Full Judgment Text
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CASE NO.:
Appeal (civil) 706 of 2005
PETITIONER:
M/s. Sneh Enterprises
RESPONDENT:
Commnr. of Customs, New Delhi
DATE OF JUDGMENT: 08/09/2006
BENCH:
S.B. Sinha & Dalveer Bhandari
JUDGMENT:
J U D G M E N T
S.B. Sinha, J.
Sealed maintenance free lead acid batteries manufactured in Taiwan
for being used in Uninterrupted Power Supply (UPS) were imported by the
appellant at Mumbai on 16.4.2002. The goods were trans-shipped from
Mumbai to Delhi. The Bill of Entry, however, was filed by the appellant
with the customs authorities at Delhi on 22.5.2002.
Anti-dumping duty, indisputably, can be levied on issuance of a
notification by the Central Government in terms of Section 9A of the
Customs Tariff Act, 1975 (for short, ’the Act’). The said provision reads
thus :
"9A. Anti-dumping duty.- (1) Where any article is
exported from any country or territory (hereafter in this
section referred to as the exporting country or territory)
to India at less than its normal value, then, upon the
importation of such articles into India, the Central
Government may, by notification in the Official Gazette,
impose, -
(a) if the articles is not otherwise chargeable with duty
under the provisions of this Act, a duty; or
(b) if the article is otherwise so chargeable, an
additional duty, not exceeding the margin of
dumping in relation to such article;"
The Central Government, in exercise of its power thereunder, issued a
notification on 22.5.2002 on lead acid batteries, originating in or exported,
inter alia8 from Taiwan, Singapore and Hong Kong. The respondents,
relying on or on the basis of the said notification directed payment of anti-
dumping duty on the said imported goods by the appellant.
The contention of the appellant, inter alia, is that the said notification
dated 22.5.2002 being not retrospective in operation the impugned order was
wholly unsustainable. It was urged that the taxable event having occurred
on the day of importation of goods, i.e., on 16.4.2002, no anti-dumping duty,
admittedly brought in force by reason of the said notification dated
22.5.2002, was applicable. The said contention of the appellant, however,
was rejected by the respondent, and affirmed by the Customs, Excise and
Service Tax Appellate Tribunal by reason of the impugned order, stating :
"It is thus settled law that the import is completed
only when the goods are to cross the Customs barriers
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and that is the time when the import duty has to be paid
and not on the date when goods had landed in India.
Under Section 9A of the Customs Tariff Act, anti-
dumping duty is imposable upon importation of the
goods. The import is completed only when the goods are
to cross the customs barrier. In the present matter on the
date of crossing the customs barrier, the anti-dumping
duty was leviable in terms of Notification No.55/2002-
Cus and, therefore, anti-dumping duty under Section 9A
of the Customs Tariff Act is payable by the Appellants.
The decision of the tribunal in the case of Suja Rubber
Industries is not applicable as it has been passed per
incuriam the judgment of the Supreme Court in Kiran
Spinning and Garden Silk Mills. Thus, the ratio of the
decision in Fenner India Ltd., is also not applicable."
Mr. P.C. Jain, learned counsel appearing on behalf of the appellant
would submit that in view of the fact that Section 9A is an enabling
provision and the notification thereunder having been issued on 22.5.2002,
the provisions of Section 15A of the Customs Act could not have been
invoked in the instant case, particularly, in view of the fact that Sub-Section
(8) of Section 9A was introduced in the year 2004 by reason of Finance
(No.2) Act, 2004.
Mr. K.P. Pathak, learned Additional Solicitor General, however,
would submit that in view of the judgment of this Court in Kiran Spinning
Mills vs. Collector of Customs [1993 (113) ELT 753 (S.C.)], the taxable
event must be held to be the day when the goods crossed the customs barrier
and not on the day when the goods landed in India or entered its territorial
waters.
Customs Tariff Act, 1975 was enacted to consolidate and amend the
law relating to custom duties. Section 2 of the said Act provides for the
rates at which the custom duty should be levied under the Customs Act,
1962 as specified in the First and Second Schedules. Imposition of anti-
dumping duty, however, is not a part of the duty, which can be levied under
the Customs Act.
Customs Duties under the Customs Act would include additional duty
under the Customs Tariff Act. Additional duty can be levied in terms of
Section 3 of the said Act. For computation of additional duty, in terms of
Sub-Section (6) of Section 3, the provisions of the Customs Act, 1962 and
the rules and regulations made thereunder, including those relating to
drawbacks, refunds and exemption from duties, shall so far as may be, apply
to the duty chargeable under the said section shall apply as they apply in
relation to the duties leviable under that Act. Sub-Section (6) of Section 3 of
1975 Act, therefore, provides for incorporation by reference the provisions
of the Customs Act, 1962 and the rules and regulations made thereunder, as
applicable in relation to the additional duty framed thereunder.
