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TMI Blog1999 (9) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... the Port Trust Authorities did receive the landing charges from the shipper or the foreign seller and that the said charges were included in the CIF contract. No merit in the contentions of the appellants and, in our opinion, landing charges were rightly taken into consideration in determining the assessable value of the imported goods for the purposes of Section 14(1)(a) of the Act. - 2976/91 and 2674/82 - - - Dated:- 29-9-1999 - B.N. Kirpal, A.P. Misra and R.P. Sethi, JJ. [Judgment per : Kirpal, J.]. - The main question which arises in all these appeals by special leave is whether while assessing customs duty payable in respect of imported gods, the customs authorities can add/include landing charges in arriving at the value of those goods. The facts which are relevant for deciding the issue are similar. For the sake of convenience we will refer to the facts in the case of Garden Silk Mills Limited in greater detail. 2.The appellants in these appeals had imported polyester yarn from abroad. The transactions for sale and purchase between the foreign supplier and the appellant company were in the nature of CIF contracts i.e. price included costs, insurance and frei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, as the case may be, is presented under Section 50. (b) Where such price is not ascertainable, the nearest ascertainable equivalent thereof determined in accordance with the rules made in this behalf." 6.By an amendment in 1988, a new provision sub-section (1A) has been incorporated in Section 14, after deleting clause (b) of sub-section (1). The new sub-section (1A) stipulates that subject to the provisions of sub-section (1), the price referred to in that sub-section in respect of imported goods shall be determined in accordance with the rules made in this behalf. Pursuant thereto Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 have been framed. Post 1988, therefore, the value of the imported goods has to be determined in accordance with the rules which, according to the respondents, are based on the GATT Valuation Code (also called Article VII of the General Agreement on Tariff and Trade) which was adopted in 1979. With these Rules, however, we are not concerned in the present case because all the goods were imported prior to the incorporation of sub-section (1A) of Section 14 of the Act. 7.On behalf of the appellants it was contended that under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 14(1)(a) of the Act therein show that : (a) the price is a deemed price; (b) at which such or like goods are ordinarily sold or offered for sale; (c) for delivery at the time and the place of importation or exportation; (d) in the course of international trade; (e) where the seller and the buyer have no interest in the business of each other and (f) the price is the sole consideration for the sale or offer for sale. 9.This Section clearly indicates that it is not the price stated in the CIF contract which alone is to be accepted as being the value of such goods for the purpose of Section 14 of the Act. The said Section requires determination of the value of the imported goods. The appellants are right in contending that this is a deeming provision. The value of such goods is to be deemed to be the price at which such goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation 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 price of the imported goods, in other words, has to be determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stody of the Port Trust Authorities till they are inter alia, cleared for home consumption. This being the position the goods cannot be cleared and delivery taken without their being valued and assessed and, thereafter, duty being paid. Section 14 of the Act provides that the value of the goods shall be deemed to be the price of the goods for the delivery at the time and place of importation in the course of international trade. The value has to be determined with relation to the time when physical delivery to the importer can take place. Physical delivery can take place only after the bill of entry, inter alia, for home consumption is filed and it is the value at that point of time which would be relevant. It is evident that there normally will be some lapse of time between the time when the shipper discharges the goods and the time when the bill of entry is filed. The landing charges, which are imposed at or after the time of the discharge of the goods and prior to the clearance being granted under Section 47 of the Act, necessarily have to be an element which have to be taken into account in determining the value thereof for the purpose of assessing the customs duty which would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... import is complete. We do not agree with the submission. This Court in its opinion in Re. The Bill to Amend Section 20 of the Sea Customs Act, 1878 and Section 3 of the Central Excises and Salt Act, 1944, 1964 (3) SCR 787 at page 823 observed as follows : "Truly speaking, the imposition of an import duty, by and large, results in a condition which must be fulfilled before the goods can be brought inside the customs barriers i.e. before they form part of the mass of goods within the country." It would appear to us that the import of goods into India would commence when the same cross into the territorial waters but continues and is completed when the goods become part of the mass of goods within the country; the taxable event being reached at the time when the goods reach the customs barriers and the bill of entry for home consumption is filed. 