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TMI Blog2015 (9) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... etition (Civil) Nos. 1906-1943 of 2009. 2. In this batch of appeals an interesting question arises on the import of crude oil by the appellants. We will take the facts contained in Civil Appeal No. 2753 of 2006 for the purpose of deciding these matters. 3. In the said Civil Appeal, during the period 13.01.1996 to 15.03.1998, crude oil was imported by the appellant by way 144 voyages of vessels, and 71 consignments out of the said 144 voyages were said to have escaped payment of full customs duty. As a result the total duty thus short paid for the 71 consignments out of the 144 voyages worked out to Rs. 6,59,49,685 /- (Basic Duty Rs. 6,16,88,210 /- and Special Customs Duty Rs. 42,61,475 /-) on the total differential assessable value of Rs. 23,71,30,242 /- for the period from 13.1.96 to 15.3.98. These figures were arrived at as revenue in its show cause notice dated 7 th January, 2000 stated that the quantity of crude oil mentioned in the various bills of lading should be the basis for payment of duty, and not the quantity actually received into the shore tanks in India. This was stated on the basis that since duty was now levied on an ad valorem basis and not on a specific rate, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... changed and since a circular dated 12th January, 2006 by the Government of India, Finance Department made it clear that import duty should be based only on the invoice price which is the price paid or payable for imported goods irrespective of the quantity ascertained through shore tank measurement, it is this price alone that should be taken into account for valuation purposes. Further, according to her, "transaction value" would necessarily mean the price that is payable for goods when sold for export to India and that therefore such price would only be referable to the quantity of goods mentioned in the bill of lading. 8. Having heard learned counsel for the parties it is important to first set out the relevant provisions contained in the Customs Act as under:- "Section 2. Definitions (22) "goods" includes - (a) vessels, aircrafts and vehicles; (b) stores; (c) baggage; (d) currency and negotiable instruments; and (e) any other kind of movable property; 2(23) "import", with its grammatical variations and cognate expressions, means bringing into India from a place outside India; 2(25) "imported goods" means any goods brought into India from a place outside India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xceeding thirty-six per cent per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette on such duty till the date of payment of said duty: Provided that the Central Government may, by notification in the Official Gazette, specify the class or classes of importers who shall pay such duty electronically: Provided further that where the bill of entry is returned for payment of duty before the commencement of the Customs (Amendment) Act, 1991 and the importer has not paid such duty before such commencement, the date of return of such bill of entry to him shall be deemed to be the date of such commencement for the purpose of this section: Provided also that if the Board is satisfied that it is necessary in the public interest so to do, it may, by order for reasons to be recorded, waive the whole or part of any interest payable under this section." 9. Rules 2(1)(f) and 4(1) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 read as follows:- "2. Definitions - (1) In these rules, unless the context otherwise requires: (f) "transaction value" means the value determined in accordance with Rule 4 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, it is the quantity of goods brought into India alone that attracts the levy of import duty. 12. The Customs Valuation Rules which defines "transaction value" also speaks of the price that is actually paid or payable only for "imported goods". Unless goods are imported, that is, "brought into India" no such price is actually paid or payable. Further, under Rule 4 of the Customs Valuation Rules, such transaction value must be adjusted in accordance with the provisions of Rule 9. Rule 9(2), the import of which has been missed by the Tribunal in the impugned judgment, states as follows:- "Rule 9(2) For the purposes of sub-section (1) and sub-section (1A) of Section 14 of the Customs Act, 1962 (52 of 1962) and these rules, the value of the imported goods shall be the value of such goods, for delivery at the time and place of importation and shall include - (a) The cost of transport of the imported goods to the place of importation; (b) loading, unloading and handling charges associated with the delivery of the imported goods at the place of importation; and (c) the cost of insurance: Provided that - (i) where the cost of transport referred to in clause (a) is not ascer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntity of goods in the latter case being only on the basis of the quantity of crude oil received in the shore tank. The third reason that it gives is that Section 14 kicks in when the duty is on an ad valorem basis and Sections 13 and 23 do not stand in the way because it is not the question of demanding duty on goods not received, but it is the demand of duty on the transaction value. In spite of the "ocean loss", the appellant has to make payment on the basis of the Bill of Lading quantity. 15. We are afraid that each one of the reasons given by the Tribunal is incorrect in law. The Tribunal has lost sight of the following first principles when it arrived at the aforesaid conclusion. First, it has lost sight of the fact that a levy in the context of import duty can only be on imported goods, that is, on goods brought into India from a place outside of India. Till that is done, there is no charge to tax. This Court in Garden Silk Mills Ltd. v. Union of India, 1999 (8) SCC 744, stated that this takes place, as follows:- "It was further submitted that in the case of Apar (P) Ltd. [(1999) 6 SCC 117 : JT (1999) 5 SC 161] this Court was concerned with Sections 14 and 15 but here we h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich again is lost sight of by the Tribunal. And last but not the least, "transaction value" which occurs in the Customs Valuation Rules has to be read under Rules 4 and 9 as reflecting the aforesaid statutory position, namely, that valuation of imported goods is only at the time and place of importation. 17. The Tribunal's reasoning that somehow when customs duty is ad valorem the basis for arriving at the quantity of goods imported changes, is wholly unsustainable. Whether customs duty is at a specific rate or is ad valorem makes not the least difference to the above statutory scheme. Customs duty whether at a specific rate or ad valorem is not leviable on goods that are pilferred, lost or destroyed until a bill of entry for home consumption is made or an order to warehouse the goods is made. This, as has been stated above, is for the reason that the import is not complete until what has been stated above has happened. The circular dated 12th January, 2006 on which strong reliance is placed by the revenue is contrary to law. When the Tribunal has held that a demand or duty on transaction value would be leviable in spite of "ocean loss", it flies in the face of Section 23 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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