Section 9A was inserted in the year 1985. It contains an enabling
provision. The said provision envisages that the duty would be imposable if,
in the opinion of the Central Government, the value of the goods is less than
its normal value. Normal value has been defined in Explanation (b) to
Section 9A to mean :
"(b) "normal value", in relation to an article, means \026
(i) The comparable price in the ordinary course of
trade for the said article or like article when meant
for consumption in the exporting country or
territory as determined under sub-section (2); or
(ii) where such comparable price cannot be ascertained
because of the particular market situation or for
any other reason, such value shall be either\026
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(A) the highest comparable price for the said
article or like article from the exporting
country or territory to any third country in
the ordinary course of trade as determined
under sub-section (2); or
(B) the cost of production of the said article or
like article in the country of origin along
with reasonable addition for selling and any
other cost, and for profits, as determined
under sub-section (2)."
Sub-section (8) of Section 9A was introduced by Finance Act, 2004.
Prior thereto, the statute did not contemplate application of the provisions of
the Customs Act and the rules and regulations made thereunder. By Section
76 of the Finance (No.2) Act, 2004, indisputably, Sub-Section (8) was
inserted stating the provisions of the Customs Act would be applicable
"relating to, the date for determination of rate of duty, non-levy, short levy,
refunds, interest, appeals, offences and penalties" in respect of anti-dumping
duty.
Sub-Section (1) of Section 15 of the Customs Act, 1962 reads as
under :
"15. Date for determination of rate of duty and tariff
valuation of imported goods.- (1) The rate of duty, and
tariff valuation, if any, applicable to any imported goods,
shall be the rate and valuation in force,-
(a) in the case of goods entered for home consumption
under Section 46, on the date on which a bill of
entry in respect of such goods is presented under
that section;
(b) in the case of goods cleared from a warehouse
under section 68, on the date on which the goods
are actually removed from the warehouse;
(c) in the case of any other goods, on the date of
payment of duty;"
The anti-dumping duty, as noticed hereinbefore, does not attract the
provisions of the Customs Act. If the provision of law is incorporated by
reference, it was obligatory on the part of the Parliament to say so. Such a
provision was brought for the first time in the year 2004. The doctrine of
incorporation by reference is, therefore, not attracted.
In Principles of Statutory Interpretation by Justice G.P. Singh, Tenth
Edition 2006, at pp.294-295, the law is stated in the following terms :
"When an earlier Act or certain of its provisions
are incorporated by reference into a later Act, the
provision so incorporated become part and parcel of the
later Act as if they had been "bodily transposed into it".
The effect of incorporation is admirably stated by LORD
ESHER, M.R.: "If a subsequent Act brings into itself by
reference some of the clauses of a former Act, the legal
effect of that, as has often been held, is to write those
sections into the new Act as if they had been actually
written in it with the pen, or printed in it." The result is
to constitute the later Act along with the incorporated
provisions of the earlier Act, an independent legislation
which is not modified or repealed by a modification or
repeal of the earlier Act."
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The question was considered at some details by a Three Judge Bench
of this Court in Nagpur Improvement Trust etc. vs. Vasantrao & Ors.
[(2002) 7 SCC 657], opining :
"...... The law on the subject is well settled. When an
earlier Act or certain of its provisions are incorporated by
reference into a later Act, the provisions so incorporated
become part and parcel of the later Act as if they had
been bodily transposed into it. The incorporation of an
earlier Act into a later Act is a legislative device adopted
for the sake of convenience in order to avoid verbatim
reproduction of the provisions of the earlier Act into the
later. But this must be distinguished from a referential
legislation which merely contains a reference or the
citation of the provisions of an earlier statute. In a case
where a statute is incorporated, by reference, into a
second statute, the repeal of the first statute by a third
does not affect the second. The later Act along with the
incorporated provisions of the earlier Act constitutes an
independent legislation which is not modified or repealed
by a modification or repeal of the earlier Act. However,
where in a later Act there is a mere reference to an earlier
Act, the modification, repeal or amendment of the statute
that is referred, will also have an effect on the statute in
which it is referred. It is equally well settled that the
question whether a former statute is merely referred to or
cited in a later statute, or whether it is wholly or partially
incorporated therein, is a question of construction."
The said decision has been followed in Kanak (SMT) & Anr. vs.
U.P. Avas Evam Vikas Parishad & Ors. [(2003) 7 SCC 693].
The Tribunal unfortunately did not address itself on the said question.
It, inter alia, relied upon Kiran Spinning Mills (supra), wherein the
provisions of Sub-Section (6) of Section 3 of the Customs Tariff Act was
attracted.
We are herein not dealing with a case of additional duty of excise. In
Kiran Spinning Mills (supra), only because Sub-Section (6) of Section 3
was held to be attracted in that case, additional excise duty was held to be
payable on the date when the Bill of Exchange was filed.
Section 9A of the Customs Tariff Act clearly states that imposition of
anti-dumping duty on dumped articles is required to be determined "upon
the importation of such article into India, the Central Government may, by
notification in the Official Gazette, impose an anti-dumping duty not
exceeding the margin of dumping in relation to such article". Quantum of
additional duty, therefore, was required to be determined when the goods
have been imported and is subject for clearance. Such is not the case here.
