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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 ..... rice which was paid included not only the cost of the goods but also the insurance and freight charges. 3.The customs authorities, in determining the value of the goods for the purpose of ascertaining the amount of duty payable, added to the CIF price the landing charges which were paid to the Port Trust Authorities. On the payment of the customs duty being made, the goods were cleared and used by the appellants. 4.The appellant company then filed writ petitions in the High Court of Gujarat, inter alia, contending that the landing charges which were paid at the rate 3/4% of the CIF value of goods had been wrongly added while arriving at the assessable value of those goods and, therefore, the High Court should direct a refund of Rs. 69,030.60 which was the amount of duty relatable to the landing charges. The High Court came to the conclusion that the Customs Authorities had rightly added the landing charges to the CIF value of the goods for the purpose of determining the customs duty and therefore, no refund was due to the appellants. Hence, these appeals by special leave. 5.Section 12 of the Customs Act, 1962 (hereinafter referred to as "the Act") provides for the levy of duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation. In the case of C.I.F. contracts, it was contended that the contracts reflect the price for sale in the course of international trade and for delivery at the time and place of importation, which, in the case of appellants, was Bombay. The expressions "time" and the "place" of importation must be understood in an ordinary sense. In commercial world and in international trade, time and place of importation could only mean (a) the date of import and (b) the place of import i.e. port of import. It was submitted that place of importation could not mean wharf, dock, port, quays or the customs barrier. Similarly the expression "delivery", it was contended, had to be construed in ordinary sense which, in the case of C.I.F. contracts, would mean the port of discharge i.e. Bombay and not the wharf at the port of Bombay. According to the appellants the words "for delivery at the time and place of importation" occurring in Section 14 of the Act could only mean delivery on the date and the port of discharge and the price must, therefore, be an ordinarily available price at about the same time and place of discharge. It could not be a price anterior or posterior to the point of time when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point of time when the goods can be physically delivered to the importer. In other words, "delivery" and "discharge" are not synonymous. As we shall presently see, merely by the shipper discharging the goods at the port of import does not ipso facto give the importer a right to take the delivery thereof. 10.Chapter VI of the Act contains the provisions relating to conveyances carrying imported or exported goods. Chapter VII of the Act contains provisions regarding the clearance of imported goods and export goods. Reading the provisions contained in the said chapters, it becomes apparent that all goods carried by vessel or aircraft entering from any place outside India has to land the goods at a customs port or customs airport and that too with the permission of the Customs Officer (Section 29). 11.The import manifest of the vessel is required to be delivered to the Customs Officer in terms of Section 30. Unloading of imported goods can take place only after the import manifest has been delivered and an order permitting entry inwards of the vessel has been given by the Customs Officer in terms of Section 31. Section 32 provides that unloading of only those goods is permitted as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot alone be regarded as the value for the purpose of calculating the duty. If the submission of the learned Counsel for the appellants is correct namely that the C.I.F. price represents the value of the imported goods, then the Section 14 would have been differently worded. It could, for instance, have easily been stated that the value of the imported goods would be the transaction value of the goods. The language of Section 14 clearly indicates that though the transaction value may be a relevant consideration, the value for the purpose of Customs duty will have to be determined by the Customs Authorities which value can be more, and at times even less, than what is indicated in the documents of purchase or sale. 15.The question as to whether the import is completed when the goods entered the territorial 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 Industries Limited - 1999 (112) E.L.T. 3 (S.C.) = 1999 (5) J.T. 160. