TaxTMI 
TaxTMI 
2014 (4) TMI 908
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....challenge in the aforesaid writ petitions. In some of the writ petitions, a show cause notice issued by the Commissioner of Customs (Preventive), West Bengal, Kolkata contemplating to confiscate the aforesaid goods under Section 111(d) of the Customs Act, 1962 for violation of the non-fulfillment of the policy condition enshrined under the said notification dated 13th May, 2013 and imposition of penalty under Section 112 of the said Act is also assailed before this Court. Admittedly the Foreign Trade Policy does not prohibit the importation of the areca nuts/betel nuts absolutely, which can be deciphered from the impugned notification dated 13th May, 2013 that it is freely importable. However, conditions have been imposed wherein the import is permissible provided the CIF Value is Rs. 110/- per kg and above. The entire thrust of the argument is founded on the legality of the said notification issued by the Director General of Foreign Trade (DGFT), though it reflects that the Central Government have imposed such conditions by amending the Foreign Trade Policy, 2009-2014. It would be relevant to record that the impugned notification dated 13th May, 2013 is issued in exercise of the ....
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....cised by the Central Government under Section 3, 5, 15, 16 & 19 of the said Act. He, thus, submits that power to formulate and amend the export & import policy cannot be delegated to the DGFT by the Central Government in view of the clear embargo created under Section 6(3) of the FTDR Act. He strenuously submits that Article 53 (1) of the Constitution of India vest the executed power of the Union in the President to be exercised directly or through the officers subordinate to him in accordance therewith. Thus, he submits that the notification amending the Foreign Trade Policy is required to be issued in the name of the President or in the name of a person subordinate to him, if duly authorized. By referring Article 77 (1) of the Constitution, Mr. Datta contends that all the executive action of the Government are expressed to be taken in the name of the President and to facilitates the smooth transaction of business of the Government of India, the President can make the Rules under Article 77 (3) of the Constitution. Since the Rules are intended for the smooth and convenient transaction of the business of the Government of India, it cannot override the substantive provisions of the ....
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....deshi -vs- Union of India & Others reported in (2003) 1 Bom LR 315. By placing reliance upon the provisions contained under Section 3 (2) of the FTDR Act, Mr. Datta submits that such power of prohibition, restriction and otherwise regulating is within the exclusive domain of the Central Government which cannot be delegated to the DGFT in view of the embargo created under Section 6 (3) of the FTDR Act. He further submits that such prohibition and/or restriction can only be regulated by an Order which is required to be placed before each house of the Parliament for approval as required under Section 19 (3) of the FTDR Act. According to him, the conditions imposed for import of the areca nuts, when the policy says, it is freely importable, amounts to a restrictions which can only be made by an Order under Section 3 (2) of the FTDR Act provided the procedure incorporated therein are adhere to. He, thus, submits that if a thing is required to be done in a certain manner, it should be done in such manner and not at all as held in case of Nazir Ahmed -vs- King Emperor reported in AIR 1936 PC 253. According to him, the prohibition can also be relatable to Section 11 of the Customs Act whic....
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....nder Section 5 of the FTDR Act. He succinctly submits that the impugned notification cannot withstand as the price fixation is a legislative function and beyond the competence of the DGFT. In support of the above contentions, he relies upon a judgment of the Apex Court in case of Union of India -vs- Cynamide India Limited & Anr; reported in (1987) 2 SCC 720. Mr. Pranab Kumar Datta, the learned Advocate appearing in some of the other writ petitions adopts the submissions of Mr. Kishore Datta and additionally submits that the artificial fixation of price for importation of the goods offends the provision of Customs Valuation (determination of value of imported goods) Rules 2007. According to him, the FTDR Act was enacted for development and regulation of the Foreign Trade by facilitating imports and augmenting exports from India. Section 5 of the said Act empowers the Central Government to formulate and announce, by notification, the Foreign Trade Policy with further power to amend it. The powers and functions of the DGFT is provided under Section 6 of the said Act wherein Sub-Section 3 excludes the power of the Central Government exercisable under Section 3,5,15,16 & 19 of the said....
