2010 (3) TMI 219 - HC - Customs

Clearance of imported goods transaction value u/s 14(1) - Circular No.4/2008Cus dated 12th February, 2008 - Rule 3(1) of the Customs (Determination of Value of Imported Goods) Rules, 2007 non clearance of goods petitioner sought a writ of mandamus directing respondents and their subordinates to allow clearance of the consignment Held that . It is now well settled that the power of judicial review of the Court under Article 226 of the Constitution of India includes all cases where the orders are passed by the authorities or even where the authorities have failed to exercise jurisdiction vested in them. It may be stated that the statutory discretion cannot be fettered by selfcreated rules or policy. Although it is open to an authority to which discretion has been entrusted to lay down to regulate exercise of discretion, it cannot, however, deny itself the discretion which the statute requires it to exercise in individual cases. The proper authority notwithstanding board circular dated 12th February, 2008 is required to consider the prayer of the petitioners on its own merits well within the scope of Section 14 of the Act and the Customs Valuation Rules by a reasoned order following principles of natural justice. - In absence of any reasoned order it will not be proper on the part of this Court to prevent the proper Officer from exercising his discretion and to undertake the job of the adjudication officer.

Summary

Issues:
- Challenge to Circular No.4/2008Cus dated 12th February, 2008 regarding valuation practice of second-hand machinery under the Customs Act, 1962.

Detailed Analysis:

Issue 1: Challenge to Circular No.4/2008Cus dated 12th February, 2008
- The petition filed under Article 226 of the Constitution sought a writ of mandamus to direct the respondents to allow clearance of a consignment based on the declared transaction value under Section 14(1) of the Customs Act, 1962. The petitioners imported second-hand machinery and requested assessment based on the declared invoice value, supported by examination and engineer reports.
- The petitioners invoked writ jurisdiction due to delays in clearance and challenged the circular issued by the Ministry of Finance in 2008, which provided guidelines on valuation of second-hand machinery. The petitioner's counsel argued that the transaction value should be accepted as per the Customs Act and Rules.
- The counsel cited previous cases and Supreme Court judgments to support their argument that the transaction value should prevail over depreciated values, as per the circular. They contended that the circular should be quashed, and the respondents should be directed to accept the transaction value declared by the petitioners.
- On the contrary, the respondents argued that the petition was premature as no order had been passed on the transaction value or the application of the circular. They stated that the circular was a compilation of principles from judicial pronouncements to guide Revenue Officers.
- The Court emphasized that the proper officer must independently consider the case, not solely rely on the circular. It highlighted the need for exercising discretion under statutory power and the court's authority to intervene in case of failure to exercise discretion.
- The Court concluded that the petition was premature as the proper officer had not yet exercised discretion. It directed the officers to adjudicate on the issue promptly, affording the petitioners a hearing and following principles of natural justice. The Court refrained from delving into the merits until a reasoned order was passed, allowing the officer to assess the bills of entry and clear the goods.

This detailed analysis covers the challenge to the circular and the court's directions regarding the assessment and clearance process, emphasizing the need for the proper officer to independently consider the case and exercise discretion in accordance with the law.