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TMI Blog2014 (4) TMI 908X X X X Extracts X X X X X X X X Extracts X X X X ..... re executive action. Merely by revising the rate in the garb of the amendment to a circular which has been quashed and set aside by the High Court cannot be done by way of an amendment of the policy u/s 5 of the FTDR Act - Paragraph 2.1 of the Foreign Trade Policy, 2009-2014 clearly provides the import and export, to be free except, where regulated by Foreign Trade Policy or any other law in force - It further provides that the Item wise export and import policy shall be notified by the DGFT as amended from time to time - According to the respondent, Paragraph 2.6 of the policy empowers the DGFT to adopt and enforce any measure under the principles of restrictions through a notification – The aforesaid parameters set forth therein does not satisfy the imposition of conditions by way of revision of rate from ₹ 75/- to 110/- per kg and above - Therefore, the DGFT even as a delegatee is not empowered to put a condition by revising the rate as a condition to import. Impugned notification dated 13-5-2013 issued by DGFT for fixation of tariff value cannot be sustained therefore set aside. - Decided in favor of assessee. Fixation of tariff value by the Customs Department - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Director General of Foreign Trade fixing Cost Insurance Freight (CIF) Value at Rs. 110/- per kg and above as condition for policy to import the areca nut commonly known as betel nut. Correspondingly the Director to Government of India, Ministry of Finance (Central Board of Excise and Customs) issued notification dated June 25, 2013 fixing the Tariff Value of the areca nuts at US $ 1613 per metric ton which is also a subject matter of challenge in the aforesaid writ petitions. In some of the writ petitions, a show cause notice issued by the Commissioner of Customs (Preventive), West Bengal, Kolkata contemplating to confiscate the aforesaid goods under Section 111(d) of the Customs Act, 1962 for violation of the non-fulfillment of the policy condition enshrined under the said notification dated 13th May, 2013 and imposition of penalty under Section 112 of the said Act is also assailed before this Court. Admittedly the Foreign Trade Policy does not prohibit the importation of the areca nuts/betel nuts absolutely, which can be deciphered from the impugned notification dated 13th May, 2013 that it is freely importable. However, conditions have been imposed wherein the impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower to amend it and not DGFT who is responsible for carrying out the policy. The DGFT can only advise the Central Government in formulation of the Foreign Trade Policy and, therefore, is not bestowed with any power either to formulate or amend the same. He further submits that though Section 6 (3) of the FTDR Act authorises the DGFT to exercise the power of the Central Government by Order published in the Official Gazette but excludes the power to be exercised by the Central Government under Section 3, 5, 15, 16 19 of the said Act. He, thus, submits that power to formulate and amend the export import policy cannot be delegated to the DGFT by the Central Government in view of the clear embargo created under Section 6(3) of the FTDR Act. He strenuously submits that Article 53 (1) of the Constitution of India vest the executed power of the Union in the President to be exercised directly or through the officers subordinate to him in accordance therewith. Thus, he submits that the notification amending the Foreign Trade Policy is required to be issued in the name of the President or in the name of a person subordinate to him, if duly authorized. By referring Article 77 (1) of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the export and import policy under Section 5 of the FTDR Act. He, thus, submits that the Central Government can only announce and amend the Foreign Trade Policy under Section 5 of the FTDR Act and not by the DGFT and placed reliance upon a judgment of the Supreme Court in case of Atul Commodities Pvt. Ltd; Ors; -vs- Commissioner of Customs, Cochin reported in (2009) 5 SCC 46 and a Division Bench judgment of the Bombay High Court in case of Narendra Udeshi -vs- Union of India Others reported in (2003) 1 Bom LR 315. By placing reliance upon the provisions contained under Section 3 (2) of the FTDR Act, Mr. Datta submits that such power of prohibition, restriction and otherwise regulating is within the exclusive domain of the Central Government which cannot be delegated to the DGFT in view of the embargo created under Section 6 (3) of the FTDR Act. He further submits that such prohibition and/or restriction can only be regulated by an Order which is required to be placed before each house of the Parliament for approval as required under Section 19 (3) of the FTDR Act. According to him, the conditions imposed for import of the areca nuts, when the policy says, it is freely impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC 161. He further placed reliance upon a judgment of the Supreme Court in case of Eicher Tractors Limited Haryana -vs- Commissioner of Customs reported in (2001) 1 SCC 315 to submit that the Customs Authorities are bound to accept the duty on the transaction value i.e. the price actually paid for the said transaction. Thus he submits that the authorities cannot arbitrarily fixed a price which has no nexus to the transaction value in invocation of the powers under Section 5 of the FTDR Act. He succinctly