2015 (9) TMI 245 - SC - Customs

Levy of duty on goods actually imported Appellant imported crude oil which was said to have escaped payment of full customs duty Revenue in its show cause stated that quantity of crude oil mentioned in various bills of lading should be basis for payment of duty, and not quantity actually received into shore tanks in India According to Commissioner, full payment for goods has to be made on quantity mentioned in bill of lading Tribunal also accepted Commissioner s reasoning Held that - levy of customs duty under Section 12 is only on goods imported into India If the goods are pilferred after they are unloaded or lost or destroyed at any time before clearance for home consumption or deposit in warehouse, importer is not liable to pay duty leviable on such goods Reasons given by Tribunal is incorrect in law Tribunal s reasoning that somehow when customs duty is ad valorem basis for arriving at quantity of goods imported changes, is wholly unsustainable Therefore Tribunal s judgment set aside and declare that quantity of crude oil actually received into shore tank in port in India should be basis for payment of customs duty Appeals disposed of Decided in favour of assesse.

Summary

Issues Involved:

1. Basis for payment of customs duty on imported crude oil.
2. Interpretation of "imported goods" under the Customs Act, 1962.
3. Applicability of "transaction value" under the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988.
4. Impact of Sections 13 and 23 of the Customs Act on the levy of import duty.
5. Validity of the circular dated 12th January, 2006 by the Government of India, Finance Department.

Detailed Analysis:

1. Basis for Payment of Customs Duty on Imported Crude Oil:

The core issue was whether customs duty should be paid based on the quantity of crude oil mentioned in the bills of lading or the quantity actually received in the shore tanks in India. The revenue argued that since duty is now levied on an ad valorem basis, it should be paid on the bill of lading quantity. However, the appellant contended that under the Customs Act, 1962 and the Customs Valuation Rules, 1988, the duty should be based on the quantity of goods at the time of importation.

2. Interpretation of "Imported Goods" under the Customs Act, 1962:

The Court emphasized that under Section 12 of the Customs Act, duties of customs are levied on goods imported into India, which means goods brought into India from a place outside India. Sections 13 and 23 further clarify that if goods are pilfered, lost, or destroyed before clearance for home consumption, no duty is leviable. Thus, the act of importation is complete only when the goods are cleared for home consumption or deposited in a warehouse.

3. Applicability of "Transaction Value" under the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988:

"Transaction value" under Rule 4 of the Customs Valuation Rules is the price actually paid or payable for the goods when sold for export to India, adjusted as per Rule 9. The Court noted that the value of imported goods should be determined at the time and place of importation, which aligns with the statutory scheme of the Customs Act. Therefore, the quantity of goods for valuation purposes should be the quantity actually imported into India.

4. Impact of Sections 13 and 23 of the Customs Act on the Levy of Import Duty:

The Court highlighted that Sections 13 and 23 play a crucial role in determining the levy of import duty. Goods that are lost, pilfered, or destroyed before clearance for home consumption do not attract customs duty. This reinforces the principle that the quantity of goods to be considered for duty is the quantity received in India, not the quantity mentioned in the bill of lading.

5. Validity of the Circular Dated 12th January, 2006 by the Government of India, Finance Department:

The circular stated that import duty should be based on the invoice price irrespective of the quantity received. The Court found this circular to be contrary to the statutory provisions and the general scheme of the Customs Act. The Tribunal's reliance on this circular was deemed incorrect.

Conclusion:

The Court set aside the Tribunal's judgment and declared that the quantity of crude oil received in the shore tanks in India should be the basis for payment of customs duty. The customs authorities were directed to take consequential action in accordance with this declaration of law. The appeals were disposed of accordingly.