1979 (1) TMI 112 - HC - Customs

Import licence - Debiting of c.i.f. value consignmentwise not admissible - Valuation - Customs Officers - Duties of

Issues Involved:
1. Validity of the Customs Department's decision to debit the import licence based on international market price.
2. Interpretation of the term "value" in the context of the Imports (Control) Order, 1955, and Customs Act, 1962.
3. Consistency of the Customs Department's actions with the Government of India's import policy.

Issue-wise Detailed Analysis:

1. Validity of the Customs Department's decision to debit the import licence based on international market price:

The appellants, Union of India and Customs Officers, challenged the learned single judge's decision that quashed the Customs Department's direction to debit the import licence based on the international market price. The respondents, a drug manufacturing company, had an import licence allowing them to import raw materials up to a c.i.f. value of Rs. 8,94,455/-. The dispute arose when the Customs Department decided to debit the licence based on the international market price rather than the actual price paid, which was lower due to a special arrangement with the supplier. The respondents argued that this change was unjustified as there had been no change in the law regarding imports.

2. Interpretation of the term "value" in the context of the Imports (Control) Order, 1955, and Customs Act, 1962:

The Customs Department argued that the amendment to Clause (e) of the definition Clause (2) of the Imports (Control) Order, 1955, authorized them to assess the value of goods for both customs duty and debiting the licence. However, the court found that this interpretation was incorrect. The term "value" in the context of Section 14(1) of the Customs Act, 1962, refers to the price at which goods are ordinarily sold in the international market. This "value" is used for levying customs duty but not for debiting the licence. The court emphasized that the licence should be debited based on the actual c.i.f. value, which includes the price charged by the supplier plus any commission, and not the international market price.

3. Consistency of the Customs Department's actions with the Government of India's import policy:

The court noted that the Government of India's import policy is influenced by the availability of foreign exchange. The respondents, being a priority industry, had an arrangement with their supplier to reduce the price of raw materials, allowing them to import a larger quantity within the same foreign exchange limit. This arrangement was fully disclosed to the authorities and accepted by the Government of India. The Customs Department's decision to debit the licence based on the international market price contradicted this policy and would result in less raw material being imported, which was against the country's interest. The court held that the Customs Department's actions were inconsistent with the Government's policy and lacked any substantive basis.

Conclusion:

The court dismissed the appeal, reiterating that the Customs Department's interpretation of "value" was flawed and inconsistent with the substantive provisions of the law. The court upheld the learned single judge's decision to quash the Customs Department's direction and debit entry, emphasizing that the licence should be debited based on the actual c.i.f. value. The court also criticized the Customs Department for engaging in wasteful litigation and driving the respondents to seek judicial redress for an obvious error. The appeal was dismissed with costs fixed at Rs. 2,500/- payable by the appellants to the respondents.

Final Judgment:
Appeal dismissed.

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