submits that the impugned notification cannot withstand as the price fixation is a legislative function and beyond the competence of the DGFT. In support of the above contentions, he relies upon a judgment of the Apex Court in case of Union of India -vs- Cynamide India Limited Anr; reported in (1987) 2 SCC 720. Mr. Pranab Kumar Datta, the learned Advocate appearing in some of the other writ petitions adopts the submissions of Mr. Kishore Datta and additionally submits that the artificial fixation of price for importation of the goods offends the provision of Customs Valuation (determination of value of imported goods) Rules 2007. According to him, the FTDR Act was enacted for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1975 provides the imposition of safeguard duty and anti dumping duty to protect the domestic producers subject to the compliance of the conditions incorporated therein. According to him, if the parent notification is declared invalid by the Madras High Court in case of S. Mira Commodities Pvt. Ltd;(supra) and Kerala High Court in Global Industries (supra), the impugned notification amending the quashed notification is impermissible and is also liable to be quashed and set aside. Mr. Arijit Banerjee, the learned Advocate appearing in other writ petitions also adopts the submissions of Mr. Kishore Datta Mr. Pranab Kumar Datta. He additionally submits that at the time of submissions of the bill of industry, the importer has to make a declaration that the content therein are true and the correct statement of facts. Any other declaration would amount to a false and wrong declaration which may attract the initiation of criminal and penal proceedings. According to him, the Foreign Trade Policy for the year 2009-2014 announced by the Central Government under Section 5 of the FTDR Act, is notified by the DGFT as Ex-Officio Additional Secretary to the Government of India, but the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raya Moreshwar -vs- The State of Bombay Others; reported in AIR 1952 SC 181, he audaciously submits if there is a substantial compliance under Article 77 (2) of the Constitution, it cannot nullify and/or invalidate the executive action as the said provision is mere directory and not mandatory as also held in P. Joseph John -vs- State of Travancore-Cochin reported in AIR 1955 SC 160. By placing reliance upon a judgment of the Supreme Court in case of M/s. Bijoya Lakshmi Cotton Mills Ltd. -vs- State of W.B. Others; reported in AIR 1967 SC 1145, Mr. Bose would contend that although the executive action of the Union is vested in the President but it is actually performed by the Ministers under the Allocation of Business Rules through the various departments specified in Second Schedule and if there is a substantial compliance thereof, such executive action cannot be assailed in a judicial proceedings. He would further contend that the Rules of Business and Allocation thereof amongst the Ministers are relatable to the provisions contained under Article 53 of the Constitution which is exercisable by the President directly or through the subordinate Officers and placed reliance upon a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quashed. The FTDR Act enacted by the Parliament is to provide Development and Regulation of the Foreign Trade by facilitating in imports and commanding exports from India which is a driving force of the economic activities. Section 5 of the FTDR Act empowers the Central Government to formulate and announce the Foreign Trade Policy and to amend it by notification in the Official Gazette which can be aptly quoted as under: 5. Foreign Trade Policy.- The Central Government may, from time to time, formulate and announce, by notification in the Official Gazette, the foreign trade policy and may also, in like manner, amend that policy: Provided that the Central Government may direct that, in respect of the Special Economic Zones, the foreign trade policy shall apply to the goods, services and technology with such exceptions, modifications and adaptations, as may be specified by it by notification in the Official Gazette. The Central Government announces the Foreign Trade Policy on regular intervals and the policy in vogue today which is a subject matter in this writ petition is Foreign Trade Policy, 2009-2014. Paragraph 2.1 contained in Chapter II relates to general provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision for prohibiting, restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the Order, the import or export of goods or services or technology: Provided that the provisions of this sub-section shall be applicable, in case of import or export of services or technology, only when the service or technology provider is availing benefits under the foreign trade policy or is dealing with specified services or specified technologies. (3) All goods to which any Order under sub-section (2) applies shall be deemed to be goods the import or export of which has been prohibited under section 11 of the Customs Act, 1962 (52 of 1962) and all the provisions of that Act shall have effect accordingly. (4) Without prejudice to anything contained in any other law, rule, regulation, notification or order, no permit or licence shall be necessary for import or export of any goods, nor any goods shall be prohibited for import or export except, as may be required under this Act, or rules or orders made thereunder. The expression Order is defined under Section 2 (h) of the FTDR Act to mean any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Business