9911796707
TMI Blog1983 (1) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... levied under section 3(1) of the said Act. This duty has been calculated not on the C.I.F. value of the goods but on their assessable value as arrived at in accordance with the terms of section 3(2) of the said Act. 3. As already noted above, the principal contention of the petitioners is that the provisions of section 3 of the said Act are ultra vires and, therefore, the aforesaid duty, levied under section 3(1), cannot be collected from the petitioners. Though other contentions were raised in the petitions, except in C.W. 3678, the only contention argued was regarding the validity of the said provision. 4. Before noting the rival contentions, it is necessary to refer to the impugned provision. Customs Tariff Act, 1975 was enacted with a view to consolidate and amend the law relating to customs duty. While section 2 of the said Act provides that duties of custom shall be levied under the Customs Act, 1962 at the rates which are specified in the First and the Second Schedule of the Customs Tariff Act, 1975, section 3 of the said Act imposes a levy of additional duty. The said provision reads as under :- "3. (1) Any article which is imported into India shall, in addition, be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s was directed against section 3(2) of the said Act. It was contended by Shri Sorabjee, on behalf of the petitioners, that the said Act has been enacted by the Parliament in exercise of its powers under Entry 83 of List I of the 7th Schedule to the Constitution of India. Under the said Entry 83, it is submitted by the learned counsel, customs or import duty can be levied only on the importation of goods. The value of goods on which the import duty can be levied is to be the value at the time and place of importation. The further submission was that, for the purposes of calculating the value of the goods, on which import duty is to be levied, the value of the goods cannot be increased by superimposing thereon any post-importation charges. In other words, it was submitted, duty under Entry 83 of List I of the 7th Schedule cannot be levied on post-importation charges. According to the learned counsel the taxable event occurs the moment the goods, which are imported, cross into the territorial waters of India. Duty on the same can be levied on the value of the goods at that time and, it is contended, post-importation expenses cannot be taken into consideration when ad valorem duty is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the nature of excise duty as contemplated by Entry 84 of List I. Similarly, it was submitted, under Entry 83 the valuation for the purposes of levy of import duty can only be the importation cost, and post-importation expenses could not be taken into consideration while valuing the article for the purposes of levy of any duty as contemplated by Entry 83. 9. It is not necessary, in our opinion, to go into the question as to whether duty can be levied, in terms of Entry 83 of List I, on imported goods by adding to the value of the same any post-importation expenses. For the purposes of the present petitions we may assume that post-importation expenses cannot be so added. In our opinion however, the customs duty which is payable on the import goods, and which is taken into consideration under section 3(2) for the purposes of valuing the imported articles for the levy of duty under section 3(1), cannot be regarded as a post-manufacturing expense. 10. There can be no quarrel with the proposition, and indeed it is now well-settled, that the taxable event in the case of customs duty is the importation of the goods. (See In re. Sea Customs Act, S. 29(2), A.I.R. 1963 Supreme Court 176 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. The duty under section 3(1) is also, like the duty under the customs Act, 1962, attracted at the time when the taxable event takes place, namely, at the time when the imported goods cross the customs barrier. In our opinion the adding of the customs duty, leviable under the Customs Act, 1962, to the value of the imported goods and thus arriving at the aggregate value, on which duty is leviable under section 3(1) of the Act, was clearly within the legislative competence of the Parliament under Entry 83 of List I of the 7th Schedule. Under the said entry, duty could be levied on the value of the goods imported. We have already expressed the opinion that the customs duty levied under the Customs Act, 1962 is not a post-importation charge. This being so, there can be no impediment to the customs duty being added to the value of the imported article for the purposes of determining the assessable value on which duty under section 3(1) of the said Act can be levied. 13. There is another way of looking at the problem. What is the pith and substance of the impugned levy This can best be understood by an illustration. Supposing the value of the goods imported is Rs. 1000/- and the cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " Similarly, in the present case also, the impugned levy is nothing more than additional customs duty on the principal value of the goods imported plus a surcharge on the customs duty leviable thereon. The impugned levy is, therefore, a levy of customs duty and of the nature as contemplated by Entry 83 of List I of the 7th Schedule of the Constitution. 14. Even if it be assumed that the impugned levy under section 3 of the said Act is a duty on post-importation charge the impugned legislation cannot still be held to be invalid. The contention of the petitioners is that customs duty, as contemplated by the said Entry 83, can only be a duty on the import of the goods but the impugned duty is also a levy on post-import charges and, as such is beyond the legislative competence of the Parliament. It was submitted that the impugned levy is essentially relatable to Entry 83, and it must conform to the inherent limitations and requirements of the nature and character of the duty or tax in the Entry to which it relates. The duty under section 3(1), it was submitted, is a type of customs duty and, in order to be valid, it can be enacted only in terms of Entry 83 and be of that type. 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there may be on the interpretation of Entry 97, List I is removed by the wide terms of Article 248. It is framed in the widest possible terms. On its terms the only question to be asked is : Is the matter sought to be legislated included in List II or in List III or is the tax sought to be levied mentioned in List II or in List: III No question has to be asked about List I. If the answer is in negative then it follows that Parliament has power to make laws with respect to that matter or tax." 17. The learned counsel for the petitioners sought to distinguish this case by contending that there may be a tax which squarely falls in one of the Entries in List I, while some of the provisions of the statute may be inconsistent with or ultra vires the Entry under which such tax falls, and in such a case the dictum in H.S. Dhillon s case will not apply. We are unable to agree with this submission. The aforesaid observations of the Supreme Court are clear and unequivocal. A law which contains various provisions, some of which fall under one of the Entries in List I and some of which do not, would still be a valid law enacted by the Parliament in exercise of its powers under Article 248 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the following submission was raised before the Supreme Court :- "The contention raised on behalf of the appellant-association is that under Entry 84 of List I in the Seventh Schedule to the Constitution the duties can be levied on goods manufactured or produced in India. Excise duty, it is pointed out, can be levied only on the actual producers and manufacturers of rubber but in the very nature of such duty it could not be imposed on users or consumers of that commodity. It is suggested that sub-section (1) of Section 12 is the charging section and sub-section (2) provides for the machinery for levy and collection of tax. But sub-section (2) cannot alter the substantive provision in the charging sub-section (1) and since the Parliament has employed the words "duty of excise" which have well understood meaning the incidence of tax would fall only on the actual producers. Once the incidence of tax was shifted to the users the tax would cease to be one which would fall within Entry 84." This contention was repelled by the Supreme Court and it was observed as follows :- "It seems to us that if the provisions of Entry 97 in List I in the 7th Schedule as also the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 175/81-Cus., dated 25th July, 1981 the components required for the manufacture of heavy commercial vehicles, medium commercial vehicles etc. were exempted from some portion of the excise duty leviable under the First Schedule to the Customs Tariff Act, 1975 as well as from the whole of the additional duty leviable under section 3 of the said Act. This exemption was available subject to three conditions being fulfilled. These conditions were as follows :- "(i) the exemption contained herein shall be applicable only to those components and the goods other than basic raw materials required for the manufacture of such components which are covered by lists certified both by the Industrial Adviser or Additional Industrial Adviser of the Directorate General of Technical Development of the Ministry of Industry and the Development of Heavy Industry ; (ii) the importer should produce evidence to the Assistant Collector of Customs at the time of clearance of the components or the goods that they have a programme duly approved by the Ministry of Industry and the Industrial Adviser or Additional Industrial Adviser of the Directorate General of Technical Development of the Ministry of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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