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TMI Blog2006 (9) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... n all these cases, the mother vessel coming from abroad and carrying the cargo anchored at Bombay Floating Light (in short 'BFL'). The cargo on board the mother vessel was then examined by the custom authorities and provisionally assessed to duty. After payment of this duty, the out of charge order was passed on the Bills of Entry permitting clearing of such goods for home consumption. After obtaining the out of charge order, the cargo was discharged at BFL from the mother vessel to the barges which then ferried the cargo to the Dharamtar Jetty. 5It may be mentioned that. the cargo could not be discharged directly from the mother vessel to the Dharamtar Jetty due to lack of draft. Hence it was discharged from the mother ship on to the barges at BFL, which carried the goods to the Dharamtar Jetty. It may further be mentioned that while Dharamtar has been approved as a place for unloading under Section 8(a) of the Customs Act, BFL has not been so approved but is only a placing for anchoring the ship. 6.In the Bills of Entry filed by the appellant in respect of the imported cargo, the assessable value of the iron ore pellets was arrived at by including freight incurred on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrol) Tribunal which has been dismissed on 7-3-2001. Hence this appeal. 11.The short point before is as to whether the transportation charges for the use of barges for carrying the cargo from the mother vessel which anchored at BFL to the Dharmatar jetty where the goods were unloaded are to be added to calculate the assessable value for the purpose of duty under the Customs Act. 12.Before dealing with the contention of the parties, we may refer to the provisions of the Customs Act, 1962 which are relevant in this case. Section 2(23) defines import to mean 'bringing into India from a place outside India'. Section 2(25) defines 'imported goods' as follows : "imported goods" means any goods brought into India from outside India but does not include goods which have been cleared for home consumption" Section 2(27) defines 'India' as follows : "India includes the territorial water of India". Section 7(l)(a) of the Act states as follows : "The Board may, by notification in the Official Gazette, appoint - the ports and airports which alone shall(a) be customs ports or customs airports for the unloading of imported goods and the loading of export goods or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is satisfied that there was no sufficient cause for such delay, the person-in-charge or any other person referred to in this sub-section, who causes such delay, shall be liable to a penalty not exceeding fifty thousand rupees". Section 31(1) & (2) of the Act state as under : The master of a vessel shall not permit"(1) the unloading of any imported goods until an order has been given by the proper officer granting entry inwards to such vessel. No order under sub-section (1) shall be(2) given until an import manifest has been delivered or the proper officer is satisfied that there was sufficient cause for not delivering it". Section 32 states as under : "No imported goods required to be mentioned under the regulations in an import manifest or import report shall, except with the permission of the proper officer, be unloaded at any customs station unless they are specified in such manifest or report for being unloaded at that customs station". Section 33 states as under : "Except with the permission of the proper officer, no imported goods shall be unloaded, and no export goods shall be loaded, at any place other than a place approved under clause (a) of Section 8 for the un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive conditions; (b) the sale does not involve any abnormal discount or reduction from the ordinary competitive price; (c) the sale does not involve special discounts limited to exclusive agents; (d) objective and quantifiable data exist with regard to the adjustments required to be made, under the provisions of rule 9, to the transaction value; (e) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which - (i) are imposed or required by law or by the public authorities in India; or (ii) limit the geographical area in which the goods may be resold; or (iii) do not substantially affect the value of the goods; (f) the sale or price is not subject to same condition or consideration for which a value cannot be determined in respect of the goods being valued; (g) &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inable, such cost shall be twenty per cent of the free on board value of the goods; the charges referred to in clause (b) shall be one per cent of the free" on board value of the goods plus the cost of transport referred to in clause (a) plus the cost of insurance referred to in clause (c); where the cost referred to in clause (c) is not ascertainable, such cost shall be 1.125% of free on board value of the goods; Provided further that in the case of goods imported by air, where the cost referred to in clause (a) is ascertainable, such cost shall not exceed twenty per cent of free on board value of the goods: Provided also that where the free on board value is not ascertainable, the costs referred to in clause (a) shall be twenty per cent of the free on board value of the goods plus cost of insurance for clause (i) above and the cost referred to in clause (c) shall be 1.125% of the free on board value of the goods plus cost of transport for clause (iii) above. Provided also that in case of goods imported by sea stuffed in a contained for clearance at an Inland Container Depot or Contained Freight Station, the cost of freight incurred in the movement of contained from the port ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n accordance with Section 14 of the Act. 17.Hence, while determining the value of Section 14, we must never lose sight of the fact that Section 14(1) is a deeming provision which creates a legal fiction. 