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Issues Involved
1. Constitutional validity of Section 151A of the Customs Act, 1962. 2. Validity of the three Circulars (Standing Orders) issued by the Chief Commissioner of Customs regarding valuation methods for certain imported goods. Summary Issue 1: Constitutional Validity of Section 151A of the Customs Act, 1962 The petitioners challenged the constitutional validity of Section 151A of the Customs Act, 1962, arguing that it encroaches upon the quasi-judicial functions of customs authorities by allowing the Chief Commissioner to issue Standing Orders that dictate valuation methods. They contended that such orders contravene Section 14 of the Act and the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988, which mandate valuation based on 'transaction value'. The court found that Section 151A authorizes the Board or its delegate to issue instructions for maintaining uniformity in classification and levy of duty, which is a benevolent purpose to avoid discriminatory treatment. The court held that the section does not violate Article 14 of the Constitution and upheld its constitutional validity. Issue 2: Validity of the Three Circulars (Standing Orders) The petitioners argued that the Standing Orders issued by the Chief Commissioner of Customs, which mandate valuation based on international prices from journals like LME Bulletin and PLATT's Weekly Report, undermine the 'transaction value' method prescribed by Section 14 and the Rules. The court observed that while the 'transaction value' is generally determinative, international prices could be relevant in cases where the transaction value is suspiciously low or unrealistic. The court noted that the language of the Standing Orders appeared to be mandates rather than guidelines, which could unduly influence the quasi-judicial discretion of customs authorities. Therefore, the court decided to read down the Standing Orders as flexible guidelines rather than rigid mandates. The Standing Orders are to be used as assistance in determining the value for customs duty, without taking away the discretion of the assessing authorities. Conclusion The court upheld the constitutional validity of Section 151A of the Customs Act, 1962. However, it partially allowed the petitions by reading down the three impugned Standing Orders to be treated as guidelines rather than mandates. The interim orders for provisional assessment were vacated, and the customs authorities were directed to regularly assess the imported goods. Each party was directed to bear its own costs.
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