1998 (8) TMI 91 - HC - Customs

Summary

Issues Involved:
1. Prospective vs. Retrospective Operation of Notification No. 286/90-Cus., dated 15-12-1990.
2. Constitutionality of Section 15(1)(b) of the Customs Act, 1962.
3. Legality of reassessment of auxiliary duty from 5% to 25%.

Issue-wise Detailed Analysis:

1. Prospective vs. Retrospective Operation of Notification No. 286/90-Cus., dated 15-12-1990:
The primary contention by the petitioners was that the Notification No. 286/90-Cus., dated 15-12-1990, which increased the auxiliary duty from 5% to 25%, should be prospective and not retrospective. The petitioners argued that since the goods were bonded in the warehouse before the notification date, the increased duty should not apply to them. However, the court emphasized that as per Section 15(1)(b) of the Customs Act, 1962, the relevant date for determining the rate of duty is the date on which the goods are actually removed from the warehouse. Since the goods were removed after the notification date, the increased duty was applicable. The court concluded that the notification was prospective as it came into effect from 15-12-1990 and did not have retrospective effect.

2. Constitutionality of Section 15(1)(b) of the Customs Act, 1962:
The petitioners challenged the constitutionality of Section 15(1)(b) of the Customs Act, 1962, claiming it was ultra vires the Constitution. However, the court noted that no substantial arguments were presented to support this claim. The court did not find any reason to declare Section 15(1)(b) unconstitutional, emphasizing that the legislature has the authority to determine tariff rates and their applicability. The court held that the provision was valid and did not suffer from any constitutional infirmity.

3. Legality of Reassessment of Auxiliary Duty from 5% to 25%:
The petitioners argued that reassessing the auxiliary duty from 5% to 25% for goods already warehoused before the notification date was illegal. They contended that the goods had been assessed at 5% auxiliary duty under Section 17 of the Customs Act and should not be reassessed simply because they were still in the warehouse on the notification date. The court rejected this argument, stating that the provisional assessment under Section 18 of the Act was not final. The court reiterated that under Section 15(1)(b), the applicable duty rate is determined on the date the goods are removed from the warehouse. Since the goods were removed after the notification date, the reassessment at 25% auxiliary duty was justified.

Conclusion:
The court dismissed the writ petitions, upholding the validity of the Notification No. 286/90-Cus., dated 15-12-1990, and the constitutionality of Section 15(1)(b) of the Customs Act, 1962. The court confirmed that the increased auxiliary duty of 25% was applicable to goods removed from the warehouse after the notification date, and the notification was prospective in nature. The court did not find any merit in the petitioners' arguments and ruled in favor of the respondents, justifying the reassessment and collection of the increased auxiliary duty.