9911796707
TMI Blog1988 (12) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... ording to the petitioner, order was given by proper officer granting "Entry Inwards" to vessel under Section 31(3) of the Act. The petitioner filed the Bill of Entry for Home Consumption under Section 46(1) of the Act. The said Bill of Entry was not accepted on the ground that the manifest did not contain the name of the importer and as such was incomplete. On 4th and 5th October, 1986 being Saturday and Sunday respectively Customs Department was closed. On 6th October, 1986, supplementary manifest was filed by the Steamer Agent. Exemption Notification No. 62/85-Cus., dated 17-3-1985 in respect of basic customs duty was withdrawn by Notification No. 439/86, dated 6-10-1986 whereby basic customs duty was raised to 60%. Similarly, the Notification No. 311/86-Cus., dated 13-5-1986 exempting auxiliary duty was also withdrawn by a Notification No. 440/86, dated 6-10-1986 and the goods became chargeable to auxiliary duty at the rate of 40 per cent. 4. On 7th October, 1986, Bill of Entry was assessed on the basis of 10 per cent basic customs duty. 5. On 31st October, 1986, public notice regarding withdrawal of aforesaid exemptions was issued by the Calcutta Customs. 6. On 12th Novem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VIIth Schedule of the Constitution of India. The said entry provided "Duties of customs including export duties". A duty of customs being a tax on the act of importation or exportation, cannot be regarded as a tax on property. It was further contended that the date of presentation of the Bill of Entry is wholly unconnected with taxable event. A Bill of Entry may be filed even before goods enter the territorial waters of India. In this connection the learned Advocate for the petitioner referred to Section 46(3) proviso of the Customs Act. Similarly under Section 48, imported goods for which no Bill of Entry has been filed within 45 days after unloading may be sold by the Customs Authorities. Such goods are in fact sold as imported goods. The learned counsel has also submitted that the taxable event being the importation and the date of importation being the date on which the goods enter the territorial waters of India, the duty chargeable can only be at the rate prevailing on that date and cannot be made dependent on any subsequent event e.g. filing of Bill of Entry. 14. The counsel for the petitioner then submitted that in any event, since the imported goods were totally exempte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t General Manifest on 3rd October, 1986. The Bill of Entry nowhere shows that it was presented on 3rd October, 1986. It is also contended on behalf of the respondents that only when a Bill of Entry is properly presented, the date is given in the Bill of Entry. The respondents further contended that the Bill of Entry was submitted on 7th October, 1986, is also corroborated by the following facts :- (a) In respect of four consignments (which are the subject matter of the writ application) the Steamer Agent filed a supplementary Import General Manifest showing for the first time the petitioner's name as the importer of the goods. The said supplementary Import General Manifest was filed by the Steamer Agent on 6th October, 1986. (b) Under Section 46 of the Customs Act, 1962 only an importer can file a Bill of Entry. Therefore no Bill of Entry properly could have been filed by the petitioner till its name appears as an importer in the Import General Manifest. Since the name was included as importer in the supplementary Import General Manifest only on 6th October, the petitioner had filed the Bill of Entry on the 7th October, 1986. (c) It is also significant that in the Bills of La ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nches and accordingly the matter was referred to Full Bench. The following questions were referred to the Full Bench. "1. Under the Customs Act, 1962 when can the event of importation be said to occur? 2. At what point of time or date the rate of customs duty to which imported goods are liable was to be determined under the Customs Act, 1962? 3. Whether it would make any difference to the answer to the second question in cases where, at the date of import the goods were totally exempt from duty, either basic or additional as against being partially exempt from such duty? 4. Whether the countervailing or additional duty payable under Section 2A of the Indian Tariff Act, 1934, or under Section 3 of the Customs Tariff Act, 1975, was customs duty referred to in the charging section, namely, Section 12 of the Customs Act, 1962?" 22. The crucial question before the Full Bench was when can the goods be said to be 'imported into India' and at what stage do they become chargeable to customs duty? The Full Bench observed that answer to this question would invariably depend upon what exactly does the expression 'goods imported into India' occurring in Section 12 mean? The chargeabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976, provides that a distance of twelve nautical miles from the nearest point of low tide along the baseline of India constitute territorial waters of India. Whatever the word "India" may mean in common parlance and under other enactments, for the purpose of the Customs Act it is made clear under the definition clause 27 of Section 2 of Customs Act that, "India" includes territorial waters of India. Reading the two definitions together it would be manifest that if goods are drought into India, meaning thereby into the territorial waters of India from outside India, that is, from outside the territorial wafers of India there is import of goods and the goods become "imported goods". These definitions thus make it clear that no sooner than the goods are brought from outside the territorial waters of India into the territorial waters of India, they become imported goods and become chargeable to duty and upto the moment they are cleared for home consumption, they constitute imported goods for the purpose of the Customs Act. No sooner than they are cleared for home consumption they cease to be imported goods. That "India" i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods