ORDER
Anand Byrareddy, J.
1. Heard the Counsel for the petitioner and the Advocate General on behalf of the respondents.
2. The factual background is as follows:
The petitioner is a company incorporated under the Companies Act, 1956. It is a subsidiary of M/s Flemingo International Limited, Dubai.
The petitioner has set-up 'Duty-Free Shops' at various international airports in India. This was enabled by the Airports Authority of India (hereinafter called 'AAI' for brevity) calling for lenders to construct, develop and operate such shops at several International airports, including the Bangalore International Airport (hereinafter referred to as 'BIA' for brevity). The petitioner's parent company was a successful bidder. The AAI had awarded a licence in the year 2004 to establish and operate Duly-Free Shops at the arrival and departure terminals of the BIA. The petitioner is the recognised subsidiary in terms of the licence, authorised lo operate the shops.
The petitioner has obtained a licence under Section 58(1) of the Customs Act, 1962, to operate as a private bonded ware-house for the storage of goods brought from abroad, to be sold to transit international passengers against approved foreign currency.
The petitioner's place of business is inside the airport premises at the international departure and arrival terminals. The petitioner's shops consist of two units, one selling goods to outgoing international passengers after they have passed out of the customs post. The other selling goods to incoming international passengers, before they pass through the customs post. Hence, the outgoing passengers purchase the goods after they have crossed the customs frontier and such goods are not brought into India. And the incoming passengers, after the purchase of goods, import the same into India when they pass through after obtaining clearance from the customs authorities.
It is the petitioner's case that the transactions are in respect of specified goods and subject to the following:
a) Sale of goods are only to international passengers with valid travel documents.
b) Sale only in foreign currency.
c) Invoices to be counter-signed by the Customs officials.
d) Transactions are according to Guide-lines issued from to time by the Customs Department.
It is contended that the activities of the petitioner, insofar as the ware-housing of goods brought from abroad and replenishment of goods in the shop from the ware-house, are at all times supervised by the Customs Officials. The petitioner has no access to the goods without the leave of the Customs Authorities.
It is contended that the sales from the Duty-free shops located at the arrival terminals of the international airport are in the course of import and are not local sales or sales within the State of Karnataka. There is a limit on the extent of goods that can be sold to each passenger. This further ensures that the goods purchased are for self-consumption and not for re-sale or distribution. The incoming passenger imports the goods purchased.
The sale in respect of goods at the departure terminal is concerned, once the outgoing passengers purchase the goods they take them out of India, without passing or re-passing, through the Customs Frontier - since they would have crossed it before entering the Duty-free shop. Hence, the goods brought by the petitioner from abroad, when sold to outgoing passengers, such goods leave the country without becoming part of the 'mass of goods within the country' and thus the import cannot be said to be completed as it does not cross the Customs Frontier, before being taken out of the country.
In this background, it is alleged that on 26.9.2007, the second respondent is said to have inspected the Duly-Free Shop located at the Departure Terminal of BIA and seized eight packages of Cigarettes, brought from abroad and kept for sale to going passengers, on the ground that the packages did not contain the importer's address apart from other requirements under the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 (hereinafter referred to as the 'Packaged Commodities Rules', for brevity) and under the Standards of Weights and Measurements Act, 1976 ((hereinafter referred to as 'the SWM Act' for brevity) . The second respondent however, obtained an undertaking from the petitioner's representative to produce the packages as and when required and would be retained in the petitioner's safe custody.
The petitioner had thereafter raised its objections in writing and submitted in respect of the inspection and deferred seizure that the goods at the shop in the departure terminal could not be said to be imported goods as they had never become part of the 'mass of goods' within the country. The respondent however has ignored the same and passed an order dated 4.10.2007 and has held that the goods referred to herein above ought to have been affixed with declarations of the name and address of the importer, month and year of import as well as quantity and hence, was in violation of the Packaged Commodities Rules and an offence under the SWM Act, and the petitioner was called upon to compound the offences.
It is the above action of the second respondent which is sought to be challenged in the present petition.
3. The Counsel for the petitioner Ms.Pritha Srikumar contends as follows:
That the goods sold by the petitioner are not imported goods. The definition of the expression 'import' in Section 2(1) of the SWM Act is the same as the definition under Section 2(23) of the Customs Act. In interpreting the meaning of 'import', the Supreme Court has, in the case of Garden Silk Mills Limited v. Union of India : AIR 2000 SC 33, held that the import of goods is complete only when the goods cross the customs barrier and on the mixing of the goods with the mass goods within the country. In the case on hand, import of goods is complete, at the arrival terminal, when the passenger purchases the goods and clears it through customs and brings it into the country. In the departure terminal, the goods are never imported - the same are transhipped as the outgoing passenger takes the goods out of India, even before the same were cleared for home consumption.
