1999 (8) TMI 82 - SC - Customs

Whether additional duty of excise was payable at the time when the goods landed in India or they had crossed into the territorial waters? Held that - Import being complete when the goods entered the territorial waters is the contention which has already been rejected by this court in Union of India and Others v. Apar Private Ltd. and Others 1999 (7) TMI 69 - SUPREME COURT . The import would be completed only when the goods are to cross the customs barriers and that is the time when the import duty has to be paid The taxable event therefore being the day of crossing of customs barrier and not on the date when the goods had landed in India or had entered the territorial waters. We find that on the date of the taxable event the additional duty of excise was leviable under the said Ordinance and therefore additional duty under Section 3 of the Tariff Act was rightly demanded from the appellants.

Summary

Issues:
Levy of additional duty under Section 3 of the Customs Tariff Act, 1975.

Analysis:
The case involved the levy of additional duty under Section 3 of the Customs Tariff Act, 1975 on imported acrylic polyster fibre. The appellants imported the articles between April 4, 1977, and September 20, 1978, and placed them in a bonded warehouse upon arrival in India. Subsequently, an Additional Duty of Excise Ordinance was promulgated on October 3, 1978, which imposed an additional duty of excise equal to 10% of the basic excise duty on such articles. The Customs Authorities demanded this additional duty from the appellants upon clearance of the imported articles from the bonded warehouse after October 4, 1978. The appellants paid under protest and later sought a refund, which was denied by the Authorities and the Tribunal, leading to the appeals in the Supreme Court.

The main contention raised by the appellants was that since the Ordinance was not promulgated at the time of import, no additional duty could be imposed under Section 3 of the Tariff Act. They argued that a circular issued by Revenue Authorities stated that the additional duty of excise would apply from October 4, 1978, and would not be levied on goods in fully manufactured condition and in stock with the manufacturer before that date. However, the Court rejected this argument, emphasizing that Section 3 of the Tariff Act is a charging section, and the levy of duty is based on the day the goods are removed from the bonded warehouse. The Court cited precedent to establish that the taxable event for customs duty is the import of goods within the customs barriers, which occurs when the goods are removed from the warehouse and brought into the country's mass of goods.

The Court further clarified that the import is completed only when the goods cross the customs barriers, and the duty is payable at that time. The Court rejected the argument that the taxable event should be considered when the goods landed in India or entered territorial waters. Relying on previous judgments, the Court held that the additional duty of excise was leviable on the date of the taxable event, i.e., when the goods were removed from the bonded warehouse after October 4, 1978. Consequently, the Court dismissed the appeals, directing each party to bear their own costs.

In addition, the Court dismissed two writ petitions based on previous judgments related to the levy of additional duties, maintaining consistency with the legal principles established in those cases.