Full Judgment Text
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PETITIONER:
BHARAT SURFACTANTS (PVT) LTD & ANR.
Vs.
RESPONDENT:
UNION OF INDIA & ANR.
DATE OF JUDGMENT17/05/1989
BENCH:
PATHAK, R.S. (CJ)
BENCH:
PATHAK, R.S. (CJ)
RANGNATHAN, S.
MUKHARJI, SABYASACHI (J)
NATRAJAN, S. (J)
VENKATACHALLIAH, M.N. (J)
CITATION:
1989 AIR 2054 1989 SCR (3) 367
1989 SCC (4) 21 JT 1989 Supl. 239
1989 SCALE (2)190
CITATOR INFO :
RF 1991 SC 583 (29,37)
R 1991 SC1931 (4)
ACT:
Customs Act, 1962--Sections 15, 16, 46 and 56--Rate of
duty and Tariff valuation--Determination of--Date of presen-
tation of Bill of Entry---Relevance or--’Date of entry
inwards of vessel’--Date recorded in Customs register.
HEADNOTE:
By way of writ petition under Article 32 of the Consti-
tution the petitioners sought relief against the imposition
of customs duty at 150 per cent on their import of edible
oils into India. Pursuant to the contract entered into by
the petitioners with foreign sellers for the supply of
edible oils the consignment of edible oils was sent by the
ocean going vessel M.V. Kotta Ratu. The vessel approached
Bombay and made its "prior entry" on 4 July, 1981. It actu-
ally arrived and registered on 11 July, 1981. As the port
authorities at Bombay were unable to allot a berth to the
vessel, the vessel left for Karachi for unloading other
cargo intended for that port. The vessel returned on 23 July
1981 and waited for berth. On August 4, 1981 she was allowed
to berth in Princess Docks ’C’ shed and the Customs authori-
ties made the "final entry" on that date.
Customs authorities are stated to have imposed duty on
the import of edible oil at the rate of 150 per cent on the
footing that the import was made on 31 July, 1981, the date
of "Inward Entry". The case of the petitioners was that the
rate of duty leviable on the imports should be that ruling
on 11 July, 1981, when the vessel actually arrived and
registered in the Port Bombay and that but for the fact that
berth was not available the vessel would have discharged its
cargo at Bombay and would have been liable to pay customs
duty at the rate of 12.5% which was the ruling rate on that
date i.e., 11 July, 1981. The petitioners contended that the
rate should not have been more than 42.5% because that was
the rate of customs duty ruling on 23 July, 1981 when the
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vessel entered the port of Bombay.
The Court rejecting the claim of petitioners,
368
HELD: The rate of duty and tariff valuation has to be
determined in accordance with S. 15(1) of the Customs Act.
Under s. 15(1)(a), the rate and valuation is the rate and
valuation in force on the date on which the Bill of Entry is
presented u/s 46. According to the proviso, however, if the
Bill of Entry has been presented before the entry inwards of
the vessel by which the goods are imported, the Bill of
Entry shall be deemed to have been presented on the date of
such entry inwards. [373B-C]
The date on which a Bill Entry is presented under S. 46
is, in the case of goods entered for home consumption, the
date relevant for determining the rate of duty and tariff
valuation. Where the Bill of Entry is presented before the
date of Entry Inwards of the Vessel, the Bill of Entry is
deemed to have been presented on the date of such Entry
Inwards. [375B]
The amendment made in S. 16 of the Act appears to have
been made by way of clarification and does not detract from
the conclusion that "the date of entry inwards of the ves-
sel" is the date recorded as such in the Customs register.
[375F]
In the present case, "the date of inwards entry" is
mentioned as 31st July, 1981. In the absence of anything
else, it may be taken that the entry was recorded on that
date itself. Accordingly, the rate of import duty and the
tariff valuation shall be that in force on 31st July 1981.
The contention of the petitioners that the rate of import
duty and tariff valuation will be that ruling on July 11,
1981 cannot be sustained and is rejected. [375G]
(1)Shawney v. M/s. Sylvania & Laxman Ltd., 77 Bom. L.R.
380; (2) Apar Private Ltd. & Ors. v. Union of India & Ors.,
185 (1985) 22 E.L.T. 644; (3) Jain Shudh Vanaspati Ltd. v.