18.Legal fictions are well-known in law. In the oft-quoted passage of Lord Asquith in East End Dwelling Co. Ltd.v. Finsbury Borough Council - (1951) 2 All ER 587, it was observed : "If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequence and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it -. The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs". 19.The observation has been referred to in a large number of Supreme Court decisions which have been mentioned in G.P. Singh's 'Principles of Statutory Interpretation', Ninth Edition (2004) at pp. 327-338, which may be seen. 20.In Commissioner of Income Tax, Bombay v. Bombay Corporation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale is in the ordinary course of trade under fully competitive conditions and the other provisions of Rule 4 are satisfied. 25.It is well-known that there are sales in which there is under-invoicing or over-invoicing or for some other reasons the sale is not under full competitive conditions. In such a case, Rules 5 & 6 have to be resorted to and the actual price has not to be seen. Thus, the Rules have been created to serve the object of Section 14 which was to determine a deeming price and not the actual price of the imported goods. 26.In our opinion it there are two possible interpretations of a rule, one which subserves the object of a provision in the parent statute and the other which does not, we have to adopt the former, because adopting the latter will make the rule ultra vires the Act. 27.In this connection, it may be mentioned that according to the theory of the eminent positivist jurist Kelsen (The Pure Theory of Law) in every legal system there is a hierarchy of laws, and whenever there is conflict between a norm in a higher layer in this hierarchy and a norm in a lower layer the norm in the higher layer will prevail (see Kelsen's. 'The General Theory of L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese principles in the judgment of Sir John Edge, the then Chief Justice of Allahabad High Court, in Beni Prasad v. Hardai Devi, (1892) ILR 14 All 67 (FB), and in the judgments of one of us (Markandey Katju, J.) while a Judge of Allahabad High Court (which have been annexed to the Second Edition of K.L. Sankar's book), there has been almost no utilization of these principles even in our own country. 32.It may be mentioned that the Mimansa Rules of Interpretation were our traditional principles of interpretation laid down by Jaimini in the 5th Century B.C. whose Sutras were explained by Shabar, Kumarila Bhatta, Prabhakar, etc. The Mimansa Rules of Interpretation were used in our country for at least 2500 years, whereas Maxwell's First Edition was published only in 1875. These Mimansa Principles are very rational and logical and they were regularly used by our great jurists like Vijnaneshwara (author of Mitakshara), Jimutvahana (author of Dayabhaga), Nanda Pandit, etc. whenever they found any conflict between the various Smritis or any ambiguity or incongruity therein. There is no reason why we cannot use these principles on appropriate occasions even today. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Sutra is read as follows : "Where there is a conflict between the use and the substance greater regard should be paid to the use" Commenting on Jaimini 3:3:9 Kumarila Bhatta says : "The Siddhanta laid down by this Sutra is that in a case where there is one qualification pertaining to the Accessory by itself and another pertaining to it through the Primary, the former qualification is always to be taken as set aside by the latter. This is because the proper fulfillment of the Primary is the business of the Accessory also as the latter operates solely for the sake of the former. Consequently if, in consideration of its own qualification it were to deprive the Primary of its natural accomplishment then there would be a disruption of that action (the Primary) for the sake of which it was meant to operate. Though in such a case the proper fulfillment of the Primary with all its accompaniments would mean the deprival of the Accessory of its own natural accompaniment, yet, as the fact of the Accessory being equipped with all its accompaniments is not so very necessary (as that of the primary), there would be nothing incongruous in the said deprival".