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TMI Blog1986 (3) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... h place the same was kept at the bonded warehouse of the customs department of Government of India to ensure payment of import duty under the Customs Act of 1962 (Central Act No. 52 of 1962) (the Customs Act). As to the payment of import duty payable on such HDPM, the petitioners claim that the demands made or to be made by the revenue were unauthorised in whole or part. But, when the petitioners found, that at least many of them, if not all, were in conformity with the Customs Act and the subsidiary provisions made thereunder, they have approached this Court under Article 226 of the Constitution challenging the provisions themselves and the consequent action of the authority thereunder. 4. Among others, the petitioners have challenged the validity of Section 15 of the Customs Act, Section 3 of the Customs Tariff Act of 1975 (Central Act No. 51 of 1975) (Tariff Act) and the Bill of Entry (Forms) Regulation of 1976 (Regulations). Apart from these, the petitioners have claimed various other reliefs on diverse grounds. We will notice and deal with them in due course setting out any additional facts that are necessary to appreciate them. 5. While issuing rule nisi in each case, thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of imported goods is not violative of Articles 14, 246, 265, 300A and 301 of the Constitution. We see no merit in this challenge of the petitioners and we reject the same. 12. The petitioners have challenged Section 3 of the Tariff Act as beyond the legislative competence of the Union Parliament and as violative of Article 14 of the Constitution. 13. Sriyuths Shevgoor and Raghavan have urged that Section 3 of the Tariff Act was beyond the legislative competence of the Union Parliament. 14. Section 12 of the Customs Act, the charging section under that Act, declares that duties of customs shall be levied at such rates as may be specified under the Tariff Act or in any law for the time being in force on goods imported into or exported from India. The Customs Act and the Tariff Act must be read together and they really form one enactment. Both these Acts really deal with one and the same topic or subject. In Khandelwal Metal and Engineering v. Union of India and Others (1983 E.L.T. 292) (Khandelwal's case) a Division Bench of the Delhi High Court consisting of Rajinder Sachar (as His Lordship then was) and Aggarwal, J. on the inter-relation of the two Acts expressed thus : " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es subjected to a fixed rate of import duty was discriminatory and had no rational basis for the same and was violative of Article 14 of the Constitution. 18. Sri Bhat has urged that by any test Section 3(2) of the Tariff Act was not violative of Article 14 of the Constitution. 19. The true scope and ambit of Article 14 of the Constitution has been explained by the Supreme Court in a large number of rulings. In Ram Krishna Dalmia v. S.R. Tendolkar (AIR 1958 S.C 538), re-The Special Courts Bill, 1978 (AIR 1979 S.C. 478), majority opinions in Twyford Tea Company Limited and Another v. State of Kerala and Another (AIR 1970 S.C. 1133) and R.K. Garg v. Union of India (AIR 1981 S.C. 2138) the Supreme Court had summarised the scope and ambit of Article 14 of the Constitution and its application to taxation measures. Bearing the principles enunciated in these cases we will examine the challenge based on Article 14, however first ascertaining the true scope and ambit of the section itself on which a controversy was raised before the authorities as also before us to the effect that Customs duty cannot be included in the determination of additional duty under Section 3(2) of the Tariff Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in the Official Gazette, direct that such imported article shall, in addition, be liable to an additional duty representing such portion of the excise duty leviable on such raw materials, components and ingredients as, in either case, may be determined by rules made by the Central Government in this behalf. (4) In making any rules for the purposes of Sub-section (3) the Central Government shall have regard to the average quantum of the excise duty payable on the raw materials, components or ingredients used in the production or manufacture of such like article. (5) The duty chargeable under this section shall be in addition to any other duty imposed under this Act or under any other law for the time being in force. (6) The provisions of the Customs Act, 1962 (52 of 1962) and the rules and regulations made thereunder, including those relating to drawbacks, refund and exemption from duties, shall so far as may be, apply to the duty chargeable under this section as they apply in relation to the duties leviable under that Act." While Section 2 of the Tariff Act stipulates the rates of customs duty leviable on imports and exports Section 3 of the Tariff Act regulates the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption granted by Government under the Central Excises and Salt Act of 1944 (Excise Act) on similar manufactured goods in the country was bound to be allowed in the payment of import duty leviable on the import of similar goods as ruled by a Division Bench of the Bombay High Court in Century Enka Limited and Others v. Union of India and Two Others [1982 (10)-E.L.T. 64] (Century Enka's case). 