TMI Blog1993 (8) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... e rate of 28.5% plus 5% working out to Rs. 2,972.25. The actual landing charges were Rs. 1,216.51. The duty was paid and the goods were cleared but a claim for refund was made on 2-12-1982 before the Assistant Collector of Customs. Two grounds were urged viz., that the duty was not chargeable on the landing charges at all and the entire amount was refundable and alternatively even if duty was payable on landing charges there was no jurisdiction to levy on a notional basis and it should be done only on the basis of actual landing charges incurred. The Assistant Commissioner by his order dated 18-1-1983 accepted the second contention and directed a refund of Rs. 2,212.35. Thus it was held that the petitioner was liable to pay a sum of Rs. 759.18 by way of customs duty on landing charges. 3. In the other writ petition No. 8177 of 1982 the petitioner imported 4,000 bags of caprolactum and filed the bill of entry on 20-1-1981. The landing charges were worked out at Rs. 5,761.97 whereas the actual landing charges was Rs. 2,214.02. On a similar application for refund, the Assistant Commissioner granted a refund of Rs. 4,255.47 leaving a balance of Rs. 1,506.50. These amounts, which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint is considered to be the place of importation, the landing charges cannot form part of the price or value of the goods as contemplated by Section 14 of the Act. It is submitted that under the Customs Valuation Rules, 1963, there was no provision for including the landing charges as part of the price at the place of importation. Reliance is placed upon the following words in Section 14(1)(a) : "the price at which such or like goods are ordinarily sold, or offered for sale.... in the course of international trade" "and the price is the sole consideration for the sale or offer for sale". It is contended that the expression "in the course of international trade" is the most crucial part of the section and when goods are imported from foreign shores the price at which foreign trader sells it to the importer is the relevant price and that should be taken as the price for the purpose of levying customs duty under Section 14. It is contended that the foreign trader could not have contemplated inclusion of landing charges in the price. Reliance is placed on the rules under Customs Valuation Rules of 1963 which contained the method of determination of the value of the imported good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession 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 India. The petitioner states that taxable event occurs at the time when the goods enter into Indian territorial waters and the duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 sale 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. 1938 Privy Council 15 = 1978 (2) E.L.T. (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 a reasonable sense" (Emphasis added)" If this principle were to be applied, the only manner in which the interpretation can be made in the rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 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 acquiesced in for a long time. All the same this principle can be extended to a situation like the present one as well where sanctity ......................... 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 there fore, no hesitation in repelling the contention urged on behalf of the petitioners in this behalf. 7. The Delhi High Court gave a similar ruling in Super Traders and Another v. Union of India and Others [1983 (12) E.L.T. 258 (Del.)]. The Court observed in para 27 at page 276 as follows : "Thus import is extricably associated with goods being brought into India so as to form a part of the mass of goods in the country. The only way the goods imported by the petitioner can become a part of mass of goods inside the country can be after they have been off-loaded from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n accordance with Section 14(1)(a). The anatomy of Section 14 reveals that the value has to be determined in the following manner : (1) The price at which goods are ordinarily sold or offered for sale. (2) Such price is required to be determined with reference to the 'time' of importation of goods, as also with reference to the 'place' of importation of goods. (3) The price at which the goods are ordinarily sold or offered for sale in accordance with the international trade. (4) Such price is to be determined in the course of a transaction where the seller and buyer have no interest in the business of each other (i.e., genuine price between two businessmen and not a price which is more or less than the genuine price, the difference in price being on account of the fact that buyer and seller are interested in the business of each other) and the price is sole consideration for the same. (5) In case the price cannot be determined in accordance with Section 14(1)(a) in the aforesaid manner, the price has to be determined as per Section 14(1)(b) on the basis of the nearest ascertainable equivalent thereof determined in accordance with the rules made in that behalf". With res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cated where the statute declares it will be. We shall return to this later when it is necessary to consider a submission in regard to the effect of transactions to or through "related persons". Again the Court pointed out : "that when enacting a measure to serve as a standard for assessing the levy the Legislature need not contour it along lines which spell out the character of the levy itself. Viewed from this standpoint, it is not possible to accept the contention that because the levy of excise is a levy on goods manufactured or produced the value of an excisable article must be limited to the manufacturing cost plus the manufacturing profit. We are of opinion that a broader based standard of reference may be adopted for the purpose of determining the measure of the levy. Any standard which maintains a nexus with the essential character of the levy can be regarded as a valid basis for assessing the measure of the levy. In our opinion, the original Section 4 and the new Section 4 of the Central Excises and Salt Act satisfy this test". 12. We are unable to accept the contention of learned counsel for the petitioner that Section 4 of the Central Excise Act will stand on an en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking delivery. 16. In this connection, learned counsel for the respondents draws our attention to the ruling of the Privy Council in Ford Motor Company v. Secretary of State [AIR 1938 PC 15 = 1978 (2) E.L.T. (J 265) (PC)]. Section 30 of the Sea Customs Act 8 of 1978 was considered by the Privy Council. The section runs in the following terms : "For the purpose of this Act the real value shall be deemed to be : (a) the wholesale cash price, less trade discount, for which goods of the like kind and quality are sold, or are capable of being sold, at the time and place of importation or exportation, as the case may be, without any abatement or deduction whatever, except (in the case of goods imported) of the amount of the duties payable on the importation thereof; or (b) where such price is not ascertainable, the cost at which goods of the like kind and quality could be delivered at such place, without any abatement or deduction except as aforesaid". The contention was that the wholesale cash price of the motor cars in question should have been assessed under clause (b) of Section 30 and in any event the appellants' price to their distributors was attributable to the work done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That the cartage charges should be analysed so as to eliminate the proportionate cost of the journey from the boundary of the port to the railway station in Bombay, is not in their Lordships' view necessitated by the phrase 'place of importation', still less could they regard it as a reasonable ground for holding that the sales in the present case were not within the terms of Clause (a). 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 a reasonable sense." 17. Learned Counsel for the petitioner also placed reliance on the proviso to Section 14(1)(a) of the Customs Act in which a reference is made to the rate of exchange as in force on the date of the bill of entry is presented under Section 46. It is argued that there cannot be any question of rate of exchange for landing charges as they are levied only locally. Hence it is contended that the section contemplates only the transaction value and price quoted by the foreign exporter and not the notional price fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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