(See Ganganath Jha's Englis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the case of Apar's Private Limited this Court was concerned with Sections 14 and 15 but here we have to construe the word "imported" occurring in Section 12 and this can only mean that the moment goods have entered the territorial water, the import is complete. We do not agree with the submission. This Court in its opinion in Re. The Bill to Amend Section 20 of the Sea Customs Act, 1878 and Section 3 of the Central Excises and Salt Act, 1944, 1964(3) SCR 787 at page 823 observed as follows : "Truly speaking, the imposition of an import duty, by and large, results in a condition which must be fulfilled before the goods can be brought inside the customs barriers i.e. before they form part of the mass of goods within the country." It would appear to us that the import of goods into India would commence when the same cross into the territorial waters but continues and is completed when the goods become part of the mass of goods within the country; the taxable event being reached at the time when the goods reach the customs barriers and the bill of entry for home consumption is filed". 39.On the strength of the above observation in the Garden Silk case (supra), learned co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods for home consumption" and it was entered at No. 012036 which was received in the appraising section of the group on February 28, 1989. The ship arrived into the port and was berthed on March 2, 1989. The entry inward was granted on March 2, 1989. From March 1, 1989 the rate of excise duty was altered. It was increased to 150 per cent ad valorem plus Rs. 300 per piece for certain sizes and for other sizes duty was raised to 150 per cent ad valorem plus weight-based duty. The result was that pre-tariff duty was Rs. 15,73,611.05 while as per the new tariff levy effective from March 1, 1989 the difference came to Rs. 1,80, 46,092.64. 43.On these facts, the Supreme Court observed thus : "The contention, therefore, that the ship entered Indian territorial waters on February 20, 1989 and was ready to discharge the cargo is not relevant for the purpose of Section 15(1) read with Sections 46 and 31 of the Act. The prior entries regarding presentation of the bill of entry for clearance of the goods on February 27, 1989 and their receipt in the appraising section on February 28, 1989 also are irrelevant. The relevant date to fix the rate of customs duty, therefore, is March 2, 1989. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Karachi port for unloading other cargo intended for that port. On return to Bombay port, it was asked to pay a higher rate of duty which had been increased in the meantime. It was in that connection that the aforesaid observation was made by the Constitution Bench. Clearly, this decision has nothing to do with the present case, because it was not concerned with transportation charges by a barge. 49.Thus, it appears that most of the decisions cited by learned counsel for both the parties in this case are not very relevant for deciding the controversy in issue here. 50.It must be remembered in this context that a case is only an authority for what it actually decides. As observed by the Supreme Court in State of Orissa v. Sudhansu Sekhar Misra - AIR 1968 SC 647 (vide para 13) : "A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made in it. On this topic this is what Earl of Halsbury, LC said in Quinn v. Leathern - 1901 AC 495 : "Now before discussing the case of Allen v. Flood (1898) AC 1 and what was decided therein, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndon Graving Dock Co. Ltd. v. Horton - 1951 AC 737 at p. 761, Lord Mac Dermot observed : "The matter cannot, of course, be settled merely by treating the ipsissima verba of Willes, J as though they were part of an Act of Parliament and applying the rules of interpretation appropriate thereto. This is not to detract from the great weight to be given to the language actually used by that most distinguished Judge". 55.In Home Office v. Dorset Yacht Co. - 1970(2) All ER 294 Lord Reid said, "Lord Atkin's speech is not to be treated as if it was a statute definition. It will require qualification in new circumstances." Megarry, J in (1971) 1WLR 1062 observed: "One must not, of course, construe even a reserved judgment of Russell L. J as if it were an Act of Parliament". And in Herrington v. British Railways Boards - (1972) 2 WLR 537, Lord Morris said : "There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances made in setting of the facts of a particular case". Circumstantial flexibility, one additional or different fact may make a world of difference between conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal's order). Without commenting on the correctness or otherwise of this view, we are of the opinion that whether we treat the place of import as BFL or the Dharamtar jetty it will make no difference to the conclusion we have reached viz. that charges for transport of the goods by barges from BFL to Dharamtar jetty cannot be included in the valuation of the goods. 61.It is not disputed that the freight upto the Dharamtar jetty had been paid by the buyer. Hence we cannot agree that additional transportation charges being the charges for carrying the goods by barges from the mother ship to the Dharamtar Jetty have to be added to the valuation. The fact that the mother ship could not come upto the Dharamtar Jetty is an extraordinary situation (due to lack of draft) and hence any extra transportation charge to meet this situation cannot, in our opinion, be added to the value of the goods. 62.The bills of lading show that the port of discharge was Mumbai Port/JNPT/Dharamtar. In the bill of entry, the FOB price, freight and insurance were shown separately in U.S. dollars. Since Dharamtar was also shown as the port of discharge, the freight charges paid by the buyer to the shipp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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