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....hed and set aside. Mr. Arijit Banerjee, the learned Advocate appearing in other writ petitions also adopts the submissions of Mr. Kishore Datta & Mr. Pranab Kumar Datta. He additionally submits that at the time of submissions of the bill of industry, the importer has to make a declaration that the content therein are true and the correct statement of facts. Any other declaration would amount to a false and wrong declaration which may attract the initiation of criminal and penal proceedings. According to him, the Foreign Trade Policy for the year 2009-2014 announced by the Central Government under Section 5 of the FTDR Act, is notified by the DGFT as Ex-Officio Additional Secretary to the Government of India, but the impugned notification is issued by the DGFT alone and, therefore, cannot be a valid and legal. Mr. Bose, the learned Advocate appearing for the Director General of Foreign Trade, at the very outset, supports the impugned notification on the plea that the DGFT has conveyed the decisions of the Central Government amending the conditions in the policy. He succinctly argues that Section 2 (8) of the General Clauses Act, 1897 defines the Central Government to mean the Pres....
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....hmi Cotton Mills Ltd. -vs- State of W.B. & Others; reported in AIR 1967 SC 1145, Mr. Bose would contend that although the executive action of the Union is vested in the President but it is actually performed by the Ministers under the Allocation of Business Rules through the various departments specified in Second Schedule and if there is a substantial compliance thereof, such executive action cannot be assailed in a judicial proceedings. He would further contend that the Rules of Business and Allocation thereof amongst the Ministers are relatable to the provisions contained under Article 53 of the Constitution which is exercisable by the President directly or through the subordinate Officers and placed reliance upon a judgment of the Supreme Court in case of Ishwar Chand Agarwal -vs- State of Punjab reported in AIR 1974 SC 2192 and in case of A. Sanjeevi Naidu -vs- State of Madras reported in AIR 1970 SC 1102. He further submits that the Central Government can not only formulate and/or announce the Foreign Trade Policy but can regulate by amending the same by putting restrictions in terms of Section 5 read with Section 3 (2) of the FTDR Act as held in case of Union of India -vs- A....
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....nment may, from time to time, formulate and announce, by notification in the Official Gazette, the foreign trade policy and may also, in like manner, amend that policy: Provided that the Central Government may direct that, in respect of the Special Economic Zones, the foreign trade policy shall apply to the goods, services and technology with such exceptions, modifications and adaptations, as may be specified by it by notification in the Official Gazette." The Central Government announces the Foreign Trade Policy on regular intervals and the policy in vogue today which is a subject matter in this writ petition is Foreign Trade Policy, 2009-2014. Paragraph 2.1 contained in Chapter II relates to general provisions pertaining to import and export wherein the export and import is free except where regulated by the said policy or any other law in force. It further provides that the Item wise export and import policy shall be specified in ITC (HS) notified by DGFT as amended from time to time. The functions of the DGFT can be deciphered from Section 6 of the FTDR Act which is primarily to advise the Central Government in formulation of the Foreign Trade Policy with further responsibili....
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....ed services or specified technologies. (3) All goods to which any Order under sub-section (2) applies shall be deemed to be goods the import or export of which has been prohibited under section 11 of the Customs Act, 1962 (52 of 1962) and all the provisions of that Act shall have effect accordingly. (4) Without prejudice to anything contained in any other law, rule, regulation, notification or order, no permit or licence shall be necessary for import or export of any goods, nor any goods shall be prohibited for import or export except, as may be required under this Act, or rules or orders made thereunder." The expression 'Order' is defined under Section 2 (h) of the FTDR Act to mean any Order made by the Central Government under Section 3 of the said Act. The expression 'prohibition' is of wide amplitude. Any pedantic and restrictive meaning would frustrate the intendment for which such prohibitions are incorporated in the legislation. It admits no quarrel that the imposition of conditions or restrictions is imbibed within the expression 'prohibition'. Apart from section 3 (2) of the said Act, the power to impose restrictions can also be traced from Section 9A of the said Act wh....