S.R. Patankar, Asstt. Collector of Customs, Bombay & Ors.,
[1988] 33 E.L.T. 77; (4) M/s. Omega Insulated Cable Co.,
(India) Ltd. v. The Collector of Customs, Madras, approved.
Writ Appeal No. 537 of 1969 decided by the Hon’ble Kailasam
and Paul, JJ. on 9 July, 1975, referred to.
JUDGMENT:
ORIGINAL JURISDICTION: Writ Petition No. 3130 of 1981.
(Under Article 32 of the Constitution of India).
Soli J. Sorabjee, Harish N. Salve, K.K. Patel, Ujwal
Rana, Rajiv Dutta and K.K. Mohan for the Petitioners.
369
K. Parasaran, Attorney General, B. Datta, Additional
Solicitor General, Kuldip Singh, Additional Solicitor Gener-
al, Ms. A. Subhashini, C.V. Subba Rao, Mrs. Sushma Suri, A.
Subba Rao, A.K. Srivastava and P.P. Singh for the Respond-
ents.
The Judgment of the Court was delivered by
PATHAK, CJ. By this writ petition under Art. 32 of the
Constitution the petitioners seek relief against the imposi-
tion of customs duty at 150 per cent on their import of
edible oils into India.
The petitioners entered into a contract with foreign
sellers for the supply of edible oils. The consignment of
edible oils was sent by the ocean going vessel M.V. Kotta
Ratu. The vessel approached Bombay and made its "prior
entry" on 4 July, 1981. It actually arrived and registered
in the Port of Bombay on 11 July, 1981. The petitioners say
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that the Port authorities at Bombay were unable to allot a
berth to the vessel, and as she was under heavy pressure
from the parties whose goods she was carrying she left
Bombay for Karachi for unloading other cargo intended for
that port. It is alleged that the vessel set out on its
return journey from Karachi and arrived in the Port of
Bombay on 23 July, 1981 and waited for a berth. On 4 August,
1981 she was allowed to berth in Princess Docks ’C’ Shed and
the Customs Authorities made the "final entry" on that date.
The petitioners point out that when the vessel made its
original journey to Bombay and was waiting in the waters of
the Port the petitioners presented the Bill of Entry to the
Customs authorities on 9 July, 1981, that the Bill of Entry
was accepted by the Import Department and an order was
passed by the Customs Officer on the Bill of Entry on 18
July, 1981 directing the examination of the consignment.
It is stated that the Customs authorities have imposed
customs duty on the import of the edible oils effected by
the petitioners at the rate of 150 per cent on the footing
that the import was made on 31 July, 1981, the date of
"Inward Entry". The case of the petitioners is that the rate
of duty leviable on the import should be that ruling on 11
July, 198 1, when the vessel actually arrived and registered
in the Port of Bombay, and that but for the fact that a
berth was not available the vessel would have discharged its
cargo at Bombay, and would not have left that Port and
proceeded to Karachi to return to Bombay towards the end of
July, 1981. Alternatively, the case of the petitioners is
that if it be found that the rate of customs duty attracted
by the import effected by the petitioners is 150 per cent
the levy is unconstitutional
370
and void as a violation of Art. 14 of the Constitution
inasmuch as customs duty at 5 per cent only was levied on
the State Trading Corporation on similar Imports of edible
oils made by it as an importer. The petitioners have also
challenged the validity of s. 15 of the Customs Act, 1961
under which the rate of duty and tariff valuation is deter-
mined.
To resolve the issue between the parties it is necessary
to ascertain the effective date with reference to which
customs duty becomes payable on imports into India. Section
15(1) of the Customs Act, 1962 provides:
"(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:
Provided that if a bill of entry has
been presented before the date of entry in-
wards of the vessel by which the goods are
imported, the bill of entry shall be deemed to
have been presented on the date of such entry
inwards."
The rate of duty and tariff valuation applicable to the
imported goods is governed by cl. (a) of s. 15(1). In the
case of goods entered for home consumption under s. 46, it
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is the date on which the Bill of Entry in respect of such
goods is presented under that section. S. 46 provides that
the importer of any goods shall make entry thereof by pre-
senting to the proper officer a Bill of Entry for home
consumption in the prescribed form, and it is further pro-
vided that a Bill of Entry may be presented at any time
after delivery of the Import Manifest or an Import report.
