Full Judgment Text
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CASE NO.:
Appeal (civil) 4426 of 2006
PETITIONER:
M/s. M.S. Shoes East Ltd
RESPONDENT:
The Commissioner of Customs, ICD, New Delhi
DATE OF JUDGMENT: 04/04/2007
BENCH:
S. B. Sinha & Markandey Katju
JUDGMENT:
J U D G M E N T
MARKANDEY KATJU, J.
This appeal has been directed against the judgment and order No.
158/06-Cus dated 24.5.2006 in Appeal No. Cus/895/2004 of the Customs,
Excise and Service Tax Appellate Tribunal, New Delhi.
The dispute in this case is about the assessable value of a 1993 model
Rolls Royce car imported by the appellant in 1996. The Bill of Entry of the
car was filed at the customs barrier by the appellant on 31.8.1996. The
dispute is about the question whether depreciation should be allowed on the
car for the purpose of valuation for the post import period.
Under Section 14 of the Customs Act, 1962 (hereinafter referred to as
’the Act’), the valuation of the car must be based on the price at the time of
the import of the goods. Section 15 of the Act makes it clear that the rate of
duty and tariff valuation has to be determined on the date on which the Bill
of Entry in respect of such goods is presented under Section 46 of the Act
vide M/s. Shah Devchand & Co. and another vs. Union of India and
another \026 AIR 1991 SC 1931. Hence, in our opinion, the Tribunal was
right in holding that post import depreciation cannot be taken into account,
despite the fact that while the Bill of Entry of the car was presented in 1996,
the clearance was given on 28.3.2005.
The submission of the appellant that there was delay of nine years in
releasing the car from the date of import has in our opinion no relevance at
all as the value has to be determined under Section 14 of the Customs Act
for delivery at the time and place of importation, which date is 31.8.1996.
Hence in our opinion, the Tribunal was right in coming to the conclusion
that the transaction value had to be declared by the appellant as on
31.8.1996, and the lapse of time before assessment by the authorities and
after the Bill of Entry was filed is irrelevant.
In Bharat Surfactants Pvt. Ltd. and another vs. Union of India
and others \026 1989(3) SCR 367, a Constitution Bench of this Court held that
the rate of duty and tariff valuation applicable to the imported goods is
governed by Clause (a) of Section 15(1) of Customs Act. In the case of
goods entered for home consumption under Section 46 of the Customs Act,
it is the date on which the Bill of Entry in respect of the goods is presented
under that Section which is relevant.
In this connection the following provisions of the Customs Act are
relevant :-
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"2. Definitions :
(4) ‘bill of entry’ means a bill of entry referred to in
Section 46;
(23) ‘import’ with its grammatical variations and
cognate expressions, means bringing into India from a
place outside India;
(26) ‘importer’ in relation to any goods at any time
between their importation and the time when they are
cleared for home consumption, includes any owner or
any person holding himself out to be the importer;
(40) ‘tariff value’ in relation to any goods, means the
tariff value fixed in respect thereof under sub-section (2)
of Section 14;
(41) ‘value’ in relation to any goods, means the value
thereof determined in accordance with the provisions of
sub-section (1) of Section 14.
14. Valuation of goods for purposes of assessment :
(1) For the purposes of the Customs Tariff Act, 1975 (51
of 1975), or any other law for the time being in force
whereunder a duty of customs is chargeable on any goods
by reference to their value, the value of such goods shall
be deemed to be the price at which such or like goods are
ordinarily sold, or offered for sale, for delivery at the
time and place of importation or exportation, as the case
may be, in the course of international trade, where -
(a) the seller and the buyer have no interest in the
business of each other; or
(b) one of them has no interest in the business of the
other, and the price is the sole consideration for the
sale or offer for sale.
Provided that such price shall be calculated with
reference to the rate of exchange as in force on the date
on which a bill of entry is presented under Section 46, or
a shipping bill or bill of export, as the case may be, is
presented under Section 50.
(1A) 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.
(2) Notwithstanding anything contained in sub-section
(1) of sub-section (1A), if the Board is satisfied that it is
necessary or expedient so to do it may, by notification in
the Official Gazette, fix tariff values for any class of
imported goods or exported goods, having regard to the
trend of value of such or like goods, and where any such
tariff values are fixed, the duty shall be chargeable with
reference to such tariff value.
(3) For the purposes of this Section -
(a) ‘rate of exchange’ means the rate of exchange -
(i) determined by the Board, or
(ii) ascertained in such manner as the Board
may direct,
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for the conversion of Indian currency into foreign
currency into Indian currency;
(b) ‘foreign currency’ and ‘Indian currency’ have
the meanings respectively assigned to them in
clause (m) and clause (q) of Section 2 of the
Foreign Exchange Management Act, 1999 (42 of
1999).
15. Date of 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 a bill of entry for home consumption
in respect of such goods is presented under
that Section;
(c) in the case of any other goods, on the date of
payment of duty;
Provided that if a bill of Entry has been presented
before the date of entry inwards of the vessel or the
arrival of the aircraft by which the goods are
imported, the Bill of entry shall be deemed to have
been presented on the date of such entry inwards
or the arrival, as the case may be."
A perusal of the above provisions as interpreted by this Court in M/s.
Shah Devchand & Co. and another vs. Union of India and another
(Supra) shows that valuation has to be done at the time of importation of the
goods, which is the date of presentation of the bill of entry by the importer.
In Commissioner of Customs, Kolkata vs. J.K. Corporation \026
2007(2) SCALE 459 this Court held as under :
"The basic principle of levy of customs duty, in
view of the afore-mentioned provisions, is that the value
of the imported goods has to be determined at the time
and place of importation. The value to be determined for
the imported goods would be the payment required to be
made as a condition of sale. Assessment of customs duty
must have a direct nexus with the value of goods which
was payable at the time of importation. If any amount is
to be paid after the importation of the goods is complete,
inter alia by way of transfer of licence or technical know-
how for the purpose of setting up of a plant from the
machinery imported or running thereof, the same would
not be computed for the said purpose. Any amount paid
for post-importation service or activity, would not,
therefore, come within the purview of determination of
assessable value of the imported goods so as to enable
the authorities to levy customs duty or otherwise. The
Rules have been framed for the purpose of carrying out
the provisions of the Act. The wordings of Sections 14
and 14(1A) are clear and explicit. The Rules and the Act,
therefore, must be construed, having regard to the basic
principles of interpretation in mind."
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We thus see no reason to interfere with the impugned judgment and
order of the Tribunal. The appeal fails and is hereby dismissed accordingly.
No costs. However, we leave it open to the appellant to file a suit for
damages or seek other remedies against the respondents for the delay in
giving the clearance for the car.