In Surana Steels Pvt. Ltd. etc. vs. Dy. Commissioner of Income
Tax & Ors. etc. [(1999) 4 SCC 306], it is stated :
"Section 115-J explanation clause (iv), is a piece of
legislation by incorporation. Dealing with the subject,
Justice G.P. Singh states in Principles of Statutory
Interpretation (7th Edn., 1999) \026
"Incorporation of an earlier Act into a later
Act is a legislative device adopted for the sake of
convenience in order to avoid verbatim
reproduction of the provisions of the earlier Act
into the later. When an earlier Act or certain of its
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provisions are incorporated by reference into a
later Act, the provisions so incorporated become
part and parcel of the later Act as if they had been
’bodily transposed into it’. The effect of
incorporation is admirably stated by LORD
ESHER, M.R.: ’If a subsequent Act brings into
itself by reference some of the clauses of a former
Act, the legal effect of that, as has often been held,
is to write those sections into the new Act as if
they had been actually written in it with the pen, or
printed in it.’ (p.233)
Even though only particular sections of an
earlier Act are incorporated into later, in
construing the incorporated sections it may be at
times necessary and permissible to refer to other
parts of the earlier statute which are not
incorporated. As was stated by LORD
BLACKBURN : ’When a single section of an Act
of Parliament is introduced into another Act, I
think it must be read in the sense it bore in the
original Act from which it was taken, and that
consequently it is perfectly legitimate to refer to all
the rest of that Act in order to ascertain what the
section meant, though those other sections are not
incorporated in the new Act.’" (p.244)"
Anti-dumping duty would be payable in respect of the goods which
have already entered Indian Territory and are warehoused.
In this case, goods were cleared by the Customs Authorities without
imposing any anti-dumping duty. It was at a later date the duties were
sought to be imposed, wherefor a show cause notice was issued.
A Judgment, as is well known, is the authority for the proposition
which it decides and not what can logically be deduced from. Kiran
Spinning Mills (supra) does not militate against a contention of the
appellant. It, in fact, supports its contention. The question as to when
import of goods is complete would depend upon contract between the parties
and/or statute governing the field. It is not a part of common law that the
import of the goods would be deemed to have been completed only when it
passes the customs barrier. Such a provision had been made for achieving
definite purposes, i.e., for the purpose of calculating customs duty.
In absence of a statute, the contract between the parties would not be
superceded. Sub-Section 6 of Section 3 or Sub-Section 8 of Section 9A of
Customs Tariff Act was enacted to achieve a specific purpose. Its operation
is limited from the date it came into force. It cannot be applied with
retrospective effect. Unless there exists a statutory interdict, common law
principle would apply which would mean that import would be complete
when the goods enter the territories of the country. Taxable event in terms
of the notification issued under Section 9A of the Act is on importation of
the good and not when the same passes the customs barrier. The goods in
question landed at Mumbai. They were trans-shipped to Delhi. They were,
however, cleared at Delhi. The goods might have passed the customs barrier
on the day on which the Bill of Entry was filed by the appellant for the
purpose of Customs Act. But such importation of goods, in terms of the
provisions of the Customs Act, was meant only for computation of duty
thereunder and not for any other purpose. In other words, a situation
contemplated under one statute cannot, in absence of any express or clear
intendment, be made to apply or be given effect to while applying the
provisions of another statute.
It is a trite law that while interpreting the statute, the courts not only
may take into consideration the purpose for which the same had been
enacted, but also the mischief it seeks to suppress. Evidently, with a view to
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suppress the mischief, if any, Section 26 of the Finance Act, 2004, was
brought into the statute book. It cannot, therefore, by no stretch of
imagination be held that the Parliament intended to apply the provisions of
Section 15 of the Customs Act in Section 9A of the Customs Tariff Act,
prior to 2004.
While dealing with a taxing provision, the principle of ’Strict
Interpretation’ should be applied. The Court shall not interpret the statutory
provision in such a manner which would create an additional fiscal burden
on a person. It would never be done by invoking the provisions of another
Act, which are not attracted. It is also trite that while two interpretations are
possible, the Court ordinarily would interpret the provisions in favour of a
tax-payer and against the Revenue.
The notification dated 22.5.2002, on its face value, is prospective in
operation and not retrospective. It, in no uncertain terms, states that Central
Government thereby may impose duty only, inter alia, on lead acid batteries
originated from the countries specified therein and imported into India. The
proviso appended to the notification provides for a clue in the sense that by
reason thereof no duty was to be imposed on industrial lead acid batteries
manufactured by the manufacturers named therein. The anti-dumping duty
imposed thereby was to remain effective only for a limited period, i.e., upto
21st November, 2002.
For the aforementioned reasons, the impugned judgment cannot be
sustained, which is accordingly set aside. The appeal is allowed. No costs.