It is contended that the transactions insofar as the goods brought by incoming passengers are sales in the course of import and are not covered by the SWM Act, or the Standards of Weights and Measures (Enforcement) Act, 1985, (hereinafter referred to as SWM (Enforcement) Act, for brevity) the said Acts apply to interstate sales and intra-state sales, respectively, as is clear from the Preamble to the SWM Act read with Section 31 thereof and as seen from a reading of Section 33 of the latter Act. The sales being sales in the course of import or export, the transactions do not constitute sales within the State. Reliance is placed on the ruling of the Supreme Court in State of Karnataka v. B.M. Ashraf and Co. : (1997) 8 SCC 468 - wherein it was laid down that merely because geographically a sale takes place in a particular Stale, the nature of the transaction does not detract from its character as a sale in the course of import or export.
It is contended that the invocation of the Packaged Commodities Rules in respect of goods sold by the petitioner is misconceived as the said Rules, namely, Rule 6 and Rule 35 would not apply to the goods of petitioner as the same can be applied only to goods that have been cleared through customs and sold to the general public. Though the incoming passengers purchasing the goods and pass through customs could be treated as importers.
It is contended that the goods sold by the petitioner are brought into India and kept in ware-houses under the custody and control of Customs Authorities, the petitioner is not in a position to change the packaging. The petitioner has no control over the packaging. The insistence of the authorities to comply with the provisions of the Act and Rules - when the same do not apply lo the goods and it is physically not possible for the petitioner to comply - the petitioners would be prevented from carrying on business under a constant threat of seizure for alleged contravention of law.
4. On the other hand, Shri Ashok Haranahalli, the Advocate General appearing for the respondents contends as follows:
That the commodities which were seized by the respondents were kept for sale in premises located at BIA within the Stale. 'Premises' as defined under the SWM Act includes a ware-house or other place where goods are exhibited. It follows that any pre-packed commodity requires to carry all mandatory declarations required under the SWM Act and Packaged Commodities Rules.
It is contended that the above Act and Rules are intended to protect the interest of a consumer within the State and any goods offered for sale - whether inside the premises of the BIA or elsewhere which would fall within the definition of premises would require to conform to the same.
It is contended that the petitioner seeking to canvass an argument that the nature of the transaction being in the course of import or export and would not be a local sale, either inter-slate or intra-slate and hence, the above provisions are not attracted, etc., is on the misleading assumption that unless the goods are brought through the customs and from part of the mass of the goods the import is not complete, is out of place. This argument may be relevant in the context of the Customs Act or a Sales Tax law - and need not be applied to the SWM Act and Packaged Commodities Rules. Irrespective of whether the goods are meant for sale to an international traveller or a domestic traveller - the Act and Rules do not contemplate any exception or exemption from application to any and every goods in any part of the Stale. The fine distinction sought to be drawn of goods outside the Customs barrier and goods within, is an illusory and artificial classification in respect of the applicability of the provisions of the Act and Rules. It is emphasized that die contention of the petitioner that it has no control over the packaging and that it may not be possible for it to re-pack the commodity is no excuse for non-compliance with the Act and Rules.
5. By way of reply, the Counsel for the petitioner would contend:
That the proceedings are under the SWM Act and not the SWM (Enforcement) Act. The transaction not being an intrastate sale, the location of the shop in Bangalore Airport would not render the nature of the transaction as an intra-state sale. The transactions would be sales in the course of import and export in respect of the goods. The goods displayed by the petitioner cannot be the subject matter of an intra-state or inter-state sale.
It is contended that the words used in Section 2(23) of the Customs Act and Section 2(i) of the SWM Act being identical, the contention that it was not relevant whether the commodities involved are meant for sale in the course of import or export -is not justified. There is nothing in the Act to indicate that the legislative intent was different and that a different meaning was to be given to the same words. The Legislature was fully aware of the interpretation of the expression by the Supreme Court (as early as in 1963 in Re. The Bill to amend the Sea Customs Act AIR 1963 SC 1760) when drafting the SWM Act and SWM (Enforcement) Act. Hence, the same interpretation ought to be adopted in the absence of any difference in wording.
It is asserted that the contention as the definition of 'import' under the Customs Act was for the sake of fixing the rate of customs duty to be imposed, is also not correct, in the light of the fact that what arose for consideration in the Garden Silk Milk Case, supra, was the meaning of import as found in Section 12 of the Customs Act and not Sections 14 and 15 thereof.