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....dent, if accepted, would lead to the proposition that the executive action of the DGFT is deemed to be the action of the Central Government despite the specific embargo created under Sub-section 3 of Section 6 of the FTDR Act. Though the Allocation of Business Rules entrusted the DGFT to act for the Central Government but in view of the specific embargo created under Sub-section 3 of Section 6, the Central Government cannot delegate the power enshrined under Section 3, 5, 15, 16 & 19 of the said Act to be exercised by the DGFT. In case of Dattatraya Moreshwar (supra), one of the point before the Constitutional Bench was whether the order passed under Section 11 of the Preventive Detention Act is invalid as it has not been expressed in the manner laid down in Article 166 of the Constitution. It was sought to be argued that the order passed by the Assistant Secretary to the Home Department who is otherwise authorized under the Rules framed by the Governor of the State to sign orders and instruments for the Government of the State is invalid, the Court held: "18. The other contention raised by the learned Attorney General involves consideration of the question as to whether the prov....
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....protection which it would otherwise enjoy, had the proper mode for expression and authentication been adopted. It could be challenged in any Court of law even on the ground that it was not made by the Governor of the State and in case of such challenge the onus would be upon the State authorities to show affirmatively that the order was in fact made by the Governor in accordance with the rules framed under Art. 166 of the Constitution. This view receives support from a pronouncement of the Federal Court in J.K. Gas Plant Manufacturing Comp. Ltd. -vs- Emperor, 1947 FCR 141, where a somewhat analogous provision contained in S. 49 (1), Schedule IX of the Government of India Act, came up for consideration and the provision was held to be directory and not imperative. 19. Even if Cl. 1 of Art. 166 is taken to be an independent provision unconnected with Cl.(2) and having no relation to the purpose which is indicated therein, I would still be of opinion that it is directory and not imperative in its character. It prescribes a formality for the doing of a public act. As has been said by Maxwell (Maxwell on Interpretation of Statutes): "Where the prescriptions of a statute relate to the ....
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....ance with those requirements. In the present case there can be no manner of doubt that the notice signed by the Chief Secretary of the State and expressed to be on behalf of the Government and giving opportunity to the petitioner to show cause against the action proposed to be taken against him was in substantial compliance with the provisions, of the article. The petitioner accepted this notice and in pursuance of it applied for further time to put in his defence. He was twice granted this time. In these circumstances, the contention of Mr. Thomas that as the notice was not expressed as required under Article 166 it was invalid and therefore the requirements of Article 311 were not satisfied in this case must be held to be devoid of force. We are satisfied that all the requirements of Article 311 have been fully complied with in this case. It may also be mentioned that the High Court held that H. H. the Rajpramukh had intimation of the decision of the Council of Ministers and the action proposed to be taken against the petitioner and that in fact His Highness approved of the proposed action." The notification under Section 4 of the West Bengal Land Development and Planning Act, 1....
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....ion to the decision of any Ministers or Officers but such rules cannot override the provisions of the Act or the statutory rules as held in State of Haryana -vs- Shri P.C. Wadhwa, IPS, Inspector General of Police & another reported in 1987 SC 1201 in these words: "10. * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * The Rules of Business that have been framed under Article 166 cannot override the provisions of the Act or any statutory rules." Therefore, under the Allocation of Buiseness Rules, DGFT is a subordinate officer to discharge the functions of the Central Government expect where it acts as a delegatee under the FTDR Act. The notification announcing the Foreign Trade Policy, 2009-2014 was published under the aegis of the DGFT who is also an Ex-Officer Additional Secretary to the Government of India. Therefore, the DGFT not only assumes the power as a delegatee of the Central Government under Section 6 of the FTDR Act but is further competent as an authorized officer under the Allocation of Business Rules on behalf of the Central Government. The DGFT discharges the official functions allotted to him as a limb of the Central Government but also as a delegatee u....
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.... such powers and functions of the State transport undertaking under Section 68(C) need not be submitted to the Minister in-charge. Under sub-clause (2) of that rule, the powers and functions of the State Government under Section 68(D) of the Act and the rules relating thereto are directed to be exercised and discharged by the Secretary to the Government in the Home Department. Rule 4 of "the Rules" deals with allocation and disposal of business. It provides that the business of the Government shall be transacted in the department specified in the 1st Schedule and classified and distributed between those departments as laid down therein. Rule 5 says that Governor shall, on the advice of the Chief Minister allot the business of the Government among the Ministers, assigning one or more departments to the charge of a Minister but the proviso to that rule says that nothing in that rule shall prevent the assigning of one department to the charge of more than one Minister. Rule 6 prescribes that each department of the secretariat shall be under a Secretary who shall be the official head of the department. Under Rule 7, the Council of Ministers constituted under Article 163(1) is held col....
