1983 (1) TMI 88 - HC - Customs

Court upholds Customs Tariff Act, 1975 validity, denies exemption under Customs Notification, affirms legislative competence.

The court dismissed the writ petitions, upholding the constitutional validity of section 3(1) of the Customs Tariff Act, 1975, the inclusion of customs ... Additional duty - Exemption - Taxable event - Import duty Issues Involved:1. Constitutional validity of section 3(1) of the Customs Tariff Act, 1975.2. Legislative competence of Parliament under Entry 83 of List I of the 7th Schedule to the Constitution of India.3. Inclusion of customs duty in the valuation of imported goods under section 3(2) of the Customs Tariff Act, 1975.4. Inclusion of landing charges in the valuation of imported goods.5. Entitlement to exemption under Customs Notification No. 175/81-Cus., dated 25th July, 1981.Issue-wise Detailed Analysis:1. Constitutional Validity of Section 3(1) of the Customs Tariff Act, 1975:The petitioners argued that section 3(1) of the Customs Tariff Act, 1975, which imposes an additional duty on imported goods equivalent to the excise duty on like articles produced in India, was ultra vires. They contended that the additional duty calculated under section 3(2) included customs duty, which they claimed was a post-importation expense and thus beyond the legislative competence of Parliament under Entry 83 of List I.2. Legislative Competence of Parliament under Entry 83 of List I of the 7th Schedule:The petitioners asserted that under Entry 83, customs duty could only be levied on the importation of goods, and the value for such duty should be the value at the time and place of importation without including post-importation charges. The respondents, however, argued that even if Entry 83 did not cover such a provision, Parliament had the power under Article 248 and Entry 97 of List I to enact it. The court held that customs duty, payable upon the importation of goods, is not a post-importation expense but an importation expense, thus falling within the legislative competence of Parliament under Entry 83.3. Inclusion of Customs Duty in the Valuation of Imported Goods under Section 3(2):The court concluded that customs duty, which is payable upon the importation of goods, is an importation expense and not a post-importation expense. Therefore, adding customs duty to the value of imported goods for the purpose of determining the assessable value under section 3(1) was within the legislative competence of Parliament under Entry 83. The court further elucidated that the levy under section 3(1) could be seen as an additional customs duty and a surcharge on the customs duty, which Parliament was competent to impose.4. Inclusion of Landing Charges in the Valuation of Imported Goods:The petitioners contended that landing charges should not be included in the valuation of goods for the purpose of the additional duty. The court referred to a previous decision in M/s. Super Traders v. Union of India, where it was held that landing charges are not post-importation expenses. Consequently, the inclusion of landing charges in the valuation was upheld.5. Entitlement to Exemption under Customs Notification No. 175/81-Cus., dated 25th July, 1981:In Civil Writ No. 3678, the petitioners challenged the denial of exemption under the said notification, which provided exemptions for components required for manufacturing heavy commercial vehicles, subject to certain conditions. The Directorate General of Technical Development denied the approval as the petitioners were not manufacturers but importers for resale. The court upheld this decision, stating that the benefit of the notification was intended for actual users or manufacturers, not for importers who sell to actual users.Conclusion:The writ petitions were dismissed, and the court upheld the constitutional validity of section 3(1) of the Customs Tariff Act, 1975, the inclusion of customs duty and landing charges in the valuation of imported goods, and the denial of exemption under the specified customs notification. The court also affirmed the legislative competence of Parliament under Entry 83 of List I and Article 248 and Entry 97 of List I of the 7th Schedule.