TMI Blog1993 (9) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... r conferred upon it by the Parliament. The provision conferring such power does contemplate and empower the Central Government to create such a fiction, as explained hereinabove. Sub-section (1) as well as sub-section (3) place the matter beyond any doubt. To repeat, the nature of power under Section 25 is conditional legislation or a species of delegated legislation : an exemption notification under Section 25 is not an executive act. No decision has been brought to our notice in support of the said contention - which is raised only in the written submissions. For the above reasons, we see no reason to hold that the said notification No. 262-Cus., dated October 11, 1958 travels beyond the four corners of Section 25. It is perfectly within the ambit of Section 25. Equally unable to agree that by virtue of the fiction contained in the exemption notification, the ship-owners are being made to pay a higher duty than the statutory duty - 1104 of 1990 - - - Dated:- 14-9-1993 - B.P. Jeevan Reddy and S.P. Bharucha, JJ. [Judgment per : B.P Jeevan Reddy, J.]. - Leave granted in SLP (C) No. 2074/93. 2.Civil Appeal No. 1104 of 1990, preferred by the Union of India, arises from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Limited. Vijaya Lines operated them for sometime as ocean-going vessels and then sold them in the year 1982 to the second respondent herein viz., West Asia Shipping Company Private Limited, a company incorporated in India. The last voyage undertaken by these ships was in February, 1982. In April-May, 1983 both these ships were laid-up in the Bombay harbour inasmuch as they had become obsolete and unfit to ply (not sea-worthy). In August, 1983, the second respondent decided to scrap these ships but since the permission of the Director General of Shipping was required for scrapping, it sought such permission from the Director General of Shipping. On October 1, 1983 permission for scrapping was accorded. On September 12, 1984 the second respondent sold the said ships to the first respondent, M/s. Jalyan Udyog, a partnership firm registered under the Indian Partnership Act. 6. On March 1, 1984 the Collector of Customs, Bombay issued a public notice prescribing the procedure for assessment of the value of Indian Flag Vessels meant for scrapping and other allied matters. The procedure prescribed in the public notice, in short, was to this effect : the valuation of Indian Flag Vessel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estimated amount of duty determined by the Customs - Authorities in lieu of the Customs duty leviable on the ship before affecting delivery of the vessel; The owner shall deposit the sum collected from the buyer with(b) the Custom-House on account of the ship sold; After the sum collected from the buyers has been deposited(c) with the Custom-House and an evidence to the effect produced to the MSTC, NCC will be issued by the MSTC for giving delivery of the vessel for scrapping; and The Custom-House thereafter shall assess the bill of entry and(d) adjust the deposit already available with them towards the duty chargeable on the vessel and permit clearance. ATTESTED Sd/- (G.M. REGE) ASSTT. COLLECTOR OF CUSTOMS, CORRESP. DEPTT. BOMBAY Sd/- (K. SRINIVASAN) COLLECTOR OF CUSTOMS, BOMBAY (Pt.)"A/1384. F. No. N/S-1486/83 (Pt.) M/s - 1459/83 J 7.The respondents-ship owners wrote to the Customs Authorities repeatedly asserting that the public notice aforesaid has no application to them inasmuch as the said ships were imported long prior to the constitution of the Metal Scrap Trading Corporation and the issuance of the public notice aforesaid. Not getting a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before another Division Bench. Ship-owners therein relied upon the decision in Jalyan Udyog and asked their writ petitions to be allowed on that basis. The Division Bench, however, distinguished the decision in Jalyan Udyog on the basis that in the writ petitions before it, Bills of Entry were in fact filed when the respective ships last arrived into the Bombay harbour whereas in the case of Jalyan Udyog no such Bill of Entry was ever filed. The Division Bench held that by virtue of Section 15, the date of filing of the Bill of Entry is the date of import, relevant for the purpose of rate and valuation. Accordingly, the writ petitions were dismissed. When these appeals came up for hearing, it was pointed out by the office that in Civil Appeal No. 1104 of 1990 (Union of India v. Jalyan Udyog and Ors.) the second respondent viz., West Asia Shipping Private Limited has not been served and that only the first respondent was served and was represented. A doubt was raised whether the said appeal can be heard without effecting service upon the second respondent. The learned Additional Solicitor General, Sri Dwivedi stated that inasmuch as the second respondent had sold the said ships to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, a good amount of uncertainty and confusion will ensue. Question would then arise, which is the relevant date of import : is it the date of last voyage of the ships, is it the date on which the permission for scraping/breaking was sought for, is it the date on which the permission for scrapping/breaking is granted or is