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....High Court assumed some importance on the factual matrix that at the time of announcing the Foreign Trade Policy, 2004-2009, the conditions were imposed in a notification issued by the DGFT under which the import is permissible provided the CIF Value is Rs.35 per kg and above, when the policy says that it is freely importable. The Court held that imposition of conditions amounts to restrictions and DGFT has no power under Section 5 of the FTDR Act nor the Central Government can do so under the aforesaid provisions. It was ultimately held that the said notification is bad and was subsequently quashed with following observations: "26. This Court has already found that the second respondent has no power to issue the notification under Section 5 read with Section 6 (3) of the FTDR Act. Further, that the price fixing on an artificial basis cannot be done and that too under the FTDR Act. It has to be done in the light of the enactments such as the Customs Act and the Customs Tariff Act. No material data have been furnished for arriving at the figure of Rs.35/- per kilo (CIF) for the betel nuts imported. When the market for betel nuts requires 90% import and the free import policy has be....
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....nd otherwise regulation, which can be imposed in exercise of the power under Section 5 of the FTDR Act by the Central Government. The said provision contemplates the formulation and/or announcement of the Foreign Trade Policy by the Central Government with further power to amend it. The power of prohibit, restrict or otherwise regulate the Foreign Trade Policy is further conferred upon the Central Government under Section 3 (2) of the FTDR Act. Putting of any conditions which fetters the free import amounts to restriction and can be brought within the wider meaning thereof. The reference can be conveniently made to the definition of a prohibited goods enshrined under the Custom Act, 1962 which provides that any goods of the import or export which is subject to the prohibition under the said Act or any other law for the time being in force but does not include any goods in respect of which the conditions subject to which the goods are permitted to be imported or exported when complied with. It can be deciphered without any ambiguity that the expression 'any other law for the time being in force' certainly imbibed within itself the prohibition under the FTDR Act. The word 'prohibitio....
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....oes not bring within its fold the restrictions imposed by clause (3) of the Import Control Order, 1955. The Court negatived the said contention and held thus: (SCC p. 732, para 11) "What clause (d) of Section 111 says is that any goods which are imported or attempted to be imported contrary to 'any prohibition imposed by any law for the time being in force in this country' is liable to be confiscated. 'Any prohibition' referred to in that section applies to every type of 'prohibition'. That prohibition may be complete or partial. Any restriction on import or export is to an extent a prohibition. The expression 'any prohibition' in Section 111(d) of the Customs Act, 1962 includes restrictions. Merely because Section 3 of the Imports and Exports (Control) Act, 1947, uses three different expressions 'prohibiting', 'restricting' or 'otherwise controlling', we cannot cut down the amplitude of the word 'any prohibition' in Section 111(d) of the Act. 'Any prohibition' means every prohibition. In other words all types of prohibitions. Restriction is one type of prohibition. From Item (I) of Schedule I Part IV to Import Control Order, 1955, it is clear that import of living animals of all ....
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.... be free except, where regulated by Foreign Trade Policy or any other law in force. It further provides that the Item wise export and import policy shall be notified by the DGFT as amended from time to time. According to the respondent, Paragraph 2.6 of the policy empowers the DGFT to adopt and enforce any measure under the principles of restrictions through a notification. It is relevant to quote the source of power of restriction of the DGFT under Paragraph 2.6 of the Foreign Trade Policy, which reads thus: "2.6. DGFT may, through a notification, adopt and enforce any measure necessary for:- (i) Protection of public morals. (ii) Protection of human, animal or plant life or health. (iii) Protection of patents, trademarks and copyrights and the prevention of deceptive practices. (iv) Prevention of use of prison labour. (v) Protection of national treasures of artistic, historic or archaeological value. (vi) Conservation of exhaustible natural resources. (vii) Protection of trade of fissionable material or material from which they are derived; and (viii) Prevention of traffic in arms, ammunition and implements of war." The aforesaid parameters set forth therein does not sat....
