the revision applications, upholding the Appellate Order. The decision was based on the interpretation that the rate of duty applicable is the one in force on the date of clearance from the warehouse, as per Section 15(1)(b) of the Customs Act, 1962, and supported by the Supreme Court's ruling in M/s. Prakash Cotton Mills (P) Ltd. v. B. Sen and others. The petitioners' reliance on the Bombay High Court's judgment was found inapplicable as it pertained to cases of total exemption, not partial exemption.

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