1981 (10) TMI 41 - HC - Customs

Customs Valuation - Interpretation of exemption notification - Form of invoice if statutory - Effect

Summary

Issues:
Interpretation of Notification No. 114 issued by the Central Government regarding Customs Duty exemption for packing materials used in imported goods.

Detailed Analysis:

1. Background and Notification No. 114:
The petitioners, a company manufacturing diesel engines, imported components from the United States which attracted Customs Duty. Notification No. 114, issued in 1967, exempted packing materials from Customs Duty if certain conditions were met. The petitioners claimed exclusion of 4% packing charges from assessable value, which was initially accepted by the Government.

2. Introduction of Additional Condition:
A subsequent Notification in 1972 introduced an additional condition that the value of packing material should be included in the invoice value of the goods. The petitioners imported goods with separate values for goods and packing charges, leading to disputes with Customs authorities.

3. Rejection of Refund Applications:
Seventy refund applications by the petitioners were rejected by the Assistant Collector of Customs, citing non-compliance with the new condition of including packing value in the invoice.

4. Appellate and Revisional Proceedings:
Appeals against the rejection were made to the Appellate Collector of Customs, who upheld the rejection based on the interpretation of the Notification. The revisional authority also dismissed the applications on similar grounds.

5. Legal Arguments and Judgment:
The petitioners argued that the value of packing material was included in the invoices, satisfying the condition of the Notification. The Court agreed, stating that the condition required inclusion of packing value in the invoice, regardless of separate mention. The Court rejected the strict construction argument and emphasized legislative intent over literal interpretation.

6. Conclusion and Relief:
The Court ruled in favor of the petitioners, allowing their refund claims. It directed the respondents to pay the refund amount within three months. The judgment highlighted the importance of adhering to the conditions of Notifications while also considering practical implications and legislative intent in customs matters.