23. Sri Bhat has urged that benefit of exemptions granted under the Excise Act cannot be claimed under the Customs Act and the enunciation in Century Enka's case was opposed to the principles enunciated by the Supreme Court in Khandelwal's case. 24. The Customs Act along with the Tariff Act, the Rules made under those Acts and the exemption or other Notifications issued thereunder form a complete code in itself. The chargeability, assessments, exemptions and recoveries of customs and exports are exclusively regulated by the Customs Act and the Tariff Acts. Section 25 of the Customs Act empowers Government to exempt in whole or in part the Customs duty on imports in the public interest. Section 5 of the Tariff Act empowers Central Government to lower the rates of customs duty to give effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court in Khandelwal's case and therefore, we cannot follow the same. In M/s. Hegde and Golay Limited v. The Collector of Central Excise and Customs (Writ Petition No. 6706 of 1979 decided on 2-1-1986) Rajasekhara Murthy, J. has expressed the same view with which we are in respectful agreement. We will also assume that Khandelwal's case does not overrule the enunciation of the Bombay High Court in Century Enka's case and examine the same on that basis also. 27. With great respect to the learned Judges that decided Century Enka's case, we are of the considered opinion that the same runs counter to the provisions of the Customs and Tariff Acts and the legal principles underlying the levy of duties or taxes on imports and excise duty on manufactured goods in the country. For these and other reasons stated by us earlier, with great respect to Their Lordship of the Bombay High Court that decided Century Enka's case, we regret our inability to subscribe to their views. 28. The petitioners have challenged the validity of the Bill of Entry (Forms) Regulations of 1976 (Regulations) as made in excess of the powers of the Customs Act. 29. Sriyuths Shevgoor and Raghavan have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs conferred by Section 157(2) of the Act and for purposes of the Act only. Section 46 of the Act also provides for filing a bill of entry by an importer in the form prescribed by the Board. An examination of the 'forms' prescribed by the Board shows that they are made for purposes of the Act. We find no merit in the challenge of the petitioners to the Regulations or the forms prescribed by the Board. 33. We will however examine the claim of the petitioners for excluding landing charges from the assessable value of imported goods independently on which considerable time was expended before us, which we must confess with a sense of sorrow and pain was out of all proportion to the negligible and smallness of the claim. But, notwithstanding the same, we allowed full opportunity to the learned counsel for the petitioners. 34. Sri Raghavan has urged that import was completed when the ship carrying the imported goods crosses the territorial waters of India and the assessable value had to be determined on the C.I.F. contract price forwarded by the 'foreign sellers' excluding the 'landing charges'. 35. Sri Bhat had urged that on a true construction of Section 14 of the Act or otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Central Government, or (ii) ascertained in such manner as the Central Government may direct, for the conversion of Indian currency into foreign currency or foreign currency into Indian currency; (b) "foreign currency" and "Indian currency" have the meanings respectively assigned to them in the Foreign Exchange Regulation Act, 1973 (46 of 1973)." Section 14(1) with which we are primarily concerned provides that for purposes of the Tariff Act which must be read with the Customs Act, the duty of customs chargeable on any goods by reference to their value, shall 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 or exportation, as the case may be, in the course of international trade, 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 or offer for sale. The value had to be determined at the time and place of importation. The time and place of importation can never be where the ship crosses the territorial waters but must naturally be at the sea port where the goods are actually delivered by the shipmaster. When ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) Some time later the customs authorities initiated proceedings under the Customs Act and levied a sum of Rs. 1,40,558-75 as import duty on Sylvania on the said imported goods which was challenged by Sylvania before the High Court of Bombay in a writ petition under Article 226 of the Constitution. Kania, J. allowed the said writ petition of Sylvania taking the view that the import was complete on or before 31-3-1977 and, therefore, they were entitled for exemption in terms of the notification dated 3-9-1966; (iv) On appeal by the revenue a Division Bench of that Court consisting of Kantawala, CJ and Tulzapurkar, J. (as His Lordship then was) affirmed the decision of Kania, J. concurring with his Lordship's views, inter alia expressing thus : " ...... As provided in that section duties of customs shall be levied at such rates as may be specified under the Indian Tariff Act, 1934, or any other law for the time being in force, in respect of goods imported into, or exported from India. Thus, the levy of customs duty either in respect of import or export of goods is under this section and such levy is subject to other provisions of the Act or any other law for the time being in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther v. Union of India and Others [1983 (12) E.L.T. 661 (Del.)] the High Courts of Gujarat and Delhi have expressed a similar view. We are in respectful agreement with the views expressed by their Lordships in these cases. 43. On the foregoing discussion, we hold that the contention of the petitioners that landing charges are not includible in the determination of customs duty under Customs Act has no merit and we reject the same. 44. The petitioners have urged that under the Customs Act Government from time to time had issued notifications one of which was notification No. 184-Customs, dated 2-8-1976 (Annexure-F) exempting packages or containers from payment of import duty and the authorities were bound to give effect to them. 45. Sriyuths Shevgoor and Raghavan have urged that in determining the customs duty the authority was bound to allow exemption from Customs Duty on packages and containers as provided in the notifications issued by Government from time to time. 46. Sri Bhat without disputing the various notifications issued by Government contends that the same had to be examined by the authority in the first instance. 47. On the packages and containers the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X
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