1999 (12) TMI 79 - HC - Customs

Summary

Issues Involved:
1. Validity of the Customs Department's assessment using the Customs Exchange Rate instead of the official rate.
2. Interpretation of Section 14(1) and Section 14(1A) of the Customs Act, 1962.
3. Applicability of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988.
4. Alleged arbitrariness and capriciousness of the Customs Department's actions.
5. Petitioner's fundamental rights under Article 14 and 19(1)(g) of the Constitution of India.

Issue-wise Detailed Analysis:

1. Validity of the Customs Department's assessment using the Customs Exchange Rate instead of the official rate:
The petitioner argued that the Customs Department should have used the official exchange rate for assessing the value of imported Life Saving Equipment, specifically Foley Balloon Catheters, instead of the Customs Exchange Rate. The petitioner contended that the official rate was Rs. 26.84 per USD, whereas the Customs Department used Rs. 29.28 per USD, resulting in a higher duty assessment.

2. Interpretation of Section 14(1) and Section 14(1A) of the Customs Act, 1962:
Section 14(1) of the Customs Act, 1962, stipulates that the value of imported goods should be based on the price at which such goods are ordinarily sold or offered for sale in international trade at the time and place of importation. The proviso to Section 14(1) specifies that the price should be calculated with reference to the exchange rate in force on the date the Bill of Entry is presented. The court noted that the Customs Department's action of using the exchange rate of Rs. 29.28 per USD on the date of the Bill of Entry presentation was in strict accordance with Section 14(1) and its proviso.

3. Applicability of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988:
The petitioner argued that under Rule 3 of the Customs Valuation Rules, 1988, the value of imported goods should be the transaction value, which is the price actually paid. Rule 4 further clarifies that the transaction value should be the invoice value. The petitioner claimed that the Customs Department's use of a different exchange rate for duty calculation was against these rules. However, the court found that the Customs Department's assessment was consistent with the statutory provisions and rules.

4. Alleged arbitrariness and capriciousness of the Customs Department's actions:
The petitioner claimed that the Customs Department's action of using the Customs Exchange Rate instead of the official rate was arbitrary and capricious. They argued that this action violated their fundamental rights under Article 14 (right to equality) and Article 19(1)(g) (right to practice any profession, or to carry on any occupation, trade, or business) of the Constitution of India. The court, however, found that the Customs Department's actions were in accordance with the relevant statutory provisions and were not arbitrary or capricious.

5. Petitioner's fundamental rights under Article 14 and 19(1)(g) of the Constitution of India:
The petitioner argued that the Customs Department's action violated their fundamental rights under Articles 14 and 19(1)(g) of the Constitution. They claimed that the explanation added to Notification No. 208/81 by Notification No. 46/89 was vague, arbitrary, and capricious, and amounted to hostile discrimination. The court did not find merit in these arguments, as it concluded that the Customs Department's actions were in line with the statutory provisions and did not violate the petitioner's fundamental rights.

Conclusion:
The court concluded that the Customs Department's assessment using the Customs Exchange Rate was in strict accordance with Section 14(1) and its proviso. The petitioner's arguments regarding the arbitrariness and capriciousness of the Customs Department's actions, as well as the alleged violation of their fundamental rights, were not upheld. Consequently, the writ petition was dismissed for lack of merit.