imported into India. As stated above, Section 12 declares that duties of customs shall be levied on all goods imported into India. The goods imported shall have to be valued under Section 14 and the duty payable shall have to be determined according to the rates specified under Section 15 of the Customs Act read with the Tariff Act. Every importer of goods is required under Section 46(1) of the Customs Act to make an entry with the proper officer by presenting a bill of entry for home consumption or warehousing in the prescribed form. The goods may be unloaded only at the approved place and under the supervision of the Customs Officer as laid down in Sections 31 to 34 of the Customs Act. Section 29 prohibits the person-in-charge of a vessel or aircraft entering India from any place outside India from permitting the vessel or aircraft to call or land at any place other than customs port or a customs airport. Within twenty-four hours of arrival the person-in-charge is required by Section 30 to deliver an import manifest or an import report. The person-in-charge of a conveyance which has brought any imported goods or has loaded any export goods is prohibited by Section 42 from lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax or Gift Tax or Estate Duty Act what has to be first determined is when exactly did the taxable event occur? It is with reference to that point of time, that the chargeability or leviability of the tax or duty, as the case may be, has to be determined. That is the crucial date." [Emphasis supplied] 27. Referring to the decisions in Wallace Brothers and Company Ltd. v. Commissioner of Income-tax, reported in 16 ITR 240, Kesoram Industries and Cotton Mills Ltd. v. Commissioner of Wealth Tax, reported in 59 ITR 767 (SC), Chatturam Horilram Ltd. v. Commissioner of Income-tax, reported in 27 ITR 709, Kalwas Devadattam v. Union of India, reported in 49 ITR 165 and in Re :Sea Customs Act, reported in AIR 1963 SC 1760, the Full Bench observed as follows :- "All these decisions make it clear that a taxing statute does not envisage that the taxable event, valuation of goods, income or estate as the case maybe, rate of duty or tax and quantification of duty or tax should be completed at any single point of time, or with reference to one and only one point of time, nor that they must be necessarily postponed until all the stages are completed; nor that each of these events could not oc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be allowed to cross the customs barrier. In support of this contention reliance was also placed on behalf of the Revenue in Re Sea Customs Act (supra). The Full Bench held as follows :- "In that case the Supreme Court was discussing as to whether imposition of customs duty on import of goods is a tax on property, that is, on the goods or on the act of import of goods. The Court held that the taxable event is the act of import of goods into India and the duty is not on property as such, but on the act of importation of goods. The Court was not concerned in that case as to when the goods can be said to have been imported, nor did the Supreme Court lay down that taxable event does not occur when the goods enter the territorial waters. What all the Supreme Court said was that the importer cannot take the goods beyond the customs barrier without first fulfilling the conditions of payment of import duty. The Court was not required to consider Sections 12,14 or 15 of the Customs Act, 1962, and determine when the taxable event occurred. There can be no doubt that unless the duty is paid, dutiable goods cannot be carried across the customs barrier but that is not necessarily the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is that they become imported goods when they are sought to be removed for home consumption. If they are not imported goods merely because they are sought to be removed for home consumption, how do they become imported goods? After all the goods sought to be removed for home consumption would have by then not only entered the territorial waters of India but would have been unloaded on to the land mass of India. But then, even according to the learned Counsel for the Customs when the goods are brought to the land mass they do become imported goods. It is common knowledge, goods unloaded on the land mass are not immediately cleared for home consumption. The Customs Act itself gives two options to an Importer. The Importer may clear the goods forthwith or lodge them in a warehouse for clearance from time to time. In the latter event when do they become imported goods? Is it only when they are cleared from the warehouse for home consumption? The goods lodged in the warehouse need not be cleared in one lot; they could be cleared in instalments. Even in respect of goods unloaded on the land mass on the same day or even at the same time, Section 15 of the Customs Act clearly envisages ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sooner than they enter the territorial waters of India and thus become subject to the levy of customs duty. The chargeability does not remain suspended until they are cleared for home consumption. In fact, the moment they are cleared for home consumption and they become part of the goods on the land mass, they cease to be imported goods for the purpose of levy of customs duty; of course, they are cleared for home consumption only on payment of duty. Even on a reading of Section 12 in the context of the scheme of the Customs Act and in particular in conjunction with Sections 14 and 15, we find nothing which requires a different meaning to be given to the expression "imported into India". We, therefore, hold that goods from outside India, no sooner than they enter the "territorial waters of India" become "goods imported into India" and acquire the character of imported goods". 