TMI Blog1987 (10) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... 226 of the constitution and we will set out those contentions at once. 2. The first submission is that the Assistant Collector of Customs is determining the assessable value for the purpose of payment of countervailing duty by loading customs duty on C.I.F. value, and that is not permissible. The second submission is that the countervailing duty cannot be charged at 42% but should be reduced to 27%, because countervailing duty should be in accordance with exemption Notification No. 302/79, dated December 4, 1979 issued in exercise of powers conferred by Sub-rule (1) of Rule 1 of Central Excise Rules. The third submission is that while ascertaining the C.I.F. value for payment of both, customs duty and the countervailing duty, it is not permissible for the Assistant Collector of customs to load the C.I.F. value with landing charges levied by the Port Trust. The fourth submission is that Section 3(2) of Customs Tariff Act, 1975 is ultra vires of the fundamental rights guaranteed under the Constitution of India, and therefore, levy of additional duty or countervailing duty is not permissible. 3. Before examining the submissions urged by Dr. Kantawala, learned counsel appearing on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law for the time being in force as an addition to, and in the same manner as a duty of customs, but not including the duty referred to in sub-section (1)." Section 6 confers power on the Central Government to levy protective duties in cases where the Government is satisfied upon recommendation made by the Tariff Commission that circumstances exist which render it necessary to take immediate action to provide for the protection of the interests of any industry established in India. These are the relevant provisions in respect of payment of customs duty. 5. The Supreme Court examined the ambit of the provisions of Sections 2 and 3 of the Customs Tariff Act, and the nature and connotation of expression "countervailing duty" in the decision reported in 1985 (20) E.L.T. 222 (Khandelwal Metal Engineering Works Anr. v. Union of India Ors.). Chief Justice Chandrachud, speaking for the Court, observed that the argument that Section 3(1) of the Tariff Act is an independent charging section or that additional duty which it speaks of is not a duty of customs but is a countervailing duty cannot be accepted. It was further held that the customs duty charged under Section 12 is extended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e legislature and the policy of the Government repeatedly declared indicate that the country desires to be self sufficient and import should be discouraged as far as possible. In reaching the goal it is possible that the duty could be required to be levied not only for the purpose of counterbalancing but also to afford protection to the indigenous goods, and it would not be appropriate to keep nature of the duties in a water-tight compartments. The first contention of Dr. Kantawala that assessable value cannot be arrived at by loading customs duty on C.I.F. value while determining countervailing duty has two facets. The submission is that the duty, whether basic customs duty or the countervailing duty, is payable on import of goods and the taxable event is the fact of import. The expression "import" as defined under Section 2(23) of the Customs Act with its grammatical variation and cognate expression, means bringing into India from a place outside India, while Section 2(25) defines "imported goods" as any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption. Section 2(27) of the Customs Act provides that 'India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the territorial waters of India and thereafter any expenses incurred in respect of those goods before clearance for home consumption cannot be taken into consideration while assessing the value of the goods cannot be accepted. The decision of the Full Bench is binding on us and we proceed on the basis that the taxable event occurs when the imported goods enter the territorial waters of India, but the mere fact that the taxable event occurs at that point of time does not mean that the duty is to be determined with reference to the value of the goods at that point of time. In our judgment, the taxable event continues till the goods are cleared at Customs barrier for home consumption and all the expenses which are required to be incurred in respect of those imported goods form part of the value of those goods and it is not permissible for the importer to suggest that the value of goods should be determined at the point of time of entry into territorial waters and all expenses incurred thereafter are post-import expenses. In our judgment, the first submission of the learned counsel therefore must fail. 7. Dr. Kantawala then submitted that even assuming that the countervailing duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ala urged that the imported goods being high density polythene is not liable to payment of countervailing duty at the rate of 42% but only at the rate of 27%. Shri Bulchandani, learned counsel appearing on behalf of the respondents, did not dispute the principal laid down by the decision of the Division Bench of this Court in the case of Century Enka, but submitted that the advantage of the notification is available to the imported goods provided the conditions set out in the Notification are complied with. Shri Bulchandani submitted that though it is not in dispute that the imported goods are manufactured from raw naptha or any chemical derived therefrom, the other condition that "on which the appropriate amount of duty of excise has been paid is not satisfied nor indeed can be satisfied in respect of the imported goods, and therefore, the advantage of the notification is not available. We find merit in the submission advanced by Shri Bulchandani. The advantage of the Notification dated December 4, 1979 is available provided both the conditions are satisfied, the conditions being that the goods are imported from raw naptha and on which the appropriate amount of excise duty has alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel appearing on behalf of the Department did not dispute that the claim of the petitioners is covered by the decision. It is undoubtedly true that it was contended on behalf of the Department that the second condition of payment of excise duty in respect of the imported goods was not satisfied but the contention was turned down on the ground that there was no material brought on record in the return in support of the submission. We are afraid that the decision of the single Judge is not correct. Even though the material was not brought on record to establish that excise duty was not paid on the raw material in respect of the imported article, that fact could have been assumed without any proof. It is impossible to imagine a case where in respect of raw naptha used for manufacture of H.D.P. in a foreign country, excise duty payable under the Indian Law could have been levied and paid. It is therefore obvious that the decision of the single Judge in Pan Asia Commercial Enterprises's case is not correct and we overrule the same. In our judgment, as the condition of payment of excise duty on raw naptha could never be satisfied in the case of imported HDP, the advantage of the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s place as soon as the goods enter the territorial waters and any charges required to be incurred after that time on import cannot be taken into consideration while assessing the value of the imported goods for the purpose of levy of customs duty. It was urged by the learned counsel that the valuation theory adopted in respect of levy of excise duty should also be made applicable in respect of imported articles. In other words, the submission is that as the post-manufacturing expenses are excluded while assessing the value of goods liable to excise duty under Section 3 of the Excise Act, while determining the value of the goods for assessment under Section 14 of the Customs Act all post-imported charges should be excluded. It is not possible to accept the claim of the learned counsel, because the submission proceeds on the basis that the landing charges are post-import charges and which submission cannot be acceded to. As observed hereinabove, though in accordance with the dictum laid down by the Full Bench in Apar's case, taxable event or the import takes place as soon as the goods enter the territorial waters, it is not possible to conclude that the taxable event becomes over at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to be applied in respect of the imported goods and that not having been done Section 3(2) of the Customs Tariff Act suffers from constitutional vice. We are unable to see any merit in the submission. It was then suggested by the learned counsel that the section leads to discrimination between two classes of importers of identical goods. The submission need not detain us for a moment, because Dr. Kantawala had to concede that there are no averments in the petition on this count. In absence of any averments, it is impossible to examine the claim of Dr. Kantawala that the impugned section leads to discrimination between two importers of identical goods. Finally Dr. Kantawala submitted that loading of customs duty and landing charges on C.I.F. value for the purpose of determining the assessable value of the imported goods amounts to double taxation, and therefore, the Section is bad and should be struck down. In the first instance we do not understand how the claim that the section provides for double taxation is correct. The liability to pay the customs duty includes payment of basic duty, auxiliary duty and countervailing duty. Though all these duties are broadly brought under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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