1988 (7) TMI 66 - HC - Customs

Summary

Issues Involved:
1. Determination of the completion of importation of goods.
2. Applicability of Customs duty based on the date of importation.
3. Interpretation of relevant sections of the Customs Act, 1962.
4. Refund of Customs duty and demurrage charges.

Issue-Wise Detailed Analysis:

1. Determination of the Completion of Importation of Goods:
The primary question was when the importation of the subject goods was complete. The petitioner argued that the goods were imported when they entered the territorial waters of India on 27th January 1987 and were unloaded by 29th January 1987. The Full Bench of the Bombay High Court in Apart Private Ltd. v. Union of India and Others held that goods are imported into India the moment they enter the territorial waters of India, as defined under Section 2(27) of the Customs Act, 1962. This interpretation was based on the definition of "India" and "imported goods" which includes territorial waters.

2. Applicability of Customs Duty Based on the Date of Importation:
The Customs Authorities issued Notification No. 40/87 on 4th February 1987, imposing a 25% ad valorem duty on Dun Peas. The petitioner filed the Bill of Entry on 3rd February 1987, before the notification came into effect. The Full Bench clarified that the taxable event occurs when the goods enter the territorial waters, and if the goods are exempt from duty at that time, they cannot be subjected to duty even if the exemption is withdrawn before the goods are cleared for home consumption.

3. Interpretation of Relevant Sections of the Customs Act, 1962:
Section 12 of the Customs Act states that Customs duty is levied on goods imported into India. The Full Bench held that "import into India" includes the territorial waters, and the taxable event occurs when goods enter these waters. Section 14 deals with the valuation of goods, and Section 15 specifies the date for determining the rate of duty. The Full Bench emphasized that chargeability is determined by the occurrence of the taxable event, not by the subsequent valuation or quantification of duty.

4. Refund of Customs Duty and Demurrage Charges:
The petitioner paid Rs. 1,76,167.40 as Customs duty and Rs. 48,680 as demurrage charges to avoid further costs. The court ordered the Customs Authorities to refund the Customs duty within three weeks from the date of the judgment, failing which interest at 12% per annum would be applicable. The Customs Authorities were also directed to issue a warehouse rent exemption certificate for the period from the arrival of the goods until their release. The petitioner was granted the liberty to seek a refund of the demurrage charges from the appropriate authorities.

Conclusion:
The judgment concluded that the importation of goods is complete when they enter the territorial waters of India. Since the goods in question were exempt from duty when they entered the territorial waters, the subsequent notification imposing duty did not apply. The petitioner was entitled to a refund of the Customs duty paid, and the Customs Authorities were directed to issue the necessary exemption certificates and facilitate the refund of demurrage charges.