1975 (1) TMI 35 - HC - Customs

Summary

Issues Involved:

1. Whether the High Court should exercise its discretion under Article 226 of the Constitution despite the availability of an alternative remedy.
2. Determination of the taxable event for the levy of customs duty.
3. Applicability of the exemption notification dated September 3, 1966, to the imported goods.

Summary:

1. Discretion under Article 226:
The appellants contended that the High Court should not entertain the petition under Article 226 of the Constitution as an alternative efficacious remedy by way of an appeal was available u/s 128 of the Customs Act. The court rejected this preliminary contention, citing that when a fundamental right is infringed, the High Court will not refuse to exercise its jurisdiction under Article 226, even if an alternative remedy exists. The court referenced Himatlal v. State of Madhya Pradesh and Customs Collector v. Shantilal and Co. to support this view.

2. Determination of the Taxable Event:
The core issue was whether the taxable event for customs duty occurs when goods enter the territorial waters of India or when the bill of entry is presented. The court examined the scheme of the Customs Act, particularly Chapter V, which deals with the levy of and exemption from customs duties. Section 12(1) of the Act was identified as the charging section, stating that duties of customs shall be levied on goods imported into or exported from India. The court held that the import of goods is completed when they cross the customs barriers, i.e., enter the territorial waters of India. This interpretation was supported by the definitions of "import" and "India" in Sections 2(23) and 2(27) of the Act, respectively. The court also referenced the Supreme Court's decision in Re: The Sea Customs Act (1878) Section 20(2) and Gopal Mayaji v. T.C. Sheth to affirm that the taxable event is the import of goods within the customs barriers.

3. Applicability of the Exemption Notification:
The respondents imported glass tubings, which were exempt from customs duty by a notification dated September 3, 1966, issued u/s 25(1) of the Customs Act. The exemption was valid until March 31, 1967. The goods arrived at the port of Bombay on March 29, 1967, and entered the territorial waters of India before the exemption expired. The court held that the goods were exempt from customs duty as they crossed the customs barriers before the expiry of the exemption notification. The Assistant Collector of Customs' demand for Rs. 1,40,558.75 was thus unjustified.

Conclusion:
The court dismissed the appeal, upholding the trial court's decision to quash the order of the Assistant Collector of Customs. The respondents were entitled to the exemption from customs duty as the goods were imported into the territorial waters of India before the exemption notification expired. The appeal was dismissed with costs.