TMI Blog1981 (5) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... ea Customs act, 1878 (hereinafter referred to as the Act ). 2. Under the Act, a ship was required, while calling at a port, to declare a list of all the stores on board the vessel: this was described as an import manifest of stores and was in a proforma containing full details of all the stores aboard the vessel (including, under the appropriate head, the quantity of diesel oil and furnace oil-bunkers-in tonnes) giving the quantity in stock on arrival and the quantity issued for consumption in port. The vessels of the petitioner-company filed the above stores lists with the Customs Authorities at Tuticorin port. According to the company (vide paragraph 4 of the petition) : On a bare perusal of the said store lists the Customs authorities could immediately learn that the said ships had called at Colombo, and that they had taken bunkers on board for their own use. When the ships called at Tuticorin and got clearance therefrom, the customs authorities did not demand any customs duty in respect of the bunkers on board. 3. Sometime on 1962, the Superintendent of Central Excise, Customs Circle, Tuticorin called for details from the petitioner regarding the exact quantities o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dates of demand/payment. 5. Aggrieved by the said orders, the petitioner-company filed appeals to the Appellate Collector of Customs, Madras after depositing the amount of duty demanded. The Appellate Collector, by orders dated 10th October, 1966, virtually rejected the appeals. He, however, granted relief to the petitioner by restricting the duty payable to the quantity of bunkers taken on board at Colombo. 6. The petitioner preferred revision applications to the Union of India (through the Secretary, Government of India, Ministry of Finance), the respondent to this writ petition. All the revision applications were disposed of by the Central Government by a consolidated order dated 16th June, 1972. The revisional authority also gave only partial relief to the petitioner. He accepted the petitioner s alternative contention that the amount of duty would be payable if at all, only at the rates prevailing on the dates of the importation and that too only on such part of the bunkers lifted at Colombo as remained on board at Tuticorin. 7. The petitioner contends that the order and decision of the respondent dated 16th June, 1972 is illegal, unauthorised, invalid and inoperati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with it a copy of the manifest filed by the various ships several years ago. It has been pointed out in the counter affidavit (paragraph 4) that the above statement is not correct. Learned Counsel for the respondent has also produced before us the original records and we have looked at the store lists filed in one of the cases. We find that the manifest only indicated the quantity of bunkers in store at the time when the ship called at Tuticorin port and did not contain any reference to bunkers taken by the ship on board at Colombo. While this was the position in the case of five of the ships, it appears that the list of stores filed by one of the ships and that filed by another ship on one of its calls at Tuticorin did not even contain the details of the fuel oil and board (vide paragraph 11 of the order in revision). But it is quite clear that the port authorities at Tuticorin were fully aware when the ships called at Tuticorin that earlier to coming to Tuticorin they had called at Colombo. Further, from the orders of the Superintendent, Central Excise, it is clear that when the ships called at Tuticorin the ship s masters had filed, through the local agents, declarations which g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from or to any foreign port and (c) goods brought from any foreign-port to any customs-port and without payment of duty, are transhipped for, or thence carried to, and imported at any other customs-port". Likewise Section 14 enables the same authority to declare by notification that any customs-port shall be a warehousing port for the purposes of the Act. Customs-port means any place declared under Section 11 to be a port for the shipment and landing of goods and foreign port means any place not within the territory of India - Sections 3(d) and 3(e). Section 11 enables the Chief Customs-authority, by Gazette notifications issued from time to time, to (a) declare the place which alone shall be ports for the shipment and landing of goods; (b) declare the limits of such ports; (c) appoint proper places therein to be wharves for the landing and shipping of goods ....; (d) declare the limits of any such wharf; (e) alter the name of any such port or wharf; and (f) declare what shall for the purposes of this Act, be deemed to be a custom house and the limits thereof. In short, the places to be called port, wharf and custom-house and the limits thereof will be declared by the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the removal of the goods from the customs house. Section 37 provides that the rates of duty applicable in any particular case, will be those in force on the date on which the bill of entry is delivered to the Collector. The Act then proceeds to provide in sections 39 and 40, remedies where the duty has been collected erroneously to the prejudice of the Revenue and the assessee