Assistant Collector of Customs (imports) Vs. Sundaram Textiles - Court Judgment

Excerpt:
date of import - customs--exemption--goods totally exempt when entering territorial waters of india on 7.12.1978--exemption withdrawn when the goods were berthed on 4.1.1979--goods exempted from basic duty and auxiliary duty on 5.1.1979 but additional duty imposed on that date--goods, whether liable to duty--relevant date is the date on which goods were unloaded--liability to duty to be fixed according to whether the goods were liable to duty on that date--customs act (52 of 1962), sections 2(11),(16),(23),(27),12,15,25(1),49--customs tariff act (51 of 1975), section 3; schedule i, ch.56--finance act, 1976, section 32--notfns. nos. 385-cus dated 23-7-1976,388-cus dated 2.8.1976, 6/79-cus dated 5.1.1979, 7/79-cus dated 5-.1.1979, 8/79-cus dated 5.1.1979. - - 6 and 7 dated 5-1-1979,.....orderpadmini jesudurai, j.1. since a common question, as to when customs duty became leviable for the two consignments of goods imported into india, arises in these writ appeals, they are disposed of together under a common judgment. 2. appellants in these writ appeals are the respondents in w.p. 298 of 1979 and w.p. 459 of 1979 (and will hereinafter be referred to as the respondents). the respondent in w.a. 538 of 1982 (who will hereinafter be referred to as the first petitioner) is the petitioner in w.p. 298 of 1979, and the respondent in w.a. 539 of 1982 is the petitioner in w.p. 459 of 1979 (and will hereinafter be referred to as the second petitioner). 3. each of the petitioners filed a writ petition, more or less on similar averments, each seeking a writ of certiorarified mandamus.....

Judgment:
ORDER

Padmini Jesudurai, J.

1. Since a common question, as to when customs duty became leviable for the two consignments of goods imported into India, arises in these writ appeals, they are disposed of together under a common judgment.

2. Appellants in these writ appeals are the respondents in W.P. 298 of 1979 and W.P. 459 of 1979 (and will hereinafter be referred to as the respondents). The respondent in W.A. 538 of 1982 (who will hereinafter be referred to as the first petitioner) is the petitioner in W.P. 298 of 1979, and the respondent in W.A. 539 of 1982 is the petitioner in W.P. 459 of 1979 (and will hereinafter be referred to as the second petitioner).

3. Each of the petitioners filed a writ petition, more or less on similar averments, each seeking a writ of certiorarified mandamus for quashing the order of the first respondent assessing their goods for customs duty to a particular sum. Both the petitioners had imported viscose staple fibre blended yarn, the first petitioner, 142 bales and second petitioner 48 bales from the United Kingdom. The goods came by steamer Clan Magnair from Middleborough Port (U.K.) to Madras. The ship entered the territorial waters of India on 7-12-1978, and berthed at North Quay on 4-1-1979. The bill of entry had already been prepared on 8-12-1979, and had been received by the office of the first respondent on 13-12-1978. Though the ship entered into the territorial waters on 7-12-1978, the unloading of the goods could not be done due to berthing difficulties and the vessel was actually berthed only on 4-1-1979. Under the Customs Tariff Act, the goods were subjected to a levy of 100 per cent basis import duty under Chapter 56 of the First Schedule of Customs Tariff Act, 1975, and an auxiliary duty of 20 per cent leviable under Section 32(1) of the finance Act 1976, together with an additional duty leviable under Section 3 of the Customs Tariff Act 1976. However, by Notification No 388 dated 2-8-1976, issued by the Government of India (Ministry of Finance Department), Department of Revenue and Banking, there was a total exemption of the duty leviable under chapter 56 of the First Schedule of the Customs Tariff Act and the whole of the additional duty leviable thereon under Section 3 of the Act. By an earlier Notification No. 385 dated 23-7-1976, the Central Government had exempted viscose staple fibre from the auxiliary duty of customs leviable under Section 32(C) of the Finance Act. Theses notifications granting exemptions were periodically extended and were in force upto and inclusive of 31-12-1978. The Government of India by two fresh Notifications Nos. 6 and 7 dated 5-1-1979, exempted viscose staple fibres when imported into India, from the whole of the duty of customs as well as the auxiliary duty of 20 per cent. By Notification No. 8 also dated 5-1-1979, an additional duty of not exceeding Rs. 1.32 per kilogram was levied under Section 3 of the Customs Tariff Act. Reckoning 4-1-1979 viz., the date of berthing of the ship, as the relevant date for determining the point of time when the goods could be treated as chargeable, the first respondent assessed the goods on the basis of the rates prevailing as on 4-1-1979, when none of the exception notifications was in force and assessed the tax on the basis of the Customs tariff Act. Contending that the relevant date for chargeability was not the date of berthing of the ship, but the date of its entry into territorial waters viz., 7-12-1978, on which date the two notifications granting exemptions were in force, the petitioners filed writ petitions, seeking quashing of the assessment orders and release of the goods free of tax.

