TMI Blog1987 (12) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... 1000 metric tons showing the price at Rs. 3,900/- per metric ton and Rs. 450/- for packing charges per metric ton, thus making up a total of Rs. 4,350/-per metric ton. Aggrieved by the assessment and demand of customs and additional customs duties made by the respondent No. 2 for securing the release of the above goods on the presentation of the bill of entry, the petitioner has approached this court seeking a writ of mandamus not to levy additional customs duty at 35% and not to include packing charges and post-importation charges in determining the assessable value for the purpose of levying customs duty etc. The respondents are opposing the writ petition. 3. The contentions urged on behalf of the petitioner are as follows : (1) The imported goods are not liable to any additional customs duty under Section 3(1) of the Customs Tariff for the reasons mentioned in paras 11 to 15 of the affidavit. Alternatively, for levy of the additional duty (a) customs duty; (b) landing charges and stevedoring charges payable by the petitioner to the Port Trust; and (c) packing charges shall not be included in the assessable value of goods for the reasons mentioned in paras 19 to 24 of the aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustoms duty or additional Customs duty, the landing charges and stevedoring charges paid to the Port Trust shall not be included. Also, the packing charges ought not to be included in the assessable value because of exemption notification referred to in paragraph 16 of the affidavit. 7. The case of the petitioner that the goods in this case are not liable to additional Customs duty is based on two grounds; Firstly, it is contended that notifications issued under Section 25 of the Customs Act and referred to in paragraph 10 of the affidavit exempt any Customs duty in excess of 75% thereof and even additional Customs duty is not payable. Secondly, reliance is placed on another set of notifications mentioned in para 14 of the affidavit for claiming exemption for additional Customs duty. Notification No. 36/83-Cus., dated 1-3-1983 reads as under: "Effective rate of Duty for Goods falling under Heading No. 39.01/06. 'In exercise of the powers conferred by sub-section (1) of Section 25 of the Customs Act, 1962 (52 of 1962) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 30/82-Customs, dated the 28th February, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. The view expressed by the Delhi High Court in connection with the Central Excise Notification has been over-ruled by the Supreme Court in the decision reported in Union of India v. M/s. Modi Rubber Ltd. AIR 1986 S.C. 1992 = 1986 (25) E.L.T. 849 (S.C.), where it has been held that the exemption under Rule 8 of the Central Excise Rules will be confined to the duty specifically referred to and not others. 11. In another decision of the Supreme Court reported in Khandelwal Metal and Engg. Works v. Union of India, AIR 1985 S.C. 1211 =1985 (20) E.L.T. 222 (S.C.), the distinction between the Customs duty levied under Section 12 read with Section 2(1) of the Tariff Act and the Additional Customs duty levied under Section 3(1) of the Customs Tariff Act has been brought out and held that both are no doubt, duties of Customs referable to Section 12 of the Customs Act, but are different and distinct duties of Customs and the measure of each is also different. Section 25 of the Customs Act confers power to grant exemption from Customs duty. Section 3(6) of the Tariff Act provides that the provisions of the Customs Act relating to exemption so far as may be apply to the duty chargeable u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lic interest so to do, hereby exempts articles made of plastics, all sorts, but excluding those specified in the Table annexed hereto, from payment of so much of the duty of Customs as is leviable thereon under Section 3 of the Customs Tariff Act, 1975 (51 of 1975). Explanation. : For the purpose of this notification plastic means the various artificial or synthetic Resins or plastic materials or cellulose, esters and ethers are included in sub-item (1) of Item No. 15A of the 1st Schedule to the Central Excises and Salt Act, 1944 (1 of 1944). TABLE Tubes, rods, sheets, foils, sticks, other rectangular or profile shapes, whether laminated or not and whether rigid or flexible including layflat tubing's and polyvinyl chloride sheets." 15. For understanding the scope of the exemption it is necessary to refer to Item 15A of the First Schedule to Central Excises and Salt Act as it existed them. It is as follows: "15A. Artificial or Synthetic resins and plastic materials; and other materials and articles specified below..... (1) xx xx xx Polymerisation and Co-polymerisation products (for example, polyethylene, polytetrahal cethylenes, polyiso-butylene, polystyrene, polyviny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said that the provision is constitutionally invalid on any of the two grounds urged. In view of the decision of the Supreme Court in Khandelwal Metal and Engg. Works v. Union of India (Supra) the legislative competence of Parliament to enact these provisions cannot be questioned. As held by the Supreme Court, the charging section for the additional Customs duty also is Section 12 of the Customs Act and Section 3(1) of Tariff Act provides its measure. Section 3(2)(ii) provides for valuation of the imported goods for purposes of levy of additional duty by including the Customs duty chargeable under Section 12 of the Customs Act. It is not shown how this is illegal. The Karnataka High Court has in its recent decision in B.S. Kamath and Co. v. Union of India 1986 E.L.T. 456 (Karnataka) (paras 19 and 20) rejected a similar contention. The contention regarding the validity of sub-section (2) of Section 3 as well as the complaint about inclusion of Customs duty in determining the assessable value of goods is untenable and rejected. 