Rules framed by the President facilitates for convenient transaction of the business of the respective Ministers, which is to be exercised subject to the restrictions imposed in any legislation passed by the Parliament. Though the expression Central Government means President in terms of the definition enshrined under Section 2 (8) of the General Clauses Act, but it is subject to the restrictions embargo and prohibition created in any other law in force. The contentions of the respondent, if accepted, would lead to the proposition that the executive action of the DGFT is deemed to be the action of the Central Government despite the specific embargo created under Sub-section 3 of Section 6 of the FTDR Act. Though the Allocation of Business Rules entrusted the DGFT to act for the Central Government but in view of the specific embargo created under Sub-section 3 of Section 6, the Central Government cannot delegate the power enshrined under Section 3, 5, 15, 16 19 of the said Act to be exercised by the DGFT. In case of Dattatraya Moreshwar (supra), one of the point before the Constitutional Bench was whether the order passed under Section 11 of the Preventive Deten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument, Cl.(2) lays down the way in which such order is to be authenticated; and when both these forms are complied with, an order or instrument would be immuned from challenge in a Court of law on the ground that it has not been made or executed by the Governor of the State. This is the purpose which underlines these provisions and I agree with the learned Attorney General that non-compliance with the provisions of either of the clauses would lead to this result that the order in question would lose the protection which it would otherwise enjoy, had the proper mode for expression and authentication been adopted. It could be challenged in any Court of law even on the ground that it was not made by the Governor of the State and in case of such challenge the onus would be upon the State authorities to show affirmatively that the order was in fact made by the Governor in accordance with the rules framed under Art. 166 of the Constitution. This view receives support from a pronouncement of the Federal Court in J.K. Gas Plant Manufacturing Comp. Ltd. -vs- Emperor, 1947 FCR 141, where a somewhat analogous provision contained in S. 49 (1), Schedule IX of the Government of India Act, cam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at level in this State. This was in our opinion substantial compliance with the directory provisions of Article 166 of the Constitution. It was held by this Court in Dattatreya Moreshwar -vs- State of Bombay, AIR 1952 SC 181 (B), that clauses (1) and (2) of Article 166 are directory only and non-compliance with them does not result in the order being invalid, and that in order to determine whether there is compliance with these provisions all that is necessary to be seen is whether there has been substantial compliance with those requirements. In the present case there can be no manner of doubt that the notice signed by the Chief Secretary of the State and expressed to be on behalf of the Government and giving opportunity to the petitioner to show cause against the action proposed to be taken against him was in substantial compliance with the provisions, of the article. The petitioner accepted this notice and in pursuance of it applied for further time to put in his defence. He was twice granted this time. In these circumstances, the contention of Mr. Thomas that as the notice was not expressed as required under Article 166 it was invalid and therefore the requirements of Art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the executive action of the Union under the Allocation of Business Rules framed under Clause 3 of Article 77 of the Constitution assumed immunity to be called in question that the said action is not made or executed by the President. The compliance of the rules clearly discernible from the executive action, does not invalidate the same. The rules of business framed under Article 77 of the Constitution for convenient transaction of the business of the Government of India and the allocation among the Ministers in relation to the decision of any Ministers or Officers but such rules cannot override the provisions of the Act or the statutory rules as held in State of Haryana -vs- Shri P.C. Wadhwa, IPS, Inspector General of Police another reported in 1987 SC 1201 in these words: 10. * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * The Rules of Business that have been framed under Article 166 cannot override the provisions of the Act or any statutory rules. Therefore, under the Allocation of Buiseness Rules, DGFT is a subordinate officer to discharge the functions of the Central Government expect where it acts as a delegatee under the FTDR Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule made under Article 166(3). Hence its validity is not open to question. 5. The impugned Rule 23(A) was introduced for the first time by GO. Ms No. 2715-Public, dated 22-12-67. Under sub-clause (1) of that rule, it is provided that powers and functions which State transport undertaking may exercise under Section 68(C) of the Act shall be exercised and discharged on behalf of the State Government by the Secretary to the Government of Madras in the Industries, Labour and Housing Department. The rule further provides that cases relating to such powers and functions of the State transport undertaking under Section 68(C) need not be submitted to the Minister in-charge. Under sub-clause (2) of that rule, the powers and functions of the State Government under Section 68(D) of the Act and the rules relating thereto are directed to be exercised and discharged by the Secretary to the Government in the Home Department. Rule 4 of the Rules deals with allocation and disposal of business. It provides that the business of the Government shall be transacted in the department specified in the 1st Schedule and classified and distributed between those departments as laid down therein. Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of S. Mira Commodities Pvt. Ltd; (supra) had no occasion to consider the above aspect whether the notification issued by the DGFT was taken as a limb of the Central Government and not as a delegatee under Section 6 of the FTDR Act. The Court simply proceeded on the basis that Section 6 (3) of the FTDR Act clearly prohibits the delegation of power by the Central Government upon the DGFT and, therefore, the DGFT as a delegatee cannot exercise the power of the Central Government conferred under Section 5 of the FTDR Act. The judgment of the Madras High Court assumed some importance on the factual matrix that at the time of announcing the Foreign Trade Policy, 2004-2009, the conditions were imposed in a notification issued by the DGFT under which the import is permissible provided the CIF Value is Rs.35 per kg and above, when the policy says that it is freely importable. The Court held that imposition of conditions amounts to restrictions and DGFT has no power under Section 5 of the FTDR Act nor the Central Government can do so under the aforesaid provisions. It was ultimately held that the said notification is bad and was subsequently quashed with following observations: 26. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power of the DGFT as a limb of the Central Government can be traced with reasonable certainty under the Allocation of Business Rules and the notification conveying the decision of the Central Government by the DGFT cannot be invalidated on the ground of non-delegation of power. The DGFT functions as a limb of the Central Government and not as a delegatee and mere nonmentioning of the specific source of power does not invalidate the entire executive action. It leads to an another point whether the imposition of condition amounts to restriction/prohibition and otherwise regulation, which can be imposed in exercise of the power under Section 5 of the FTDR Act by the Central Government. The said provision contemplates the formulation and/or announcement of the Foreign Trade Policy by the Central Government with further power to amend it. The power of prohibit, restrict or otherwise regulate the Foreign Trade Policy is further conferred upon the Central Government under Section 3 (2) of the FTDR Act. Putting of any conditions which fetters the free import amounts to restriction and can be brought within the wider meaning thereof. The reference can be conveniently made to the definit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xport of the goods of any specified description. The notification can be issued for the purposes specified in sub-section (2). Hence, prohibition of importation or exportation could be subject to certain prescribed conditions to be fulfilled before or after clearance of goods. If conditions are not fulfilled, it may amount to prohibited goods. This is also made clear by this Court in Sk. Mohd. Omer v. Collector of Customs, wherein it was contended that the expression prohibition used in Section 111(d) must be considered as a total prohibition and that the expression does not bring within its fold the restrictions imposed by clause (3) of the Import Control Order, 1955. The Court negatived the said contention and held thus: (SCC p. 732, para 11) What clause (d) of Section 111 says is that any goods which are imported or attempted to be imported contrary to any prohibition imposed by any law for the time being in force in this country is liable to be confiscated. Any prohibition referred to in that section applies to every type of prohibition . That prohibition may be complete or partial. Any restriction on import or export is to an extent a prohibition. The expression an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Central Government when Section 6 (3) of the FTDR Act debars such delegation of power. Merely by revising the rate in the garb of the amendment to a circular which has been quashed and set aside by the High Court cannot be done by way of an amendment of the policy under Section 5 of the FTDR Act. The respondent tried to support the notification by taking aid of Chapter-II of the Foreign Trade Policy, 2009-2014 relating to the general provision regarding import and export. Paragraph 2.1 of the Foreign Trade Policy, 2009-2014 clearly provides the import and export, to be free except, where regulated by Foreign Trade Policy or any other law in force. It further provides that the Item wise export and import policy shall be notified by the DGFT as amended from time to time. According to the respondent, Paragraph 2.6 of the policy empowers the DGFT to adopt and enforce any measure under the principles of restrictions through a notification. It is relevant to quote the source of power of restriction of the DGFT under Paragraph 2.6 of the Foreign Trade Policy, which reads thus: 2.6. DGFT may, through a notification, adopt and enforce any measure necessary for:- (i) Protectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (e) the conservation of foreign exchange and the safeguarding or