TMI Blog1982 (3) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... larger significance and impact from the following stand point has come to be questioned. Insignificant in the sense that only 3/4% of C.I.F. value (by way of landing charges) is included in assessable value of a consignment imported into India for computing the customs duty payable thereon, significant in the sense that if the challenge succeeds, hundreds of thousands of importers who have imported goods in the past worth billions of rupees can come forward to claim refund and flood the courts with petitions or suits for refund on the ground that payment was made under a mistake of law discovered for the first time in 1980 and the levy being invalid limitation commenced to run in 1980. 2. Be that as it may the problem is this, does an 'export' or 'import' of goods take place when the vessel transporting the goods (1) leaves or enters the territorial waters of India or (2) when the goods are loaded from or unloaded on the landmass of India ? If first alternative provides the true answer, the petitioners might succeed. If the second alternative provides the true answer, they might not. The setting in which the problem arises will become clear in a short while. 3. The importers of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid factor or component of the assessable value ranges from Rs. 5.08 to Rs. 1124.10. In other words, on one occasion of importation Rs. 5.08 have been paid in connection with the landing charge component to which exception is being taken now whereas on another occasion Rs. 1124.10 have been paid. On the rest of the occasions the amount paid varies between these two figures (the particulars are specified in annexure 'A' to the petition). By and large a few hundreds of rupees have been paid in connection with each consignment during these three years on 231 occasions. This payment according to the petitioners was made under a mistake of law that the amount was so includible. It may be stated that all over India all importers of goods have been making computation on this basis without protest or demur. It appears that M/s Kirloskar Oil Engines Ltd., for the first time raised such a contention in 1980 in connection with the importation of certain goods. The Collector of Customs did not uphold the plea of the petitioner Company. An appeal was preferred to the Appellate Collector of Customs at Bombay, which came to be decided on November 27, 1980 who allowed the appeal and upheld the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be highlighted so that the problem can be understood in the proper perspective and its proportions can be fully realised. If the contention of the petitioners is right, all those who have been paying customs duty on the landing charge component included in the assessable value would be entitled to refund of the amount paid so far in that context. Tens of thousands of importers who must have imported goods worth hundreds of crores of rupees in the last several years would be entitled to refund because payments under a mistake of law can be reclaimed irrespective of the length of time for the mistake could be said to have been discovered only in 1980. The recoveries can, therefore, go back to 1878 or atleast till 1950 when the Constitution of India came into force. All the importers can then come forward and contend that payments were made under a mistake of law which they discovered when the Appellate Collector of Customs gave legal shape to his pet theory by upholding the plea of M/s. Kirloskar Oil Engines Ltd. when he got an opportunity to do so in exercise of his official duties to decide the matter in the course of an appeal on November 27, 1980. The total amount involved ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he consumer, the original and real sufferer, will again have to suffer as the burden will have to be again borne by him. He will have to pay the price for his pocket having been picked in the past instead of being compensated for it. Thus insult will be added to injury. While, therefore, the Court will not be deterred from upholding the plea if this was the only interpretation which was possible, it will not be in too great a hurry to do so without examining the matter closely, carefully and in depth. In such circumstances, upholding such a plea is not the first thing that the Court will do. The Court will do so only provided it appears that the other view is not equally possible. More so since the Court in exercising its high prerogative-jurisdiction under Article 226 of the Constitution of India will not exercise it in such a manner that everything settled becomes unsettled and hundreds of crores of rupees are required to be refunded at the cost of the much exploited consumer or the majority of the populace who bear more than 75% of the tax-burden by way of indirect taxes and only in order to benefit those importers who have marketed their goods on the footing that the duty was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was of the order of Rs. 5.08 and the maximum that was paid during the last year was of the order of Rs. 1000. 9. The question will have to be examined in the light of the relevant provisions which spell out the manner in which the customs duty is required to be computed. Section 12 of the Customs Act of 1962 provides that duties of customs shall be levied at such rates as may be specified under the Indian Tariff Act of 1934 or any other law being in force for the time being unless it is provided otherwise, we are not concerned with the rates at which the customs duties are required to be levied. Our immediate concern is with regard to the mode of computation of assessable value for the purposes of working out the impost as per the prescribed rates. The provision which is relevant from this stand point is section 14(1) which reads as under :- '14. Valuation of goods for purposes of assessment.