1982 (8) TMI 52 - HC - Customs

Valuation - Determination of defective goods - Customs - Rate of duty - Applicability of - Circles and sheets - Writ jurisdiction - Classification

Summary

Issues Involved:
1. Validity of Customs Tariff (Amendment) Bill No. 50 of 1982 and related legislation.
2. Determination of applicable customs duty rate.
3. Identity and locus standi of the petitioner.
4. Valuation of the goods for customs duty.
5. Confiscation of goods due to alleged breach of license.
6. Impact of Income-Tax Department's order under Section 132A of the Income-Tax Act.

Detailed Analysis:

1. Validity of Customs Tariff (Amendment) Bill No. 50 of 1982 and Related Legislation:
The petitioner challenged the Customs Tariff (Amendment) Bill No. 50 of 1982, the Customs Tariff (Amendment) Act No. 40 of 1982, the notification dated 16-4-1982, and the Provisional Collection of Taxes Act, 1931. The petitioner claimed these were ultra vires, unconstitutional, and violative of Articles 19(1)(g)(6), 265, and 300A of the Constitution. The court noted that retrospective effect to prevent revenue loss is not inherently unreasonable and does not violate constitutional provisions. The court cited precedents, including "Motibhai Lalloobhai & Co. v. Union of India" and "Kunnathat Thathunni Moonil Nair v. State of Kerala," to support the constitutionality of retrospective taxation.

2. Determination of Applicable Customs Duty Rate:
According to Section 15 of the Customs Act, 1962, the duty rate is determined by the rate in force on the date the bill of entry is presented. The bill of entry was presented on 11-5-1982, the same day the Amendment Act came into force. Thus, the petitioner was liable to pay customs duty at the rate of 230% ad valorem. The court dismissed the argument of promissory estoppel, stating that no promise was made by the government regarding a lower duty rate and that the Amendment Act's classification was rational.

3. Identity and Locus Standi of the Petitioner:
The court examined the identity of the petitioner due to discrepancies in the names and signatures associated with the bank account and letter of credit. Despite grave doubts about the petitioner's identity, the court proceeded on the presumption that the goods were imported by the petitioner for the purpose of the present problem. The court noted that detailed inquiry into the petitioner's identity would be undertaken by the Revenue at a later stage.

4. Valuation of the Goods for Customs Duty:
Sections 14 and 15 of the Customs Act prescribe the methods for determining the value of goods. The court provisionally fixed the value at Rs. 15,000/- per M.T., considering the petitioner's agreement to sell the goods at that rate and the invoices from the supplier. The court noted that the goods were defectives, as stated in the invoices, and thus valued at a lesser price than prime quality steel.

5. Confiscation of Goods Due to Alleged Breach of License:
The respondents argued that the goods were liable to confiscation under the Customs Act and Import Control Order due to a breach of license. The court held that this issue should not prevent the petitioner from clearing the goods at this stage, as the valuation was still under serious contestation and the goods had not yet been confiscated.

6. Impact of Income-Tax Department's Order Under Section 132A of the Income-Tax Act:
The court noted that a writ petition against the Income-Tax Department's order under Section 132A had been dismissed. However, it held that the possible amount of income-tax could be safeguarded by a proper guarantee and that it would not be reasonable to hold the goods for that reason alone.

Conclusion:
The court directed that pending the decision of the writ petition, the petitioner could clear the goods on the following conditions:
1. Payment of customs duty at 230% on the value computed at Rs. 15,000/- per M.T., with part paid in cash and the rest secured by an unconditional bank guarantee.
2. Furnishing a bank guarantee for 10% of the invoice value to the Income-Tax Department.
3. Keeping and furnishing inventories and records of the goods sold.
4. Providing a bank guarantee for any claims regarding demurrage/ground rent/detention charges before the issuance of a detention certificate.

The court disposed of the C.Ms. 2737, 2907, and 2908 of 1982 accordingly.