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....of national treasures of artistic, historic or archaeological value; (m) the conversation of exhaustible natural resources; (n) the protection of patents, trade marks, copyrights, designs and geographical indications; (o) the prevention of deceptive practices; (p) the carrying on of foreign trade in any goods by the State, or by a Corporation owned or controlled by the State to the exclusion, complete or partial, or citizens of India; (q) the fulfillment of obligations under the Charter of the United Nations for the maintenance of international peace and security; (r) the implementation of any treaty, agreements or convention with any country; (s) the compliance of imported goods with any laws which are applicable to similar goods produced or manufactured in India; (t) the prevention of dissemination of documents containing any matter which is likely to prejudicially affect friendly relations with any foreign State or is derogatory to national prestige; (u) the prevention of the contravention of any law for the time being in force; and (v) any other purpose conducive to the interests of the general public." The FTDR Act does not override any other substantive law but is ....
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.... Act and the Drug (Prices Control) Order, 1979 was made wherein notifications were issued fixing the maximum price at which various indigenous manufacturing bulk drugs may be sold by the manufacturer. The said notification was assailed before the High Court and ultimately the matter reached before the Supreme Court. In the above perspective, it was held that ordinarily the fixation of price or determination of price is legislative action, which is not a rule of rigidity. The Supreme Court in unequivocal and clear terms indicated that the price fixation is neither the function nor the forte of the Court. The exception to the above rule is also indicated when the price fixation may assume an administrative or quasi-judicial character than the legislative activity, Para 7 of the said report can be conveniently quoted for the above proposition: "7. The third observation we wish to make is, price fixation is more in the nature of a legislative activity than any other. It is true that, with the proliferation of delegated legislation, there is a tendency for the line between legislation and administration to vanish into an illusion. Administrative, quasi-judicial decisions tend to merge ....
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....s a direction of a general character, not directed against a particular situation. It is intended to operate in the future. It is conceived in the interests of the general consumer public. The right of the citizen to obtain essential articles at fair prices and the duty of the State to so provide them are transformed into the power of the State to fix prices and the obligation of the producer to charge no more than the price fixed. Viewed from whatever angle, the angle of general application, the prospectiveness of its effect, the public interest served, and the rights and obligations flowing therefrom, there can be no question that price fixation is ordinarily a legislative activity. Price fixation may occasionally assume an administrative or quasi-judicial character when it relates to acquisition or requisition of goods or property from individuals and it becomes necessary to fix the price separately in relation to such individuals. Such situations may arise when the owner of property or goods is compelled to sell his property or goods to the Government or its nominee and the price to be paid is directed by the legislature to be determined according to the statutory guidelines la....
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....racter when it relates to the acquisition and requisition of goods or property from the individuals. Apart from the said proposition of law, the petitioners could not demonstrate in the pleading that the fixation of price at Rs.110/- per kg & above is based on the irrelevant or extraneous consideration. On the other hand, the respondents have justified the fixation of price to be based upon the price prevalent in the indigenous market and the cost of production and/or cultivation. I don't wish to delve deep into the matter in absence of any specific pleadings except to say that generally a price fixation is a legislative activity but may assume administrative and quasi-judicial character occasionally. To conclude the above point, I thus held that the impugned notification cannot be sustained on whichever angle it is viewed and is, therefore, quashed and set aside. Notification dated 25th June, 2013 issued by the Director of Government of India, Ministry of Finance (Central Board of Excise & Customs) & Notification dated 21st August, 2013. The aforesaid notifications are issued under Section 14 (2) of the Customs Act, 1962 by fixing the tariff value for importation of the areca nu....
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....ent to issue notifications exempting generally either absolutely or subject to such conditions as specified in the notification, goods of any specified description from the whole or any part of the customs Act (sic duty) leviable thereon. 14. The definition of imported goods has to be read along with Section 111 of the Act which deals with goods brought from place outside India. Section 111 of the Act provides for confiscation of goods and conveyances and imposition of penalties. Section 111(d) of the Act provides that any goods which are imported or attempted to be imported or are brought within Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force, shall be liable for confiscation. Section 112 of the Act provides for penalties for improper importation of goods." The levy and exemption of the customs duties are provided under Chapter V of the said Act. Sub-section 1 of Section 14 of the Customs Act makes the applicability of the Customs Tariff Act, 1975 by reference relating to the valuation of both imported and exported goods to be the transaction value, which is the price a....