it the date on which the ship is actually broken up. Neither the exemption notification nor the public notice issued by the Collector of Customs, Bombay clarifies this aspect nor does the said notification or the public notice specify when the Bill of Entry in respect of such ship is to be filed. Further, the power under Section 25 is either to exempt the duty in full or to reduce the incidence of duty. The duty cannot be increased or enhanced under Section 25 but that is precisely the result brought about by the said exemption notification. If the exemption notification is read and understood as contended for by the Union of India, it would be void for being inconsistent with Section 25. The power of exemption under Section 25 is exercisable by the executive. The executive cannot enhance the duty over what is prescribed by the Act. Indeed, the acceptance of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rring in the Act. Clause (4) defines the Bill of Entry to mean a Bill of Entry referred to in Section 46. Clause (14) defines the expression "dutiable goods" to mean "any goods which are chargeable to duty and on which duty has not been paid". Clause (22) defines the expression "goods". The expression includes vessels, air-craft and vehicles. Clauses (23) and (25) define the expressions `import' and `imported goods' respectively. They read as follows : "23. "import", with its grammatical variations and cognate expressions, means bringing into India from a place outside India; 25. "imported goods" means any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption." 13.Clauses (40) and (41) define the expressions "tariff value" and "value" to mean the tariff value and value fixed under sub-section (2) and sub-section (1) respectively of Section 14. 14.Section 12 is the charging section. Sub-section (1) says that "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 (51 of 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inwards of the vessel by which the goods are imported, the bill of entry shall be deemed to have been presented on the date of such entry inwards. The provisions of this section shall not apply to baggage(2) and goods imported by post." 16.Section 25 confers upon the Central Government the power to exempt goods either wholly or partly or either absolutely or subject to such conditions as it may specify in that behalf. While sub-section (1) speaks of general exemption, sub-section (2) provides for exemption in certain specific cases. In either case, the power can be exercised only in public interest. Sub-section (3) clarifies the ambit of the power conferred by sub-sections (1) and (2). Since the main submissions in these appeals revolve around Section 25, it would be appropriate to quote the section in full : "25. Power to grant exemption from duty. - If the Central Government is satisfied that it is necessary(1) in the public interest so to do it may, by notification in the Official Gazette, exempt generally either absolutely or subject to such conditions (to be fulfilled before or after clearance), as may be specified in the notification goods of any specified description ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere then imported to be broken up." 19.It is not disputed that it is this exemption notification which is applicable herein. Now what does the notification say? In our opinion, it is couched in simple and clear language. It admits of no ambiguity or doubt. It says that ocean-going vessels other than vessels imported to be broken-up are exempt from payment of customs duty leviable thereon. It then says that where any such ocean-going vessel is subsequently broken-up it shall be chargeable with the duty which would be payable if it were imported then for being broken-up. The idea behind the notification evidently was to encourage the import of ocean-going vessels. The notification also contemplates and provides for the situation where an imported ocean-going vessel becomes `not sea-worthy' after a few years and the ship-owner decides to scrap/break it. It provides that in such a situation it would be deemed as if the ship is imported for breaking-up when it is broken up and the customs duty is charged on that basis. The notification thus creates a fiction viz., the vessel must be deemed to have been imported for being broken-up when it is broken up, though as a matter of fact the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fictional date of import which is different from the actual date of import is beyond the purview of Section 25. The submission is that an exemption notification can merely reduce or waive the customs duty but it cannot alter the basic premises provided by Sections 12, 14 and 15. In other words, the argument is that the power of exemption cannot be employed for changing the date of import or for altering the date with reference to which the value and the rate of duty has to be determined nor is the power of exemption available for enhancing the duty chargeable. We are not prepared to agree. Section 25 has already been set out hereinabove. A proper analysis of sub-section (1) of Section 25 shows that the power of exemption can be exercised (a) where the Central Government is satisfied that in the public interest it is necessary to either waive or reduce the duty chargeable on any