Customs duty linked to vessel's entry inwards date under Section 15, not territorial waters, higher rate upheld

SC upheld the customs authorities' determination that the relevant date for assessing customs duty under Section 15 of the Customs Act, 1961 is the date of "entry inwards" of the vessel as recorded in the customs register, not the date of its entry into territorial waters. On the facts, 31 July 1981 was held to be the decisive date, making applicable the enhanced 150% customs duty on imported edible oils. The challenge to Section 15 as conferring arbitrary discretion was rejected, the Court finding the procedure structured and non-arbitrary. The Article 14 challenge based on differential rates vis-à-vis a state trading entity was also rejected. The writ petition was dismissed.

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Issues Involved:
1. Imposition of customs duty rate.
2. Determination of the effective date for customs duty.
3. Constitutional validity of Section 15 of the Customs Act, 1962.
4. Alleged violation of Article 14 of the Constitution due to differential treatment.

Detailed Analysis:

1. Imposition of Customs Duty Rate:

The petitioners challenged the imposition of customs duty at 150% on their import of edible oils, arguing that the applicable rate should be 12.5% or, alternatively, 42.5%, based on the dates when the vessel entered Indian territorial waters and the Port of Bombay, respectively. They contended that the rate should be based on the date the vessel first arrived and registered in the Port of Bombay (11 July 1981) or, at most, the date it returned from Karachi (23 July 1981).

2. Determination of the Effective Date for Customs Duty:

The court examined Section 15(1) of the Customs Act, 1962, which stipulates that the rate of duty and tariff valuation applicable to imported goods is the rate and valuation in force on the date the Bill of Entry is presented under Section 46. The proviso to Section 15(1) states that if a Bill of Entry is presented before the date of entry inwards of the vessel, the Bill of Entry shall be deemed to have been presented on the date of such entry inwards. In this case, the Bill of Entry was presented on 9 July 1981, but the "date of entry inwards" was recorded as 31 July 1981. The court held that the rate of customs duty and tariff valuation should be determined based on the date of entry inwards recorded in the Customs register, which was 31 July 1981.

3. Constitutional Validity of Section 15 of the Customs Act, 1962:

The petitioners argued that Section 15 is arbitrary and vague, thus unconstitutional, as it does not account for situations beyond the control of the importer, such as the unavailability of a berth. The court rejected this argument, stating that the procedure for determining the date of entry inwards is detailed and systematic, leaving no scope for arbitrary discretion by the customs authorities. The court affirmed the validity of Section 15, emphasizing that the procedure is followed consistently and regularly.

4. Alleged Violation of Article 14 of the Constitution:

The petitioners contended that imposing a 150% customs duty on their imports, while the State Trading Corporation was levied only 5% for similar imports, violated Article 14 of the Constitution, which guarantees equality before the law. The court referred to its judgment in M. Jhangir Bhatusha v. Union of India, where a similar contention was rejected. The court held that the differential treatment did not constitute a violation of Article 14.

Conclusion:

The court dismissed the writ petition, upholding the imposition of customs duty at 150% based on the date of entry inwards recorded in the Customs register (31 July 1981). The court also upheld the constitutional validity of Section 15 of the Customs Act, 1962, and rejected the contention of violation of Article 14 due to differential treatment in customs duty rates. The petitioners were ordered to bear the costs.

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