17.It was submitted by the learned counsel for the appellants that in actual effect in the case of CIF contracts like the present, it is the shipper who pays the landing charges and the Indian importer does not incur these expenses in addition to what he has paid on the basis of the CIF contract. In other words the submission was that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on behalf of the appellants that onus of proving that the transaction value does not represent the value for the purposes of Section 14 of the Act and that it has to be loaded with any other elements such as landing charges, is on the Department. We are unable to agree with the submission. The value at which the goods are to be assessed is indicated by the importer when he makes a declaration while submitting a bill of entry under Section 46 of the Act. Once, we come to the conclusion that the landing charges would be included in the determining of the value of the goods imported then the onus has to be on the importer to show that the price indicated in the CIF contract includes therein this element of landing charges. If such an element is included in the CIF contract, that would be within the knowledge of the importer and the Department cannot be asked to prove the negative, namely that the CIF contract does not include therein the element of landing charges. 19.It was contended that legal fictions are created only for some definite purposes and here the purpose is to take the transaction value in international trade as the basis for valuation. Therefore, whichever view is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the concept of value as understood in Section 14 of the Act necessarily requires the landing charges to be included in the value. These decisions are : (a) 1982 (10) E.L.T. 203 (Gujarat High Court) Prabhat Cotton and Silk Mills v. Union of India judgment dated 9-3-1982. (b) 1983 (12) E.L.T. 258 (Delhi High Court) Super Traders and Anr. v. Union of India and Others, judgment dated 23-9-1982, followed by another judgment in 1983 (12) E.L.T. 661 (Delhi High Court) in Bhartiya Plastic Udyog v. Union of India, judgment dated 7-1-1983. (c) 1984 (18) E.L.T. 235 (Punjab and Haryana High Court) Oswal Woollen Mills Ltd. v. Union of India, judgment dated 22-2-1983. (d) 1988 (35) E.L.T. 280 (Calcutta High Court) Govind Ram Agarwal v. Collector of Customs, Calcutta, judgment dated 21-1-1985. (e) 1986 (24) E.L.T. 456 (Karnataka High Court) B.S. Kamath Co. v. Union of India, judgment dated 12-3-1986. (f) 1987 (32) E.L.T. 262 (Bombay High Court) Ashok Traders v. Union of India, judgment dated 9-10-1987 followed by another judgment in 1992 (57) E.L.T. 221 (Bombay High Court) in Ceat Tyres v. Union of India. (g) 1988 (37) E.L.T. 327 (Andhra Pradesh High Court) Barium Chemicals Ltd. v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we do not find any merit in this submission and, therefore, these appeals are dismissed. Writ Petition Nos. 7221-23 and 7295 of 1982 27.The only contention raised in these petitions pertains to the addition of landing charges. For the reasons stated hereinabove, we do not find any merit in this submission and, therefore, these petitions are dismissed. Writ Petiton (C) Nos. 7224, 7296 of 1982 and 40 of 1983 28.The only contention raised in these petitions pertains to the addition of landing charges. For the reasons stated hereinabove, we do not find any merit in this submission and, accordingly these petitions are dismissed. Civil Appeal No. 2902 of 1991 29.The only contention raised in this appeal pertains to the levy and addition of landing charges. For the reasons stated hereinabove, we do not find any merit in this submission and, therefore, this appeal is dismissed. Civil Appeal No. of 1999 arising out of Special Leave Petition (C) No. 4120 of 1989 30.Special leave granted. Three contentions were urged in this appeal. The first was whether landing charges can be included for determining the assessable value of imported goods under Section 14 of the Act. In view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble value of imported goods under Section 14 of the Act. In view of the foregoing discussion, this contention of the appellants is rejected. 36.The second contention related to the validity of Section 3(a) of the Customs Tariff Act. In view of the decision of this Court in Jain Brothers case, this issue has been decided against the appellants. 37.The third contention related to the claim for exemption by virtue of Notification No. 184/76-Cus, dated 2-8-1976 of customs duty and packing material. In view of the decision of this Court in Hind Plastics case, this submission of the appellants can also be not accepted. This appeal is accordingly dismissed. Civil Appeal No. 5974 of 1994 38.In the written submissions filed on behalf of the appellants it was stated that the appellants had filed a declaration under the Kar Vivadh Samadhan Scheme, 1998. The Assistant Commissioner, Kar Vivadh Samadhan Scheme, Central Excise, Mumbai had conveyed to the appellants that the declaration is not based on the show cause notice or demand notice prior to 31st March, 1998 and, therefore, the said declaration was not tenable and was rejected. This letter of March, 1999 has been challenged in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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