respectively. These sections runs as follows : 39. When customs-duties or charges have not been levied or have been short-levied through inadvertence, error, collusion or misconstruction on the part of the officers of Customs, or through mis-statement as to real value, quantity or description on the part of the owner, or when any such duty or charge, after having been levied, has been, owing to any such cause, erroneously refunded, the person chargeable with the duty or charge which has not been levied or which has been so short-levied, or to whom such refund has erroneously been made, shall pay the duty or charge or the deficiency or repay the amount paid to him in excess, on a notice of demand being issued to him within three months from the relevant date as defined in sub-section (2); and the Cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, does not envisage any formal assessment order determining the duty payable. Where the value declared by the bill of entry is accepted, duty is paid on that basis and the goods cleared. Where the value is estimated, the owner should either pay the duty demanded and get the goods released or receive their value and surrender the goods. 12. The above provisions refer to the bill of entry to be filed on an importation of goods. To understand this, it is now necessary to deal with the relevant provisions of Chapters VII to XI which deal with the rules and regulations to be observed by ships arriving at a port, discharging of cargo for home consumption or warehousing and leaving the port. Chapter VII (Sections 55-66) deal with the arrival and departure of vessels. Section 53 enables the Chief Customs-authority, by notification, to fix a place in any river or port, beyond which no vessel arriving shall pass until a manifest has been delivered to the pilot officer of customs or other person duly authorized to receive the same. Such a manifest should also be delivered where no such place has been notified or where the ship does not cross the place so fixed, within 24 hours after it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of Section 63 are complied with and all port-dues and other charges and penalties due by such vessel, or by the owner or master thereof, and all duties payable in respect of any goods shipped therein, have been duly paid, or their payment secured by such guarantee, or by deposit at such rate, as such Customs-collector directs; (underlining ours*). The Customs-collector, on being satisfied that the provisions of Sections 63 and 64 have been complied with or after obtaining adequate security from the ship s agent, will grant a port clearance to the vessel and return to the master of the ship one copy of the manifest duly countersigned (Sections 65 and 66). 13. To sum up, these provisions of the Act require every incoming vessel to deliver a manifest of the goods on board. Thereafter the master of the vessel should also make an application for the entry of the vessel. A ship can break bulk only after obtaining an order for entry. A similar procedure is to be followed by delivering a manifest and application for clearance when the ship intends to leave the port. The ship cannot leave the port until clearance is granted and no clearance will be granted until all the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place of the cumbrous procedure of filing a bill of entry, obtaining an order for entry and then getting a port-clearance after paying all dues and duties, a simpler procedure involving a delivery of a manifest of goods on board by the master and its return by the Collector duly signed. This will tantamount to an order for clearance. There is, however, a power vested in the Customs-collector to refuse port clearance in certain cases. This section, however, does not materially affect the present case as Section 162 (b) lays down that if permission is granted by the Collector for the discharge of cargo from any coasting vessel and if the vessels either touched at any intermediate foreign port in the course of her voyage or has on board any dutiable goods, such vessel will be subject to all the provisions of Chapters VII and IX. It is sufficient here to notice only the two provisos to Section 159 which provide for the delivery of the manifest of goods on board to the Customs-Collector on the vessel s arrival at any port and before it discharges any goods thereat. These two provisos read as follows : If the vessel has touched at any foreign port between such port of arrival and her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for the writ petitioner have to be considered. 