balance of payments; (f) the prevention of injury to the economy of the country by the uncontrolled import or export of gold or silver; (g) the prevention of surplus of any agricultural product or the product of fisheries; (h) the maintenance of standards for the classification, grading or marketing of goods in international trade; (i) the establishment of any industry; (j) the prevention of serious injury to domestic production of goods of any description; (k) the protection of human, animal or plant life or health; (l) the protection of national treasures of artistic, historic or archaeological value; (m) the conversation of exhaustible natural resources; (n) the protection of patents, trade marks, copyrights, designs and geographical indications; (o) the prevention of deceptive practices; (p) the carrying on of foreign trade in any goods by the State, or by a Corporation owned or controlled by the State to the exclusion, complete or partial, or citizens of India; (q) the fulfillment of obligations under the Charter of the United Nations for the maintenance of international peac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7) 2 SCC 720 which was the case under the Essential Commodities Act, 1955 where a complaint was made about the unscrupulous exploitation of the Indian Drug Pharmaceutical Market by multi national corporation by circulating low quality and deleterious drugs. Section 3 (1) of the Essential Commodities Act enables the Central Government to maintain and increase the supply of essential commodity at fare price. Section 3 (2) (c) empowers the Central Government to make Order for controlling the price at which any essential commodity may be bought or sold. In exercise of the power conferred upon the Central Government under the Essential Commodities Act and the Drug (Prices Control) Order, 1979 was made wherein notifications were issued fixing the maximum price at which various indigenous manufacturing bulk drugs may be sold by the manufacturer. The said notification was assailed before the High Court and ultimately the matter reached before the Supreme Court. In the above perspective, it was held that ordinarily the fixation of price or determination of price is legislative action, which is not a rule of rigidity. The Supreme Court in unequivocal and clear terms indicated that the pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion indicates the future course of action. Adjudication is determinative of the past and the present while legislation is indicative of the future. The object of the rule, the reach of its application, the rights and obligations arising out of it, its intended effect on past, present and future events, its form, the manner of its promulgation are some factors which may help in drawing the line between legislative and non-legislative acts. A price fixation measure does not concern itself with the interests of an individual manufacturer or producer. It is generally in relation to a particular commodity or class of commodities or transactions. It is a direction of a general character, not directed against a particular situation. It is intended to operate in the future. It is conceived in the interests of the general consumer public. The right of the citizen to obtain essential articles at fair prices and the duty of the State to so provide them are transformed into the power of the State to fix prices and the obligation of the producer to charge no more than the price fixed. Viewed from whatever angle, the angle of general application, the prospectiveness of its effect, the public in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a contract can be prima facie or otherwise held to be vitiated so as to call for an independent investigation, as prayed for by the appellants. Therefore, the above contention of the appellants also fails. In case of Pallavi Refractories and others -vs- Singareni Collieries Co. Ltd. and Others; reported in (2005) 2 SCC 227, the Apex Court held that in judicial review, the Court is neither concerned with the economic policy nor with the rates unless it is based on extraneous and irrelevant consideration while determining the price. The fixation of price though ordinarily a legislative activity but may assume an administrative and quasi-judicial character when it relates to the acquisition and requisition of goods or property from the individuals. Apart from the said proposition of law, the petitioners could not demonstrate in the pleading that the fixation of price at Rs.110/- per kg above is based on the irrelevant or extraneous consideration. On the other hand, the respondents have justified the fixation of price to be based upon the price prevalent in the indigenous market and the cost of production and/or cultivation. I don t wish to delve deep into the matter in absenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to confiscation under Section 111 or Section 113 of the Act. 13. Section 11 of the Act enables the Central Government to prohibit importation or exportation of goods either absolutely or subject to conditions as specified in the notification, the import or export of the goods of any specified description. Sections 11-A to 11-G speaks of detention of illegally imported goods and prevention of the disposal thereof. Section 12 of the Act is the charging section. Under this section, the duty is leviable on all imported goods. Valuation of the imported goods is done as provided under Section 14 of the Act. Section 25 of the Act empowers the Central Government to issue notifications exempting generally either absolutely or subject to such conditions as specified in the notification, goods of any specified description from the whole or any part of the customs Act (sic duty) leviable thereon. 