It is contended that under the SWM Act import does not mean the goods merely being brought into the country. As for instance, goods which are sold by the petitioner from its Duty-fee shop at the departure terminal would have to be treated as imported although they have not been cleared through customs. And the same will also be required to be repackaged to comply with the Packaged Commodities Rules even though the same are not imported. Insofar as the contention that no inconvenience would be caused to the petitioner to mechanically comply with the Act and Rules, it is sought to be pointed out that the petitioner being required to perform obligations imposed upon importers does not arise when the petitioner is not an importer. Packaging of the goods is by the respective manufacturers or packer of the goods abroad, the petitioner who is merely a trader is not in a position to provide alternative packaging for the variety of goods sold by it.
Rule 6 of the Packaged Commodities Rules prescribes the various declarations to be included on the package.
Rule 6(1B) stipulates that individual stickers cannot be affixed for the purpose of making the declarations required.
Rule 7 prescribes the dimension of the display panel on which declarations are to be made.
Rules 8 and 9 specify where the declaration is to appear and the manner in which it is to be made.
Rules 11 and 12 prescribe how the quantity of goods contained in a package are to be described.
Apart from the above, in terms of Section 72(2)(r) of the SWM (Enforcement) Act, each State in the Country can amend the Packaged Commodities Rules. The petitioner in its normal course of business brings the goods from abroad to Mumbai and the goods are then transported under Customs supervision to Duty-free shops around the country. In the event of varying Rules as regards packaging by each State, the petitioner would require to re-pack the goods, differently for each shop.
Rule 2(r) which defines retail sale price and indicates that the price is to be indicated in Rupees. However, the goods are sold against Foreign Currency, the price is marked in dollars - the price indicated in Rupees would van' on a daily basis on account of the exchange rate fluctuations.
It is contended that for all of the above reasons, there is a physical impossibility in the petitioner being able to comply with the Rules.
6. On these rival contentions, it is seen that the petitioner operates Duly-free Shops at the inter-national arrival and departure terminals of the BIA. The said shops are customs bonded ware-houses within the meaning of Section 58 of the Customs Act. The goods sold are brought from abroad and are packaged commodities. The same can be sold only to international travellers with travel documents and only against approved foreign currency. The goods displayed are brought from customs bonded ware-houses and are goods which are not cleared for home consumption. The movement of the goods at all times remains under the control and supervision of the Customs authorities. Therefore, it is to be considered whether the nature of goods in the Duty-free Shops of the petitioner, in the departure and arrival terminals of the BIA, are imported goods. In this context, the meaning to be given to import as contemplated under the Act would assume significance. As pointed out by the Counsel for the petitioner, the definition of the expression, both under the Customs Act and the SWM Act is identical. Hence, the meaning as judicially interpreted, can only be the same for both the Acts unless the Statute expresses otherwise. It is the settled position of law that import is complete only when the goods have crossed the customs barrier and on the mixing of goods with the mass goods within the country. In the instant case on hand, the import is completed when the incoming passenger purchasing the goods clears it through customs and brings it into the country. And in the departure terminal the goods are not imported because the outgoing passenger takes the goods to a foreign country. The goods are transhipped and not imported at all. Rule 6 and Rule 35 of the Packaged Commodities Rules which are applicable to imported goods will not apply to the goods of the petitioner. The said Rules would apply only to goods that have been cleared through customs and are sold lo the general public in the open market. The passengers purchasing the goods are shown as the importers/exporters in the relevant documents. The preamble to the SWM Act declares that the Act applies only lo sales in the course of inter-stale sales. Similarly, the SWM (Enforcement) Act, 1985, applies only to intra-slate sales. The question then arises whether the sales made by the petitioner are either in the nature of inter-state sales or inlfa-state sales. A plain analysis of the transactions in the shops, either at the departure terminal or the arrival terminal, can be said to be an inter-state or intra-slate sale. For even the sale at the arrival terminal cannot be treated as an intra-state sale as the sale is made even before the commodity is imported, as contemplated under the Act. It is a sale in the course of import. It is therefore evident that tile Legislature has chosen not lo cover transactions in the course of import or export, either under the Standards of Weights and Measures Act, 1976 or the Standards of Weights and Measures (Enforcement) Act, 1985. The sales in Duly-free Shops in which foreign goods are sold to incoming and outgoing and transit international passengers are a distinct and separate type of transactions - the goods are a separate class of goods as distinct from the mass of goods sold to the general public within the country. It is evident that the said transactions are outside the ambit of the Acts and Rules sought to be enforced. Especially in the light of the deliberate omission of sales in the course of import and export from the purview of the Legislation. It follows that any Rules framed under the relevant Act is equally inapplicable.
The writ petition is accordingly allowed. It is declared that the Standards of Weights and Measure Act, 1976, the Standards of Weights and Measures (Enforcement) Act, 1985, and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, dealing with imported goods are not applicable to the goods of the petitioner brought from other countries and sold at its Duty-free Shops located in the international departure terminal of the Bangalore International Airport. Consequently, Annexures - J and L, to the writ petition are quashed.