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.... anything contained in sub-section (1), if the Board is satisfied that it is necessary or expedient so to do, it may, by notification in the Official Gazette, fix tariff values for any class of imported goods or export goods, having regard to the trend of value of such or like goods, and where any such tariff values are fixed, the duty shall be chargeable with reference to such tariff value. Explanation- For the purposes of this section- (a) "rate of exchange" means the rate of exchange- (i) determined by the Board, or (ii) ascertained in such manner as the Board may direct, for the conversion of Indian currency into foreign currency or foreign currency into Indian currency; (b) "foreign currency" and "Indian Currency" have the meanings respectively assigned to them in clause (m) and clause (q) of section 2 of the Foreign Exchange Management Act, 1999" The tariff value is defined under Section 2 (40) of the Customs Act to mean the tariff value fixed in respect of any goods under Sub-section 2 of Section 14. The value is also defined under Section 2 (41) of the Customs Act to mean the value determined in accordance with the provisions of Sub-section 1 or Sub-section 2 of Secti....
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....priate adjustment can be made in accordance with the provisions of rule 10 of these rules; and (d) the buyer and seller are not related, or where the buyer and seller are related, that transaction value is acceptable for customs purposes under the provisions of sub-rule (3) below. (5) (a) Where the buyer and seller are related, the transaction value shall be accepted provided that the examination of the circumstances of the sale of the imported goods indicate that the relation ship did not influence the price. (b) in a sale between related persons, the transaction value shall be accepted, whenever the importer demonstrates that the declared value of the goods being valued, closely approximates to one of the following values ascertained at or about the same time. (i) the transaction value of identical goods, or of similar goods, in sales to unrelated buyers in India; (ii) the deductive value for identical goods or similar goods; (iii) the computed value for identical goods or similar goods: Provided that in applying the values used for comparison, due account shall be taken of demonstrated difference in commercial levels, quantity levels, adjustments in accordance with the pr....
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....aj Lal H. Vohra v. Union of India were directly concerned with a similar contention that had been raised. Dealing with the same, this Court has in clear terms come to the conclusion that what is relevant is the day on which the bill of entry in respect of the goods is presented under Section 46 and in the case of goods which are warehoused the relevant date would be the date on which the goods are actually removed from the warehouse. It is no doubt true that in Bharat Surfactants this Court did observe that it did not express any opinion with regard to the soundness of the view taken by the Bombay High Court in Sylvania & Laxman case and in the judgment under appeal but, nevertheless, as we read the said judgment, the conclusion of this Court in Bharat Surfactants was contrary to the view expressed by the Bombay High Court. We do not find that the said decision in Bharat Surfactants can in any way be distinguished from the facts of the present case. Similarly in Dhiraj Lal the contention raised that the ship had entered the territorial waters on 20-2-1989 and that was the relevant date for determining the taxability of the imported goods, was rejected. In this connection, it was ob....
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.... 1989 also are irrelevant. The relevant date to fix the rate of customs duty, therefore, is March 2, 1989. The rate which prevailed as on that date would be the duty to which the goods imported are liable to the impost and the goods would be cleared on its payment in accordance with the rate of levy of customs prevailing as on March 2, 1989." In case of Garden Silk Mills Ltd. -vs- Union of India reported in (1999) 8 SCC 744, the point arose whether the landing charges can be added and/or included in ascertaining the value of the imported goods. It is held that the taxable event would arise when the goods reaches at the customs barriers and is allowed to become a part of the mass of goods in these words: 13. All imported goods unloaded in a customs area are required to remain under the Customs Authorities until they are cleared for home consumption or are warehoused or are trans-shipped (Section 45). The goods can be cleared by the importer only after, as provided by Section 6, the importer files a bill of entry for home consumption or warehousing pursuant to which clearance of goods is granted under Section 47 by the Customs Officer. This clearance is given after the officer is, ....
