TMI Blog1984 (12) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... tions were issued by the Government of India. As per Notification No. 42, dated 1-3-1979, for palmolein and some other oils exemption was granted in respect of (a) so much of that portion of the duty of customs leviable thereon which is specified in the First Schedule as is in excess of 12.5% ad valorem and (b) the whole of the additional duty leviable thereon under S. 3 of the Customs Tariff Act. On the same date, 1-3-1979 another notification bearing number 63 was issued as per which Notification No. 129, dated 1-7-1977 referred to above granting entire exemption to palmolein oil was rescinded along with few other notifications. 3. When the appellant wanted to clear the goods without payment of any tax by virtue of the exemption granted by Notification No. 129, dated 1-7-1977, the Customs Department insisted that the appellant should pay duty at 12.5% as per Notification No. 42, dated 1-3-1979, which had come into force. The appellant paid the duty under protest and filed petitions for refund on 17-3-1979 and 10-4-1979, respectively for each of the consignments. The Assistant Collector of Customs (Refund Section) by orders dated 20-4-1979 and 17-5-1979, rejected both the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the point whether the liability to duty is to be ascertained with reference to the date on which the vessel entered the territorial waters or the date on which the articles were actually unloaded there is a divergence among the decisions of courts. In order to understand the controversy it is necessary to set out some provisions of the Customs Act, 1962, hereinafter referred to as the Act :- Sec. 12 of the Act reads as follows :- "12(1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975, or any other law for the time being in force, on goods imported into, or exported from India. (2) The provisions of sub-sec. (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government." Sec. 2(27) reads thus : "2. In this Act, unless the context otherwise requires - (27) `India' includes the territorial waters of India." Sec. 15 reads as follows :- "15(1) The rate of duty and tariff valuation, if any, applicable to any imported goods, shall be the rate and valuation in force : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry within the territorial waters. 7. The above principle have been followed in several other decisions like New India Industries v. Union of India, (Single Judge) 1981 Tax L.R. 2763; Sundaram Textiles Ltd., Madurai v. Asstt. Collector of Customs, Madras (Single Judge) 1983 E.L.T. 909 (Madras) and Krishna Oil Cake Industries v. S.R. Patankar, Asstt. Collector of Customs, 1983 E.L.T. 2153 (Bombay). The decision in Synthetics and Chemicals Ltd. v. S.C. Coutinho and others, 1981 E.L.T. 414 (Bombay) has applied the same principle, but stressed in addition the point that the exemption on the date of importation should be total. The above principle was applied in New Chemi Industries Pvt. Ltd. v. Union of India, 1981 E.L.T. 920 (Bombay). It was, in fact, held by a Single Judge that if the goods were totally exempted on the date of their entry within the territorial waters the duty cannot be recovered merely because such total exemption stands withdrawn on the date of clearance. But, if there was only partial exemption on the date of importation and no exemption on the date of clearance, the goods would attract the full normal duty leviable as per Sec. 15 of the Act. The rationale of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsumption, sale or distribution and are incorporated in and got mixed up with the totality of the property in the country they cannot be said to have been imported. Otherwise, the goods in transit will be covered by the words `imported into' or `exported from' and that would make the air borne goods passing through India liable to confiscation or other penalties provided for under the Customs Act, as soon as the plane lands or takes off from the airport. It is the same view which has been taken by the judgment now under appeal. 9. In Shewbuxrai Onkarmall v. Asstt. Collector of Customs and others, 1981 E.L.T. 298 (Cal.) a Single Judge of the Calcutta High Court decided that the words `imported into India' have a wide meaning which will also be apparent on a reference to S. 111(d) of the Act which makes a distinction between goods which are imported or attempted to be imported or are brought within Indian customs waters for the purpose of being imported. He further observed 'to give the words their literal meaning would lead to an absurdity because a person may bring goods into India by a ship and may re-export them without clearance or an aircraft landing in any airport with goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and others 1983 E.L.T. 1688 (Delhi) DB, considered the matter elaborately and the following conclusions were arrived at - "Unless the goods are brought into the country for the purpose of use, enjoyment, consumption, sale or distribution and are incorporated in and got mixed up with the totality of the property in the country, they cannot be said to have been imported. As such, it cannot be said the moment the aircraft passes through the country or a ship enters the territorial waters, an importation takes place. Importation can only be when the goods cross the customs barriers. As the territorial waters extend upto 12 nautical miles from the base line, the question as to when and at what particular time a ship entered the territorial waters can always become a subject-matter of debate and dispute between the importer and the Customs authorities. Since there is no machinery with the Customs authorities to keep a check and to know the exact time when the ship enters the territorial waters, S. 15 when it specifies the test with reference to which the date is to be fixed for the purpose of calculating the rate of duty, has obviously the merit of providing a definite and specific ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd before clearance. The inclusive definition of `India' as given in Sec. 2(27) of the Customs Act, is not designed to pin point the point of time at which chargeability to Customs duty under S. 12 could attach to the good?. Utmost the definition satisfies only the earlier point of time from which the goods could be treated as dutiable but does not preclude the charge being imposed at any subsequent point of time so long as the goods continue to be imported goods for the purpose of Sec. 12. Under the definition clause, the goods retain the character of `imported goods' till they are cleared for home consumption for the purposes of Ss. 46 or 68. Even if they were totally exempt from duty at the time the goods entered the territorial waters, a rate of duty could still fasten on them under S. 12, so long as they retain the character of imported goods, if an appropriate notification is issued in the meanwhile. An exemption only suspends or eclipses chargeability which can be revived the moment exemption is lifted or withdrawn. In other words, exemption from duty can also be construed as chargeability at `nil rate' if rate in Sec. 12 is the whole basis for the chargeability." 15. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s may be required." In the first clause, India is defined as a political entity. Clause (3) gives a geographical content of the political entity referred to in Art. 1. With these definitions in mind, if we peruse the Customs Act we find that the word `India' is often used with the meaning different from the one given in Sec. 2(27) of the Act. We shall now refer to a few sections of the Act, where the word `India' is used. Sec. 11(2)(p) of the Act reads as follows :- "11(2) The purposes referred to in sub-section (1) are the following - (a) to (o)......... (p) the carrying of foreign trade in any goods by the State, or by a Corporation owned or controlled by the State to the exclusion, complete or partial of citizens of `India'. Here, the word `India' does not obviously include the territorial waters, it is instead used in its political meaning as defined in Clause 1 of Art. 1 of the Constitution. - Sec. 2(7) of the Act reads as follows - "2. Definitions : In this Act, unless the context otherwise requires - (1) to (6)......... (7) `coastal goods' means goods, other than imported goods, transported in a vessel from one port in India to another." Sec. 22(1)(a) re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no possibility and no provisions in the Act, to levy duty when the ships are in the territorial waters. The object of the Act is not to tax goods which are just passing through the territorial waters but only those who get mixed with the m ass of goods in India. 18. A useful reference may be made to Sec. 13 of the Act which comes immediately after Sec. 12 defining the dutiable goods. That section reads as follows - "If any imported goods are pilferred after the unloading thereof and before the proper officer has made an order for clearance for home consumption or deposit in a warehouse, the importer shall not be liable to pay the duty leviable on such goods except where such goods are restored to the importer after pilferage." The purpose of this section is to give exemption from duty which had become payable; and the goods are considered dutiable only after being unloaded. This again shows that the chargeability does not start when the goods are still in the territorial waters. 19. We may also refer to a decision of the Supreme Court. Of course, it has not decided therein directly the question of the meaning to be assigned to the word 'India' in Sec. 12. But it ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 deals with chargeability and Sec. 15 with quantification of duties ; as per the second stream of decisions, the import as per Sec. 12 and therefore, the chargeability takes place at the time of the unloading of the articles. Each stream stressed correctly one aspect of the meaning of the section, the conflict which remained unsolved was on account of the definition of the word 'India' under Sec. 2 (27) of the Act, which is now found not applicable to Sec. 12, since the content requires otherwise. 20. Let us now turn to the facts of the case. The articles were unloaded on 2-3-1979. By that time, Notification No. 42, dated 1-3-1979 fixing the Customs duty at 12.5% had come into force. Chargeability operates when the goods are imported into the territory of India, as per the meaning to be assigned to the word 'India' under Sec. 12 (1) of the Act. Therefore, the goods unloaded on 2-3-1979 were chargeable and duties levied are in order. 21. The second ground urged on behalf of the appellant is based on the doctrine of promissory estoppel. This ground does not appear to have been urged before the learned Single Judge. However, since both parties advanced arguments, we are also dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by law and that there can be no promissory estoppel against the exercise of legislative power. 22. In Gujarat State Financial Corporation v. M/s. Latur Hotels Pvt. Ltd., AIR 1983 S.C. 848 the Gujarat State Financial Corporation entered into an agreement in performance of its statutory duty to advance loan to a company and acting on that undertaking the company proceeded to undertake and execute a project of setting up a 4-Star Hotel and incurred huge expenses and suffered liabilities. It was held that the principle of promissory estoppel would certainly estop the Corporation from backing out of its obligation arising from a solemn promise made by it to the respondent. In Tapti Oil Industries v. State of Maharashtra, 1984 Excise and Law Cases 307, it was held that though it would be necessary for a person, who sought to rely on the doctrine of promissory estoppel, to show that certain promises or representations were made to him, it was not necessary that those promises or representations must be made expressly only in a communication addressed to that individual. 23. All the decisions relied upon by the learned counsel for the appellant did not omit to mention that a promise i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Delhi High Court in Khandelwal Metal and Engg. v. Union of India, 1983 E.L.T. 292. In another decision of the same High Court viz. Jain Shudh Vanaspati v. Union of India, 1983 E.L.T. 1688, this point was gone into in detail and it was held as follows : "It is well settled that under the General Clauses Act an authority which has power to issue a notification has the undoubted power to rescind, modify the said notification in the like manner ... ...... . The Central Government when issuing notification under Sec. 25(1) is not in any way violating the mandate of Parliament because in fact the power to issue a notification under Sec. 25(1) is a delegation of the legislative power given to the Central Government, and in any case the notifications were placed before the Parliament. Therefore, if the same Central Government which initiated notification and amended it subsequently under S. 25(1) ibid it cannot be said that the Central Government cannot modify the total exemption or partial exemption. We, therefore, find that there was no promise made by the Government in the Notification No. 129, dated 1-7-1977 to keep it alive indefinitely and that accordingly, the Government had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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