18. The contention regarding the inclusion of packing charges and post-importation charges (that is, landing charges and stevedoring charges) in determining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms ports, airports etc. - The Central Government may, by notification in the official gazette, appoint.... (a) the ports and airports which alone shall be customs ports or customs airports for the unloading of imported goods and the loading of export goods or any class of such goods; (b) the places which alone shall be land customs stations for the clearance of goods imported or to be exported by land or inland water or any class of such goods; (c) the routes by which alone goods or any class of goods specified in the notification may pass by land or inland water into or out of India, or from any land customs station from or to any land frontier; (d) the ports which alone shall be coastal ports for the carrying on of trade on coastal goods or any class of such goods with all or any specified ports in India. Section 8. Power to approve landing places and specify limits of Customs area : The Collector of Customs may .. (a) approve proper places in any Customs port or Customs airport or coastal port for the unloading and loading of goods or for any class of goods; (b) specify the limits of any Customs area. Section 14. Valuation of goods for purposes of assessment :-( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or manufactured the goods to be assessed, or ordinarily sold or offered for sale to other buyers in India under competitive conditions." 20. In this case, the place of importation is Kandia Port, which is one of the specified Ports under Section 7 of the Act. The import is not permissible from any Port unless it is specified under Section 7. Further, in view of Section 33 read with Section 8, the imported goods can be unloaded only at the specified places in the Ports. Section 46 requires that the importer of goods shall present a bill of entry to the Customs Officer, who, after being satisfied that the assessed import duty has been paid will permit clearance of the goods. The prescribed form of the bill of entry for the purposes of Section 46 requires inclusion of the landing charges payable to the Port Trust for assessment of Customs duty. In this case, the petitioner is asked to include in the bill of entry the amount which he has admittedly paid to the Port Trust in connection with the goods being made available from the vessel on the land mass of India. Port Trust has to incur expenditure, among other things, for bringing the Ship into the harbour and unloading the goods fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a circumstance for deviating from the prescribed method of assessment for the purposes of goods imported in accordance with the provisions of the Act. In view of Section 14, the Customs duty is chargeable with reference to the value of the goods at the place of importation in the course of International trade where seller and buyer have no interest in the business of each other, that is, the price is to be determined at an arm's length. The price at the place of importation viz., that is, place specified under Section 8 in a port notified under Section 7 will, naturally, include the cost of making the goods available at these places which are on the land mass of India. Rule 3(a) also makes this clear. As already noticed, the prescribed form under Section 46 also requires landing charges to be mentioned in the bill of entry. In view of these detailed statutory provisions regarding assessment of Customs duty, it cannot be urged that the inclusion of the expenses incurred for making the goods available at the land mass of India ought not to be included in the assessable value of the goods. A Full Bench of the Bombay High Court in the case reported in Apar Private Limited v. Union o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Customs duty and additional Customs duty, if the three conditions mentioned in it are satisfied. In this case, as pointed out earlier, the cost of packages is separately shown in the invoice. The vendors in Romania have also issued letter and certificate at the time of issue of invoice to the effect that the aforesaid conditions are satisfied with reference to the packages in this case as stated in para 17 of the affidavit. The Xerox copies of certificates are also filed alongwith the writ petition. 23. On behalf of the Revenue it is contended that the petitioner ought to have satisfied the authority at Kandla Port that the conditions in the notification are satisfied and for this purpose the case should be remitted back for enquiry by the 2nd respondent as was done by the Karnataka High Court in the case of B.S. Kamath Co. v. Union of India (supra). If the conditions are satisfied the petitioners are entitled to the relief of exclusion of the packing charges from the assessable value for levy of Customs duty and additional Customs duty. They have referred to the certificates issued by the exporter in para 17 of the affidavit. No counter-affidavit is filed by respondent No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the duty demanded and on furnishing bank guarantee for the balance. The respondents will, therefore, exclude the value of packing charges from the assessable value and compute the Customs duty and additional Customs duty and after adjusting the amounts paid, recover the balance by enforcing the Bank guarantee furnished by the petitioner. The petitioner shall pay the balance amount of duty after it is determined in the manner indicated. 24. Writ Petition No. 8850/1983. -In this case, the goods imported are 110 metric tons HDPE from the same exporter. The price and packing charges are separately shown in the invoice and the necessary certificates regarding the packing material to satisfy the requirements of the exemption notification have also been given by the Exporter. The imported material is liable to the levy of Customs duty and also auxiliary duty of Customs. In addition, additional Customs duty and surcharge are also to be levied. An additional contention is raised that the auxiliary duty should not have been included in the assessable value for purpose of levy of additional Customs duty. For the same reasons given in the earlier writ petition, this contention also cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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