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Port Trust authorities directly from the steamer agents and, therefore, a second inclusion of such landing charges by loading a flat percentage of the CIF value is uncalled for. In this connection, reliance was placed on clause 15 of the terms and conditions of a sample of a Bill of Lading which deals with loading, discharge and delivery and reads as under : "any expenses, costs, dues and other charges which incur before loading and after discharge of the goods shall be borne by the Merchant." Learned Additional Solicitor General is correct in submitting that the aforesaid clause 15 does not in any way indicate that the CIF value includes therein the charges levied by the Port Trust Authorities after the discharge of the goods. It is difficult to imagine that at the time when the contract to entered into, and the CIF price is fixed, as to how the parties could envisage as to what the port charges at the destination are likely to be. It does appear that any expense which is incurred with regarded to the loading or unloading of the goods to and from the ship would be included in the CIF price paid by the importer. But there is nothing on record to show that in actual effect l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case the fiction was clearly limited to the parameters provided in Section 14(1)(a) (ordinary price in international trade at the time and place of importation) and cannot be extended further to be settled with elements like landing charges. Once that is done, the whole purpose of legal fiction stands defeated and, therefore, landing charges cannot form part of the value of goods for assessment. 20.We do not agree with the aforesaid submission because what has to be arrived at is a deemed price in the manner indicated in the said Section. In determining this deemed price in international trade the element of port charges which have to be borne by the importer, in addition to the CIF value, before the goods can be cleared for human consumption must necessarily form a part or an element of the value. The said Section does not accept as final the price fixed by the purchaser and the seller in the course of international trade as reflected in the CIF contract but it requires determination of value by the customs authorities in the manner indicated therein. What has to be seen is the value or cost of the imported articles at the time of importation i.e. at the time when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cisions have correctly interpreted the relevant provisions of the Customs Act and the submissions on behalf of appellants cannot be accepted. 22.For the aforesaid reasons, we do not find any 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. There being no other point for consideration, Civil Appeal Nos. 2976 of 1991 and 2674 of 1982 are accordingly dismissed. Civil Appeal Nos. 8459-60, 8864, 8865, 8866, 11897 of 1983 and 7675 of 1996 23.The only contention raised in these appeals by Mr. J. Vellapally, Sr. Advocate related to the addition of the landing charges to the CIF value for the purpose of determining the assessable value under Section 14(1)(a) of the Act. The emphasis of the learned counsel was that in the case of CIF contract the freight which is paid included the landing cost and, therefore, the same cannot be added once again to the CIF value. 24.As we have already indicated earlier, it is a question of fact whether lending cost was included in the freight which was paid by the importer in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this contention is rejected. 31.The second contention was whether Section 3(a) of the Customs Tariff Act is ultra virus of Article 14 of the Constitution of India and/or whether the customs authorities are correct in charging additional duty on the sum total of assessable value, basic customs duty and auxiliary duty, instead of only on additional duty. In the case of Jain Brothers v. Union of India, 1999 (112) E.L.T. 5 (S.C.), a similar contention was not accepted and it was held that the said provision is valid. 32.The third contention was that the appellant had imported consignment of HDPE Blow molding Grade from M/s. Inter Trade, Yugoslavia. The total invoice price of the consignment was US $ 830 per M.T. The said invoice price also included in it the cost of packing materials. The cost of packing materials was US $ 40 per M.T. The appellant claimed benefit of exemption from customs duty on the value of packages in terms of Notification No. 184/76-Cus, dated 2-8-1976. 33.The High Court dis-allowed the aforesaid benefit on this ground that the effect of aforesaid notification was not to exclude the value of packages from the total assessable value of the imported goods (which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng or the same be heard after the disposal of Writ Petition No. 2528 of 1999 by the Bombay High Court or in the alternative, this Civil Appeal No. 5974 of 1994 may be allowed to be withdrawn. In our opinion, the latter course is a preferable one and, therefore, Civil Appeal No. 5974 of 1994 is dismissed as withdrawn in view of the pendency of the Writ Petition No. 2528 of 1999 before the Bombay High Court. Civil Appeal No. 5014 of 1989 39.Three contentions were raised in this appeal. The first was whether the countervailing duty at the rate of 42% could be levied on the goods viz. Polyvinyl Alcohol imported by the appellant or whether the appellant was entitled to benefit of the exemption notification imposing a duty of 10% as the Polyvinyl Alcohol imported is manufactured only from Vinyl Acetate Monomer. 40.This issue has to be decided against the appellant in view of the decision of this Court in M/s. Motiram Tolaram and Anr. Etc. v. The Union of India and Anr. - 1999 (112) E.L.T. 749 (S.C.) = 1999 (4) Scale 666. 41.The second contention related to the landing charges and the said contention cannot be accepted in view of our discussion hereinabove. 42.The third contention r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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