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....came to the conclusion in Apar (P) Ltd. case that the duty has to be paid with reference to the relevant date as mentioned in Section 15 of the Act. 17. It was further submitted that in the case of Apar (P) Ltd. 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 waters the import is complete. We do not agree with the submission. This Court in its opinion in Bill to Amend Section 20 of the Sea Customs Act, 1878 and Section 3 of the Central Excises and Salt Act, 1944, Re SCR at p. 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." The aforesaid judgments as cited above and relied upon by the Custom Authorities couldn't be conveniently applied in relation to the power to fix the tariff value by the Board except for the limited purpose as to the commencement of the taxing events. On a meaningful reading of Section 14 Sub-sectio....
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....ence of any fixation of a tariff value by the Board, the recourse to Sub-section 1 of Section 14 can be resorted to and not otherwise. The contention of the petitioners that the Board cannot fix the tariff value is unacceptable and runs contrary to the intendment of the legislation. The other point taken by the petitioner to assail the impugned notification is that Sub-section 2 of Section 14 of the Customs Act requires the satisfaction of the Board in relation to the trend of values of such or like goods. The petitioner says that there is no recording of satisfaction both subjectively and objectively with regard to the trend of values of the similar or like goods and, therefore, the impugned notification is liable to be quashed and set aside. It is further contended that unless there is a valid reason for fixation of a tariff value, the notification can be challenged on the ground of unreasonability and improportionality. In this regard, the reference can be made to a judgment of the Supreme Court in case of Union of India -vs- Century Manufacturing Company Ltd. reported in 1992 (60) ELT 3 (SC) where the vires and interpretation of Section 3 (2) of the Central Excises and Salt Act....
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....ufacturer concerned under Section 4 (old and new). But this need not be the sole criterion. The value may be derived with reference tot he wholesale price, the retail price or the average price at which the goods are sold by the manufacturer concerned or even by the price at which the goods are sold by any particular person or place or the average price which the goods command in the whole country or any part thereof. It can be fixed at the lowest of such prices, at the highest of such prices or at some average (mean, media mode etc.) of such prices as the Government may consider appropriate in the case of any particular commodity." The Supreme Court in Paragraph 11 of the said reports ultimately held: "11. In our opinion, the tariff value has been notified under Section 3(2) for valid reasons and on germane grounds having a nexus to the 'value' of the goods and the High Court erred in accepting the assessee's plea that "the notifications are arbitrary, perverse and display a non-application of mind on the part of the authorities as the tariff values fixed are unrelated to the value or price or the manufacturing cost and manufacturing profit of the products". That the weighted av....
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....n grounds extraneous to the legislation or if there are no grounds at all for passing it or if the grounds are such that no one can reasonably arrive at the opinion or satisfaction requisite under the legislation." No case of such nature has been made out in the present case. It would be deciphered from the impugned notification that the authorities took note of the trend of the value of such or like goods and, therefore, the presumption lies in favour of upholding the notification. This Court, therefore, does not find that the impugned notification, which is issued in exercise of the power under Sub-section 2 of Section 14 can be invalidated on the grounds taken by the petitioner. Show Cause Notice The power of judicial review should not be exercised when challenge is made to a show cause notice unless the Court is satisfied that the said show cause notice is totally non-est in the eye-of-law for want of jurisdiction or the authority issuing the said show cause notice is otherwise not competent therefor and not vitiated by unfairness and bias or issued with a close mind. The show cause notice is not an ideal formality but should inspire confidence in the minds of those subjecte....
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....cision by this Court in case of Suttons & Sons Pvt. Ltd; -vs- Union of India & Ors; reported in 1994 (2) CHN 131 where it is held: "41. A contention has been raised by Mr. Daw, learned Advocate for the respondents, that the petitioner should have replied to the show cause notice and submitted to the jurisdiction of the Customs authorities. If the petitioner is aggrieved by the decision of the Adjudicating Authority, the petitioner will be at liberty to move the appropriate forum. The contention of Mr. Dutt, learned Advocate on behalf of the petitioner is that had the reply to the impugned show cause notice been given, the Court would not have entertained the writ application and accordingly no reply was given. 42. I do not find any substance in the contentions raised by the learned Advocates appearing for the parties. If the show cause notice is without jurisdiction, the Writ Court can interfere irrespective of the fact whether the importer has replied to the show cause notice or not. Mere submission of a reply to the statutory Authority against the show cause notice does not by itself take away the right of a citizen to challenge such show cause notice, if such show cause notic....