The Bill of Entry may be presented even before the delivery
of such Manifest if the vessel by which the goods have been
371
shipped for importation into India is expected to arrive
within a week from the date of such presentation. Section 47
empowers the proper officer, on being satisfied that the
goods entered for home consumption are not prohibited goods
and that the importers had paid the import duty assessed
thereon as well as charges in respect of the same, to make
an order permitting clearance of the goods for home consump-
tion.
According to the petitioners, the cargo of edible oil
could not be unloaded in Bombay during the original entry of
the ship into the Port for want of an available berth, and
it is for no fault of the petitioners that the vessel had to
proceed to Karachi for unloading other cargo. Section 15,
the petitioners contend, is arbitrary and vague and there-
fore unconstitutional because it provides no definite stand-
ard or norm for determining the rate of duty and tariff
valuation and does not take into account situation which are
uncertain and beyond the control of an importer. The peti-
tioners contend that the rate of customs duty chargeable on
the import of goods in India is the rate in force on the
date when the vessel carrying the goods enters the territo-
rial waters of India. The petitioners point out that s.
12(1) declares that customs .duty will be levied at the
rates in force on goods imported into India, and the expres-
sion ’India’, they urge, is defined by s. 2(27) as including
the ’territorial waters of India’. In other words, the
petitioners contend that when the vessel entered the terri-
torial waters on 11 July, 1981 the rate of customs duty at
12.5 per cent ruling on that date was the rate which was
attracted to the import. In any event, the petitioners
contend, the rate should not have been more than 42.5 per
cent because that was the rate of customs duty ruling on 23
July, 1981 when the vessel entered the port of Bombay. To
preserve the validity of s. 15 the petitioners urge, we must
read the expression "the date of entry inwards" in the
proviso to s. 15(1) as the date on which the vessel enters
the territorial waters of India. Learned counsel for the
petitioners says that if this interpretation cannot reasona-
bly be given to the provisions of s. 15(1) then it becomes
necessary to question the constitutional validity of s. 15
on the ground that the terms of that section are vague and
arbitrary, and therefore no recourse can be had to s. 15(1).
Considerable reliance has been placed by the peti-
tioner on Shawney v. M/s. Sylvania and Laxman Ltd., 77 Bom.
L.R. 380 in support of the submission that-the taxable event
occurs when the vessel enters the territorial waters of
India and it is that date which should determine the rate at
which import duty can be levied. It is desirable,
372
we think, to appreciate what was said in that case. The
Bombay High Court held there that the date on which the
vessel enters the territorial waters is the relevant date
for determining whether the import of goods carried by it
falls within the scope of the Customs Act. If the import of
the goods is exempt from the operation of the Act on that
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date, the learned Judges said, the provisions of s. 15 of
the Act will not come into play, and therefore the import
will be free from duty. A distinction was made between a
case where the import of goods stands exempted on the date
when the vessel enters the territorial waters of India and a
case where the import falls within the operation of the Act
on that date but the duty is rated at nil or at a certain
figure. The distinction was discussed by a Full Bench of the
Bombay High Court in Apar Private Ltd. and Others v. Union
of India and others, [1985] 22 E.L.T. 644 where Madhava
Reddy, C.J., speaking for the Court, observed:
"If the goods were wholly exempt from basic
customs duty leviable under the Customs Act,
when they entered the territorial waters of
India, no basic duty of customs would be
leviable thereon even if such exemption were
withdrawn under Section 25(1) of the Customs
Act before the goods are releasedfor home
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..Only
if the
goods were chargeable to some basic customs
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duty under the Customs Act, when they entered
the territorial waters of India, than the
rates in force at the time when the bill of
entry is presented or at the time when the
goods are sought to be cleared for home con-
sumption, as the case may be, would be ap-
plicable and the basic duty would be quanti-
fied and demanded at those rates."
And in Jain Shudh Vanaspati Limited v. S.R. Patankar,
Asstt. Collector of Customs, Bombay and Others, [1988] 33
E.L.T. 77 the Bombay High Court proceeded on the basis that
where the imported goods were totally exempt from payment of
customs duty on the date when the vessel entered the terri-
torial waters of India, the taxable event was not postponed
to the date when the goods were cleared for human consump-
tion.
In the present case. there is no dispute that on the
date when the vessel first entered the territorial waters of
India by July, 198 1 the rate of customs duty was 12.5% on
the import of the goods in question and thereafter when the
vessel returned from Karachi and entered the
373
territorial waters of India the rate of duty was 42.5%.