19. The first question for consideration is regarding the point at which import customs duty under Section 20 is attracted. The relevant clauses of Section 20 to be considered here are clauses (a) and (c) Clause (a) envisages a levy of duty on goods imported by sea into any customs-port from any foreign port . Clause (c) envisages a case where goods are brought to any customs-port and, without payment of duty thereon or being discharged there, are transhipped for or thence carried to and imported at another customs-port. In the present case, duty is demanded under Section 20(a). It is argued for the Revenue that an import takes place when the ships carrying any goods enter any port and that, since the petitioner s vessels were allowed entry within the limits of Tuticorin port, the oil taken on at Colombo and remaining on board the ship at the time of such entry should be deemed to have been imported" into Tuticorin from Colombo. Some support can also be found for this argument from the use of the words without payment of duty in clause (c) which, it is possible to urge, means that the mere act of bringing goods into the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... move quickly without too many formalities. However, when the vessel has touched a foreign port or carries dutiable goods, the Act enforces all the formalities of Chapters VII and IX in order to ensure that a bill of entry is presented by the owner and that duty is paid on goods discharged for home consumption or warehousing. Section 20(c), again, does not carry any implication to the contrary. Read with Section 128, it also reinforces the idea that no duty is to be paid at the port where the goods are unloaded but transhipped to another Indian port. It will also be appreciated that the duty is payable by the owner of the goods and neither he nor his agents will be there at a port unless the goods are intended to be cleared there. The question of a liability on the part of the ship owner has arisen only because in this case the ship has taken the oil on board for itself and not as carrier for somebody else. Such ship owner or master cannot be in a worse, position than other owners of goods and so cannot be mulcated with liability at all intermediate customs-ports merely because the ship has entered the limits of the port. All these considerations, in our view, lead to the irresistib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and act have resulted in the escapement of duty (assuming, again, that the first contention discussed earlier is answered in favour of the Revenue). But the question that falls for consideration is whether it is a case of an escapement without there having been an assessment at all initially or whether it is a case of an escapement caused because, on an initial or first assessment NIL duty was demanded due to an error. This distinction becomes material for it may have a bearing on the remedy, if any, available to the Department to set the matter right in case its view of the dutiability of the bunkers is correct. 24. Of the two aspects of the Department s conduct referred to above, the failure to get a bill of entry and make an assessment on basis thereof is only negative in character and cannot be equated to an assessment. It appears to us, however, that the second aspect viz., the grant of port-clearance to the vessels is a positive act and has as clear significance in that it involves a decision by the customs authority and to whether any duties are payable in respect of the goods shipped in the vessel. Before granting port-clearance to a vessel, the customs authorities have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 191 because the decision was in its favour. The department itself could also revise the decision under Section 190A but this Section does not help the Revenue in the present case for three reasons, viz., (i) that the action thereunder has to be taken within two years; (ii) that the section came into force only in 1955; and (iii) that it could be invoked only by an authority to whom the officer making the original decision or order is subordinate and not by the same officer. No power of review of his own order by the same authority can be presumed in the absence of a specific statutory provision and particularly so when the Act confers such a power in a superior authority. It is a realisation of this weakness, apparently that is responsible for the stand of the Revenue that there has been no determination, decision or assessment at all in this case so far and that it is open to them to assess or determine the duty at any point of time and raise a demand. This argument we have already dealt with. 26. We think Sri Rana is correct in his contention that the only statutory provision on which the Revenue can rely for initiating the present proceedings is Section 59 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty or charge has not been levied . Within three months from the date on which the customs officer makes an order for the clearance of the goods. We may add that this argument of the Revenue trying to rule out the applicability of Section 39 can be of help to the respondent only if its contention that no assessment has as yet taken place in this case is accepted. We have already given reasons why this contention cannot be accepted. The orders and demand, therefore, clearly fall within the scope of Section 39 and are, admittedly, barred by the limitation prescribed for action under that section. 27. We, therefore, hold that the bunkers in question were not assessable to import customs duty. Even if they were and duty was omitted to be charged before the ships left port due to an error, the respondent cannot revise, review or rectify the position after the lapse of so many years. 28. For the above reasons, we direct the issue of a writ of certiorari quashing the nine orders of the Superintendent, Central Excise dated 30th September, 1964, 1st July, 1965 and 24th January, 1966. The appellate and revisional orders dated 10th Oct., 1966 and 16th June, 1972 confirming in part the or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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