1994 (4) TMI 73 - SC - Customs

Whether Notification No. 184-Cus., dated 2-8-1976 does not provide for deduction of the value of packages from the invoice value of imported P.V.C. and that the Notification merely saves the duty/additional duty leviable separately on the said packages, which too are deemed in law to have been imported? Held that - It may, however, be that taxing of packing material twice, once at the rate applicable to the contents and then at the rate applicable to container, which would be the result if levy of duty on packing material were not to be exempted, may appear harsh, but it cannot be said to be illegal. What should be taxed is a matter not to be decided by the courts, but by appropriate instrumentalities of functionaries. We are inclined, on a balance of several factors, to accept the interpretation placed by the Revenue. The Notification is designed to exempt levy of duty/additional duty on the packages separately, since in law there is also an import of packages and such import too is subject to I.T.C. restrictions. The interpretation placed by the Division Bench of the Bombay High Court on Notification No. 184 is the correct one and warrants no interference at our hands. The appeal is accordingly dismissed.

Issues Involved:
1. Interpretation of Notification No. 184-Cus., dated 2-8-1976.
2. Applicability of customs duty and additional duty on packages containing imported goods.
3. Validity of the claim for refund of customs duty and additional duty.
4. Maintainability of writ petitions under Article 32 of the Constitution.

Detailed Analysis:

1. Interpretation of Notification No. 184-Cus., dated 2-8-1976:
The core issue in the judgment revolves around the interpretation of Notification No. 184-Cus., dated 2-8-1976, issued under Section 25 of the Customs Act, 1962. The Notification provides for exemption from customs duty and additional duty on packages containing imported goods, subject to three conditions: (a) the value of the packages must be included in the invoice value of the goods, (b) the packages must not be of a permanent character and suitable for repeated use, and (c) the packages must be normally used in the trade for packing such goods. The appellant argued that since the invoice value included the value of the packages, they were entitled to the exemption. However, the court held that all three conditions must be satisfied to avail the exemption, and the mere inclusion of the package value in the invoice does not automatically grant the exemption.

2. Applicability of customs duty and additional duty on packages containing imported goods:
The appellant contended that they should not be liable for customs duty and additional duty on the packages as they met the conditions of the Notification. The court observed that the authorities levied duty on the total invoice value, which included the value of the packages, at the rate applicable to the imported goods (P.V.C.). The court agreed with the Revenue's interpretation that the Notification exempts the packages from a separate levy but does not provide for deduction of the package value from the invoice value. The court emphasized that the duty is levied on the entire invoice value, and the Notification does not imply a reduction in the invoice value for the purpose of duty calculation.

3. Validity of the claim for refund of customs duty and additional duty:
The appellant sought a refund of the customs duty and additional duty paid on the packages, arguing that they were unaware of the Notification at the time of import. The court noted that the appellant did not raise the issue at the time of import and filed the claim long after the goods were cleared. The court held that the authorities could not verify whether the packages met the conditions of the Notification after the event. Therefore, the claim for a refund was not valid as the appellant did not fulfill the necessary conditions at the relevant time.

4. Maintainability of writ petitions under Article 32 of the Constitution:
The court addressed the maintainability of writ petitions filed under Article 32, which raised the same issue as the civil appeal. The court held that the writ petitions were misconceived and not maintainable in law, as the controversy was about the interpretation of a Notification under the Central Excise Rules, not the enforcement of fundamental rights. The court cited Smt. Ujjam Bai v. State of Uttar Pradesh to support this position. Additionally, the petitions were filed long after the import, making it impossible for the authorities to verify the compliance with the Notification's conditions. Consequently, the writ petitions were dismissed with costs.

Conclusion:
The Supreme Court upheld the interpretation of the Division Bench of the Bombay High Court, affirming that the Notification No. 184-Cus., dated 2-8-1976, exempts packages from a separate levy but does not allow for deduction of their value from the invoice value. The appellant's claim for a refund was rejected, and the writ petitions under Article 32 were deemed not maintainable. The appeal and writ petitions were dismissed with costs.

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