14. The definition of imported goods has to be read along with Section 111 of the Act which deals with goods brought from place outside India. Section 111 of the Act provides for confiscation of goods and conveyances and imposition of penalties. Section 111(d) of the Act provides that an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of goods when there is no sale, or the buyer and the seller are related, or price is not the sole consideration for the sale or in any other case; (iii) the manner of acceptance or rejection of value declared by the importer or exporter, as the case may be, where the proper officer has reason to doubt the truth or accuracy of such value, and determination of value for the purposes of this section: Provided also that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under section 46, or a shipping bill of export, as the case may be, is presented under section 50. (3) Notwithstanding anything contained in sub-section (1), if the Board is satisfied that it is necessary or expedient so to do, it may, by notification in the Official Gazette, fix tariff values for any class of imported goods or export goods, having regard to the trend of value of such or like goods, and where any such tariff values are fixed, the duty shall be chargeable with reference to such tariff value. Explanation- For the purposes of this section- (a) rate of exchange means the rate of exchange- (i) determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported goods under sub-rule (1) shall be accepted: Provided that- (a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which- (i) are imposed or required by law or by the public authorities in India; or (ii) limit the geographical area in which the goods may be resold; or (iii) do not substantially affect the value of the goods; (b) the sale or price is not subject to some condition or consideration for which a value cannot be determined in respect of the goods being valued; (c) no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions of rule 10 of these rules; and (d) the buyer and seller are not related, or where the buyer and seller are related, that transaction value is acceptable for customs purposes under the provisions of sub-rule (3) below. (5) (a) Where the buyer and seller are related, the transaction value shall be accepted provided that the examination of the circumstances of the sale of the imported goods indicate that the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported in (1999) 6 SCC 117 as to whether the import is completed when the goods entered the territorial water and the value, at that relevant point of time, is to be taken for consideration. It is held that duties required to be paid in reference to the relevant date mentioned in Section 15 in these words: 4. The Bombay High Court following its earlier decision in M.S. Shawhney v. Sylvania Laxman Ltd. decided in favour of the respondents and held that as the goods were exempt from payment of tax on the day when they entered the territorial waters no customs duty was payable. 5. In our opinion, this question is no longer res integra. At least two decisions of this Court, namely, Bharat Surfactants (P) Ltd. v. Union of India and Dhiraj Lal H. Vohra v. Union of India were directly concerned with a similar contention that had been raised. Dealing with the same, this Court has in clear terms come to the conclusion that what is relevant is the day on which the bill of entry in respect of the goods is presented under Section 46 and in the case of goods which are warehoused the relevant date would be the date on which the goods are actually removed from the warehouse. It is no d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are on March 2, 1989 and the master of the vessel made a declaration in this behalf that they would discharge the cargo on March 2, 1989 therefore, the relevant date under Section 15(1)(a) is the date on which entry inwards after delivery of import manifest was granted to discharge the cargo for the purpose of the levy of the customs duty and rate of tariff. The contention, therefore, that the ship entered Indian territorial waters on February 20, 1989 and was ready to discharge the cargo is not relevant for the purpose of Section 15(1) read with Sections 46 and 31 of the Act. The prior entries regarding presentation of the bill of entry for clearance of the goods on February 27, 1989 and their receipt in the appraising section on February 28, 1989 also are irrelevant. The relevant date to fix the rate of customs duty, therefore, is March 2, 1989. The rate which prevailed as on that date would be the duty to which the goods imported are liable to the impost and the goods would be cleared on its payment in accordance with the rate of levy of customs prevailing as on March 2, 1989. In case of Garden Silk Mills Ltd. -vs- Union of India reported in (1999) 8 SCC 744, the point aros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... waters and it is the value at that point of time which is to be taken into consideration is no longer res integra. This contention was raised in Union of India v. Apar (P) Ltd. In that case the day when the goods entered the territorial waters, the rate of duty was nil but when they were removed from the warehouse, the duty had become leviable. The contention which was sought to be raised was that what is material is the day when the