We express no opinion on the soundness of the view taken
by the Bombay High Court in the cases mentioned above; it is
sufficient to point out that on the facts they afford no
assistance to the petitioners.
The rate of duty and tariff valuation has to be deter-
mined in accordance with s. 15(1) of the Customs Act. Under
s. 15(1)(a), the rate and valuation is the rate and valua-
tion in force on the date on which the Bill of Entry is
presented under s. 46. According to the proviso, however, if
the Bill of Entry has been presented before the entry in-
wards of the vessel by which the goods are imported, the
Bill of Entry shall be deemed to have been presented on the
date of such entry inwards. In the present case the Bill of
Entry was presented on 9 July, 1981. What is "the date of
entry inwards" of the vessel? We may refer to the detailed
procedure in this matter set forth in the counteraffidavit
of Shri R.S. Siddhu, then under Secretary to the Government
of India.
Before the arrival of the vessel the Master of the
vessel or his Agent informs the Port authorities and the
Customs authorities of the probable date of arrival of the
vessel. This information is technically known as presenta-
tion of the Import General Manifest. In this Manifest the
Master intimates the details with regard to the cargo car-
ried by the vessel. In the instant case the Manifest was
conveyed by the Steamer Agent on 6 July, 1981 by his letter
No. IM/394/81/1116. Admittedly this intimation or presenta-
tion of the Manifest on 6 July, 1981 was prior to the arriv-
al of the vessel. The presentation of the Manifest can be
effected either before the arrival of the vessel or after
its arrival in the usual course. In the forwarding letter
dated 6 July, 1981 mentioned above, the Shipping Agent
informed the authorities that the ship would be arriving at
Bombay 12 July, 1981. According to the normal procedure, if
the intimation or presentation of the Manifest is made on
the arrival of the vessel it is accompanied by an applica-
tion for Entry Inward within 24 hours of arrival. In the
instant case since the vessel was to arrive later there was
no application accompanying the letter dated 6 July, 1981.
The vessel arrived on 11 July, 1981. On receipt of the
Manifest a "prior entry" is made in the Register, which is
called the Register of Inward/Outward Entry of vessels. Upon
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the recording of the "prior entry" a rotation number is
given and conveyed to the Shipping Agent or the Master of
the vessel. In the instant case the "prior entry" or rota-
tion number allotted was 743/PE. The Customs authorities
display daily, on receipt of the Import General
374
Manifests, the details of the vessels on a notice board for
the information of importers. On noticing the arrival or
expected arrival of the vessel from the Import General
Manifest the importer or his clearing agent files his Bill
of Entry. In this case the Bill of Entry was filed on 9
July, 1981. An entry with regard to presentation of the Bill
of Entry is made in the Import General Manifest against the
entry with regard to the consignment belonging to the im-
porter.
The procedure thereafter is as follows.
A vessel on arrival in the territorial waters has to
await the allotment of a berth by the Port Trust. The Port
Trust authorities, on receipt of information about the
arrival of a ship, allot a berth, if it is available, for
the discharge of the cargo. In the instant case, since no
berth was available, the vessel left for Karachi to dis-
charge the cargo meant for that Port. The vessel arrived at
Bombay on 23 July, 1981. Before its arrival, the Steamer
Agent had presented a supplementary Manifest on 18 July,
1981 under cover of his letter No. IM/394/81/ 1223. The
"prior entry" made earlier in the Register of Inward Entry
remained the same and the rotation number also continued to
remain the same. Against the rotation No. 743 in column No.
3 of the Register of Inward Entry the date of the arrival of
the vessel was indicated as 23 July, 1981, and in column No.
2 the date of Inward Entry was mentioned as 31 July, 1981.
On 30 July, 1981 the Master of the vessel had made a decla-
ration certifying that the vessel could discharge its cargo
on 31 July, 1981, and it is on this basis that the Customs
authorities granted the Entry Inward to the vessel for the
purposes of discharging its cargo.