32. The Full Bench referred to the provisions of Sections 21, 22, 23, 31, 32, 33, 34, 37, 45, 46, 48, 49 and 53 of the Customs Act in support of the view that goods become imported goods no sooner than they enter into the territorial waters of India. The Full Bench observed: "It is thus manifest that under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also because the Central Government chooses to exempt from duty by issuing a notification under Section 25 of the Customs Act. In this context, it is necessary to note the distinction between the notification under sub-section (1) of Section 25 of the Customs Act and an exemption notification issued under sub-section (2) of Section 25 thereof. Under sub-section (1) the Government may exempt absolutely or subject to conditions goods of any specified description from the whole or any part of duty of customs leviable thereon. Duty is leviable under Section 12 of the Customs Act and not under the Schedules of the Tariff Act. If duty is leviable under Section 12, then only for the calculation of the duty the Schedules of the Tariff Act become relevant and have to be looked into. A notification under Section 25(1) of the Customs Act exempts goods themselves from the levy of duty under Section 12. A notification under sub-section (2) of Section 25 does not exempt goods from levy of the tariff. A notification thereunder only exempts by special order in each case from payment of duty under circumstances of exceptional nature. While under sub-section (1) of Section 25 goods themselves are e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd consequently, Sec. 15 does not come into operation in respect of these goods and the question of valuation of the goods under Sec. 14 does not arise for the purpose of assessment." 33. Another contention was raised before the Full Bench that when goods are wholly exempt from duty by a notification issued under Section 25, they are still chargeable to duty under Section 12 but at Nil rate. The Full Bench negatived that contention and observed as follows : "The power vested under Section 25(1) is exercised by the Central Government and that is to exempt the goods from the levy of duty itself and not merely from the rate of duty. What is levied under Section 12 is wholly exempted in exercise of the power under Section 25. The fact that the goods are still shown in the Schedule as chargeable under the Customs Tariff Act does not render the goods subject to levy of duty. Only if the goods are chargeable to duty under the Customs Act, the duty will be at the rates specified in the Schedule to the Customs Tariff Act. But, inasmuch as where the notification under Section 25(1) exempts imported goods covered by the Notification from the levy of whole of the duty leviable thereon it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of discussion in that case and the Full Bench rightly observed that learned Single Judge of the Madras High Court changed his views in a subsequent decision in the case of Sundaram Textiles Ltd., Madurai v. Assistant Collector of Customs, Madras and Another, reported in 1983 (13) E.L.T. 909. 37. Reference has also been made to a decision in Jain Shudh Vanaspati Ltd. v. Union of India, reported in 1983 E.L.T. 1688. The Full Bench dealt with that decision at length and distinguished the case. According to the Full Bench there is no contradiction in fixing chargeability of goods to duty with reference to time when the goods acquired the character of imported goods, that is when the taxable event occurred, and the rate of duty with reference to date of clearance. Since the goods brought to India become imported goods from the moment they enter into territorial waters, customs duty becomes leviable on them. The taxable event having occurred at that point of time, it has to be determined whether they are exempt from duty or not on that date. If they are exempt from duty, no question of calculating the duty payable arises at any later point of time; if they are chargeable to some duty a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 48. Such goods are in fact sold as imported goods. The taxable event being the importation and the date of importation being the date on which the goods enter the territorial waters of India, the duty chargeable can only be at the rate prevailing on that date and cannot be made dependent on any subsequent event, e.g., Filing of Bill of Entry. In the instant case, the goods were totally exempted from additional and auxiliary duties as on the date when the goods entered the territorial waters of India. As such no such duties were chargeable on the goods. The fact that the exemption notification exempting the goods from auxiliary duty was withdrawn subsequent to the date when the goods entered the territorial waters of India makes no difference to the above position. As and when the goods entered the territorial waters of India, i.e., October 2,1986, the goods in question were chargeable to basic customs duty at the rate of 10% by virtue of exemption notification then in force and wholly exempt from auxiliary and additional customs duties. 42. Reference may be made to a few material dates relating to the arrival of the goods. On October 2, 1986, the goods entered the terr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment made on the Bill of Entry on October 7, 1986, at the rate of 10% still stands and has not been revised or reviewed, but nonetheless the goods were not released on the ground that duty was payable on the basis of the Notifications of October 6,1986. 45. From the facts and circumstances, it would be evident that an order had been given for "entry inwards" to the vessel carrying the imported goods on October 3, 1986, under Sec. 31 of the Customs Act and the Bill of Entry was filed by the petitioner on the same date, i.e., on October 3, 1986. The rate of duty and tariff valuation chargeable on the said goods on October 3, 1986, in accordance with Section 15(l)(a) of the Customs Act, 1962, was 10% ad valorem basic customs duty only. No auxiliary or additional duty was chargeable. Such amount was paid by the petitioner on November 24, 1986. The contention that the import manifest was incomplete can have no bearing on the facts of the present case because the order granting "entry inwards" had been passed on October 3, 1986, under Section 31 of the Customs Act. Such order could only be passed after delivery of the import manifest. The import manifest was permitted to be suppleme ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