goods, (b) it can do so by way of a notification published in the Official Gazette, (c) such exemption, however, must be a general one, (d) the exemption granted may be an absolute one or subject to such conditions, as may be specified in the notification, and (e) the conditions, if any, specified may be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the date of clearance it can do so. The guiding factor is the public interest. The power given by Section 25 to the Central Government to specify conditions which may even relate to a stage subsequent to the clearance of goods clearly shows that the power of exemption can be used even for altering the relevant date prescribed by Section 15. It is this very position which has been clarified by sub-section (3) introduced in the year 1983. In our opinion, sub-section (3) does not provide anything new. It merely elucidates and makes express what is implicit in sub-sections (1) and (2). Sub-section (3) says that a notification under sub-section (1) or (2) may provide "for the levy of a duty on such goods at a rate expressed in a form or method different from the form or method in which the statutory duty is leviable." It further says that "any exemption granted in relation to any goods in the manner provided in this sub-section shall have effect subject to the condition that the duty of customs chargeable on such goods shall in no case exceed the statutory duty". The explanation to sub-section (3) explains the words "form or method" occurring in the sub-section. It says that the for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beyond the statutory duty payable on such deemed date. 26.The learned Counsel for the ship-owners sought to construe the proviso in the notification to mean that the duty will be payable as if the ships were imported for breaking-up on the date of its actual import. In other words, according to the learned counsel, in Jalyan Udyog the ships must be deemed to have been imported for breaking-up in the year 1968 itself and the value and the rate must be determined on that basis. This is the view taken in the order under appeal and also in a decision of the Calcutta High Court in Union of India v. Sri Ram Nivas Chaudhary [1987 (30) E.L.T. 118]. We do not think that the plain words of the proviso are capable of any such interpretation apart from the patent incongruity of the said submission. To repeat, the main limb of the notification says that ocean-going vessels other than vessels imported to be broken-up are exempt from the payment of the customs duty leviable thereon but if such a vessel is subsequently broken-up it shall be chargeable with the duty payable as if it were then imported to be broken-up. If the intention behind the notification was to say what the learned counsel fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered by the customs authorities. It was a case where the Bill of entry was filed on July 9, 1981 i.e., before the arrival of the vessel. The ship in question arrived at Bombay on July 11, 1981. The port authorities were, however, unable to allot a berth to it. The vessel then left Bombay for Karachi for unloading other cargo intended for that port and then came back to Bombay on July 23, 1981. In the Register of Inward Entry, the date of arrival of the vessel was recorded as July 23, 1981 and Entry Inward granted and registered as July 31, 1981. The customs authorities imposed duty on the import of edible oil @ 150% which was the rate prevailing on July 31, 1981. The case of the importers, however, was that the rate of duty should be the rate prevailing on July 11, 1981 when the vessel had actually arrived and registered in the port of Bombay. Their contention was that the vessel had actually entered the territorial waters of India on July 11, 1981 and, therefore, that is the date of import of goods relevant for the rate of duty. The mere fact that a berth was not available for it on the earlier occasion on account of which it had to leave the port and come back, they said, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the character of tax. Since the character of tax cannot be said to have undergone a change in the present case, we do not think it necessary to discuss the said decision in any detail. 34.The decision of the House of Lords in Chertsey Urban District Council v. Mixnam's Properties Ltd. [1965 Appeal Cases 735] was relied upon in support of the proposition that the conditions imposed by the subordinate legislating authority cannot be ultra vires the Act nor be derogatory to the object of the enactment. While the principle is unexceptionable its applicability to the facts of this case is not. 35.For the above reasons, we are of the opinion that the decision under appeal in Jalyan Udyog is unsustainable in law. The Civil Appeal No. 1104 of 1990 is accordingly allowed and the judgment and order of the Bombay High Court is set aside. For the same reasons, the other civil appeals are dismissed though not for the reasons assigned in the judgment under appeal therein. No costs. 36.Inasmuch as the ships concerned in all these appeals have been broken-up either under the interim orders of this court or after paying the duty as demanded by the customs authorities (in which cases the refu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