It is urged on behalf of the petitioners that the import
of the goods must be deemed to have taken place on ’11 July,
1981, when the ship originally arrived in Bombay Port and
registered itself. The rate of customs duty prevailing on
that date was 12.5 per cent, and that, learned counsel
contends, should be the rate applicable to the edible oil
consignment under s. 15 of the Act. The circumstance that
the vessel was unable to secure a berth in the Port of
Bombay compelled it to proceed to Karachi to discharge the
cargo pertaining to that Port, and but for the non-avail-
ability of the berth she would not have undertaken that
voyage but would have continued in Bombay and discharged the
edible oil consignment there. The customs duty which could
have been levied then would have been 12.5 per cent. It is
pointed out that the vessel was unable to do so for no fault
of the petitioners and a reasonable construction must be
given to s. 15 taking
375
into account the particular circumstances of the case, so
that the vessel must be deemed to have made the "Entry
Inwards" on 11 July, 1981. We do not find it possible to
accept this submission. The provisions of s. 15 are clear in
themselves. The date on which a Bill of Entry is presented
under s. 46 is, in the case of goods entered for home con-
sumption, the date relevant for determining the rate of duty
and tariff valuation. Where the Bill of Entry is presented
before the date of Entry Inwards of the vessel, the Bill of
Entry is deemed to have been presented on the date of such
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Entry Inwards.
In M/s. Omega Insulated Cable Co., (India) Limited v.
The Collector of Customs, Madras, Writ Appeal No. 537 of
1969 decided by the Hon’ble Kailasam and Paul, JJ. on 9
July, 1975 the Madras High Court addressed itself to the
question whether the words in s. 15(1)(a) of the Act, viz.
"date of entry inwards of the vessel by which the goods are
imported" mean "the actual entry of the vessel inwards or
the date of entry in the register kept by the department
permitting the entry inwards of the vessel." The learned
Judges examined the corresponding provisions of the earlier
statute and after comparing the provisions of s. 15 with
those of s. 16 of the Customs Act, 1962, and the amendments
made from time to time, held that the date of entry inward
for the purpose of s. 15(1)(a) and the proviso thereto is
the date when the entry is made in the Customs register.
We have considered the matter carefully and given due
heed to the submissions of learned counsel for the petition-
ers rounded, inter alia, on the provisions of the Sea Cus-
toms Act and the amendment made in s. 16 of the Customs Act
and we are of opinion that the view taken by the Madras High
Court in M/s. Omega Insulated Cable Co. Ltd., (supra) repre-
sents the correct view. The amendment made in s. 16 of the
Act appears to have been made by way of clarification and,
in our opinion, does not detract from the conclusion that
"the date of entry inwards of the vessel" is the date re-
corded as such in the Customs register. In the present case,
"the date of inwards entry" is mentioned as 31 July, 1981.1n
the absence of anything else, we may take it that the entry
was recorded on the date itself. Accordingly, the rate of
import duty and the tariff valuation shall be that in force
on 31 July, 1981. The contention of the petitioners that the
rate of import duty and tariff valuation will be that ruling
on 11 July, 1981 cannot be sustained and is rejected.
As to the question whether s. 15 of the Customs Act is
ultra vires on the ground that arbitrary discretion has been
conferred on the
376
customs authorities in the matter of determining the date of
inward entry, it seems to us that having regard to the
procedure detailed above there is no scope for the submis-
sion that the provision is invalid. An entire series of
consecutive acts makes up the procedure, and it is reasona-
ble to presume that each step in the series is completed on
time. In that view of the matter, the challenge to the
validity of s. 15 must fail. It is true that an amendment
has been made in s. 16 in the case of the export of goods,
and the rate of duty and tariff valuation applicable to
export goods are now specifically referable to "the date on
which the proper officer makes an order permitting clearance
and loading of the goods for exportation", and it is appar-
ent that no such amendment has been made in the provisions
of s. 15. The omission, it seems to us, is of no consequence
when the procedure outlined above is being followed regular-
ly and consistently. There is nothing before us to show that
in following the procedure the Customs authorities act
arbitrarily.
Accordingly, we are of opinion that the claim made by
the petitioners must be rejected.
Finally, there remains the contention of the petitioners
that the differential treatment meted out to the petitioners
by the imposition of a rate of 150 per cent constitutes a
violation of Article 14 of the Constitution on the ground
that the rate applied to corresponding imports by the State
Trading Corporation is 5 per cent only. This point has
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already been considered by us, and the contention has been
rejected, in our judgment in M. Jhangir Bhatusha etc. v.
Union of India & Ors. etc., [1989] 3 SCR 356 pronounced
today.
The Writ Petition is dismissed with costs.
R.N.J. Petition
dismissed.
377