goods had entered the territorial waters because by virtue of Section 2(23) read with Section 2(27) the import into India had taken place when the goods entered the territorial waters. Following the decision of this Court in Bharat Surfactants (P) Ltd. v. Union of India and Dhiraj Lal H. Vohra v. Union of India this Court came to the conclusion in Apar (P) Ltd. case that the duty has to be paid with reference to the relevant date as mentioned in Section 15 of the Act. 17. It was further submitted that in the case of Apar (P) Ltd. this Court was concerned with Sections 14 and 15 but here we have to construe the word imported occurring in Section 12 and this can only mean that the moment goods have entered the territorial waters the import is comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation in the course of international trade. The word ordinarily necessarily implies the exclusion of extraordinary or special circumstances. This is clarified by the last phrase in Section 14 which describes an ordinary sale as one where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale . Subject to these three conditions laid down in Section 14(1) of time, place and absence of special circumstances, the price of imported goods is to be determined under Section 14(1-A) in accordance with the Rules framed in this behalf. In absence of any fixation of a tariff value by the Board, the recourse to Sub-section 1 of Section 14 can be resorted to and not otherwise. The contention of the petitioners that the Board cannot fix the tariff value is unacceptable and runs contrary to the intendment of the legislation. The other point taken by the petitioner to assail the impugned notification is that Sub-section 2 of Section 14 of the Customs Act requires the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute and also illustrated by the manner in which the determination is provided for in Section 4. The statute leaves one in no doubt that the rate of duty is to be fixed ad valorem i.e. on the basis of the value of the goods. It cannot be disputed that the normal indication of the value of the goods will be its price and, that the statute intends price to be the relevant factor is clear from the language of Section 4 under which the statute itself fixes the value for the majority of cases. But where one had got bogged down, possibly due to certain earlier observations of this Court in a different context, was in thinking that the value of goods can only comprise of manufacturing cost and profit. Actually it has been made to depend on the wholesale price of the manufacturer concerned under Section 4 (old and new). But this need not be the sole criterion. The value may be derived with reference tot he wholesale price, the retail price or the average price at which the goods are sold by the manufacturer concerned or even by the price at which the goods are sold by any particular person or place or the average price which the goods command in the whole country or any part thereof. It can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss it is demonstrated that it is extraneous to the scope and purpose of the statute. The following excerpts from the judgment of the Supreme Court in case of Barium Chemicals Ltd. -vs- Company Law Board reported in AIR 1967 SC 295 is quoted in this regard: Though an order passed in exercise of power under a statute cannot be challenged on the ground of propriety or sufficiency, it is liable to be quashed on the ground of mala fides dishonesty or corrupt purpose. Even if it is passed in good faith and with the best of intention to further the purpose of the legislation which confers the power, since the Authority has to act in accordance with and within the limits of that legislation, its order can also be challenged if it is beyond those limits or is passed on grounds extraneous to the legislation or if there are no grounds at all for passing it or if the grounds are such that no one can reasonably arrive at the opinion or satisfaction requisite under the legislation. No case of such nature has been made out in the present case. It would be deciphered from the impugned notification that the authorities took note of the trend of the value of such or like goods and, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licable to quasijudicial proceeding if such a proceeding has to inspire confidence in the mind of those who are subject to it. Though the Court should be slow and circumspect in entertaining the writ petition challenging the said show cause notice but it is not inviolable principle that in each and every circumstances, the Court should refuse to interfere with the show cause notice. The petitioners have not only challenged the show cause notice after giving reply but have also challenged the impugned notification dated 13th May, 2013 and 25th June, 2013 which forms the basis of the issuance of the said show cause notice. There is no impediment in maintaining the writ petitions even after filing of the reply. In this regard, the reliance can be conveniently placed upon a decision by this Court in case of Suttons Sons Pvt. Ltd; -vs- Union of India Ors; reported in 1994 (2) CHN 131 where it is held: 41. A contention has been raised by Mr. Daw, learned Advocate for the respondents, that the petitioner should have replied to the show cause notice and submitted to the jurisdiction of the Customs authorities. If the petitioner is aggrieved by the decision of the Adjudicating A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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