- (1) For the purposes of the Indian Tariff Act 1934 (32 of 1934) or any other law for the time being in force whereunder and duty of customs is chargeable on any goods by reference, to their value, the value of such goods shall be deemed to be— (a) the price at which such or like goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance, if the goods are landed at Bombay on 1st January, 1980, the valuation has to be made on the basis of the price at which such goods are ordinarily sold or offered for sale at Bombay Port on 1st January, 1980. But the petitioner contends that having regard to the provisions of the Customs Act of 1962 the place of importation would have a different connotation. It is contended that importation in India means importation in Indian territorial waters. Therefore, the taxable event, such is the submission, occurs at the point of time when the goods enter the Indian territorial waters and the price of the goods has to be determined in the context of the said circumstance. Councel for the petitioner concedes that since importation occurs when the goods are introduced into 'India', which expression has been defined in section 2(27) as including the territorial waters of India, and since that is the time and place when the taxable event occurs, valuation must be made on that basis. It would mean that the goods would have to be valued at the point of time when the vessels enter the "Indian customs waters" as defined in section 2(28) of the Customs Act of 1962. So also the valuation is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expression 'goods exported from India' to mean goods exported from the landmass of India on the one hand and to interpret the expression following on its heels the goods imported into India' to mean goods imported into territorial waters of India and not the landmass of India would introduce an anachronism and so incongruity. Section 12 must, therefore, be read in a consistent manner so that the same meaning can be assigned to the expression 'India' when it is used in the context of exportation of goods from India as also when it is used in the next breath in the context of importation of goods into India. We have, therefore, no hesitation in holding that section 12 refers to exportation from, or importation into, of goods with reference to the landmass of India and not with reference to the territorial waters of India. Once we reach this conclusion the main plank of the submission urged on behalf of the petitioners must collapse. In paragraph 6 of the petition (Special Civil Application No. 1640/81) the argument has been structured in the following manner : "The petitioner says that the duty which is imposed under the Customs Act is a tax charged on the entry of the goods into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e genuine price between a commercial seller and a commercial buyer unrelated to each other. Such being the position, proposition Nos. (2) (3) must be called into aid for the purpose of determination of assessable value of the goods. And the goods will have to be valued at the point of time of being unloaded on the landmass of India and at the place where they are unloaded. Since the landing charges have to be paid to the Port authorities as soon as the goods are landed, and the sale can take place only after they are landed, the price at which the goods are sold or offered for sale would of necessity include the landing, charges payable before the transaction of same is effected. An argument as regards the post-importation charges was advanced in the Privy Council in Ford Motor Company of India Ltd. v. Secretary of State, A.I.R.] 938 Privy Council 15 = 1978 ELT J 265. The Privy Council has expressed the opinion : "That the Legislature intended to exclude post-importation expenses need not be doubted but it had to do this in a practicable manner without undue refinement, and it must be taken to have regarded the phrase which it employed as sufficient for the purpose if taken in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, Wardha, A.l.R. 1958 Supreme Court 341 (pare 19)]. No doubt the proposition is adverted to in the context of sanction of continued decisions over a long period. So also no doubt the Supreme Court came to the conclusion that the said principle was not attracted in the case before the Court because the interpretation in question had not been acquisced in for a long time. All the same this principle can be extended to a situation like the present one as well where sanctity must be accorded to an interpretation which has found acceptance by all concerned over such a long time without making any one unhappy (let alone considerations regarding desirability for pragmatism and undesirability for undue refinement and other weighty factors outlined earlier). We have therefore, no hesitation in repelling the contention urged on behalf of the petitioners in this behalf. 12. If the argument of the Counsel for the petitioners were right, customs duty would be payable even if the ship were to stray in the territorial waters of India for it would amount to importation of goods into India. So also customs duty would be payable even when the ship which enters the territorial waters changes its c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stice at p. 447 observed : "Sale is the object of importation, and is an essential ingredient of that intercourse, of which importation constitutes a part. It is as essential an ingredient, as indispensable to the existence of the entire thing, than, as importation itself…… This supports the contention raised that import is not merely the bringing into but comprises something more i.e., incorporating and mixing up of the goods imported with the mass of the property in the local areas. The concept of import as implying something brought for the purpose of sale or being kept is supported by the observations of Kalley C.B. in Harvey v. Corporation of Lyme toll was made under the Harbour Act and the words for construction were "goods landed or shipped within the same cobb or harbour." Construing these words Kally C.F. said: "The ordinary meaning and purport of the words is perfectly clear, namely, that tolls are to be paid on goods substantially imported, that is, in fact, carried into the port for the purpose of the town and neighbourhood. (underlined added) This very position has been reiterated by the Supreme Court In Re : Sea Customs Act, A.I.R. 1963 Supreme Court 1760, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention to the decision in Prakash Cotton Mills (P.) Ltd. v. B. Sen, A.I.R. 1979 Supreme Court 75= 1979 E.L.T. (J 241), wherein the Supreme Court has taken the view that the rate and valuation of goods for the purpose of section 15(1) (b) of the Customs Act was the rate and valuation in force on the date on which the warehoused goods were actually cleared from the warehouse. It was contended that the ratio of this decision lends support to the view point canvassed by the revenue. Since the question before us was not directly before the Supreme Court, we do not propose to dwell at length on the question which was posed before the Supreme Court in order to call out the ratio of the said decision for the purpose of the present discussion. 14. Under the circumstances, we are of the view that the customs authorities are justified in including the landing charges in the assessable value of the goods imported into India for the purpose of computation of the customs duty. The petitions must, therefore, fail. 15. The petitions are rejected. Rule is discharged in each matter. There will be no order regarding costs. Interim orders will stand vacated. 16. Learned Counsel for petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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