4. The respondents contended that the chargeability for duty was only on the date of the berthing of the ship and not the date of the entry of the ship into territorial waters and that the petitioners have been rightly assessed to duty that was leviable on 4-1-1979, when none of the exemption notifications were in force and the duty had to be levied on the basis of the Customs Tariff Act.

5. Learned Judge relying mainly on the judgment of the Bombay High Court in Shahwney v. Sulvania and Laxman - LXXVII Bom. Law Reporter 380 held that the liability to duty was to be ascertained with reference to the date on which the ship entered the territorial water, which was on 7-12-1978, on which date both the exemption notifications were in force and that therefore the order of assessment of the first respondent could not be sustained. Both the writ petitions were allowed. Hence these writ appeals by the aggrieved department and the Union of India.

6. The question that initially arises for consideration is as to the point of time when chargeability for import duty takes place. This question has now been settled by a Division Bench of this Court in Jamal Co. v. Union of India and Others - : 1985(21)ELT369(Mad) , wherein this court after going elaborately into the question, analysing the different provisions of the Customs Act and discussing the decision of the Bombay High Court in Shahwney v. Sylvania and Laxman - 78 Bom. L.R. 380 held that the chargeability for import duty takes place at the time of the unloading of the goods and not when the goods enter territorial waters, since the very object of the Act, was not to tax the goods which are just passing through the territorial waters but only to tax goods which get mixed with the mass of goods in India. Adopting the rationale of the above cases, another Division Bench of this Court in M/s. Lucas TVS Ltd. Asstt. Collector of Customs : 1987(28)ELT266(Mad) held that the time of loading into the ship, is the relevant point of time for determining the stage at which duty was leviable for export. In view of the above decisions, the order of the learned Judge reckoning the date of entry into the territorial waters as the relevant date and consequently quashing the assessment orders cannot be sustained. The relevant date is the date of unloading of the goods.

7. In the instant case, the actual date of unloading is not available. Though it is mentioned that the vessel was actually berthed on 4-1-1979, yet, the date of actual unloading is not mentioned by either of the parties. Notification No. 388, originally dated 2-8-1976 and granting exemptions to these goods from the whole of the Customs duty leviable under Chapter 56 of the First Schedule of the Customs Tariff Act, 1975 and the whole of the additional duty leviable under Section 3 of the Act, had been periodically extended and was in force upto and inclusive of 31-12-1978. Similarly, Notification No. 385 dated 23-7-1976, granting exemptions from the auxiliary duty of customs leviable under Section 32(1) of the Finance Act, had been periodically extended and was also in force upto and inclusive of 31-12-1978. The next series of exemption notifications are issued only on 5-1-1979 as Notification Nos. 6, 7 and 8. Notification Nos. 6 and 7 granted full exemption of Customs leviable under Chapter 38 [This should read 'Chapter 56'.] of the First Schedule of the Customs Tariff Act, and also the auxiliary duty of 20 per cent leviable under Section 32 [This should read 'Section 35(4)'.] of the Finance Act, while 2 Notification No. 8, an additional duty of not exceeding Rs. 1.32 per kilogram was leviable under Section 3 of the Customs Tariff Act. Between 1-1-1979 and 4-1-1979 (both days inclusive) no exemption notification was in force and the duty leviable would be according to the Customs Tariff Act, 1975. If the date of unloading was on the 4-1-1979, when the exemption notification was not in force, the duty leviable would be the same as now assessed, though assessment has been made taking the date of berthing as the relevant point of time. However, if the date of actual loading was on 5-1-1979, or thereafter, the Exemption Notifications Nos. 6, 7 and 8 were in force and the tax could have to be assessed only on the basis of these notifications.

8. Since the actual date of unloading is not placed before us, we give the following directions -

(i) The point of time relevant for chargeability is the date of the actual unloading of the goods;

(ii) If the date of unloading was on 4-1-1979, duty as now assessed on the basis of the Customs Tariff Act, 1975, without any exemptions will stand; and

(iii) If the date of unloading was either 5-1-1979 or thereafter, the first respondents shall assess afresh, the duty on the basis of Notifications Nos. 6, 7 and 8.

9. These writ appeals are ordered accordingly.

No costs.