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1985 (10) TMI 273
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....er the countervailing or additional duty payable under Section 2A of the Indian Tariff Act, 1934, or under Section 3 of the Customs Tariff Act, 1975, was Customs duty referred to in the charging section, namely, Section 12 of the Customs Act, 1962 ? 2. The facts leading to the filing of these two writ petitions are stated in the order of reference and we think it unnecessary to repeat the same. Suffice to note that on the dates when the goods in question entered the "territorial waters of India" from the foreign country as also on the day they were stored in the bonded warehouse, they were wholly exempt from payment of basic Customs duty under a notification issued by the Central Government (hereinafter referred to as "Exemption Notification") in exercise of its powers under Section 25(1) of the Customs Act, 1962 (hereinafter referred to as "the Customs Act"). But, by the time these goods were sought to be removed from the bonded warehouse, the Exemption Notification was rescinded and the exemption granted thereunder was withdrawn. A Division Bench of this Court in Shawhney v. Sylvania & Laxman (hereinafter referred to as "Sylvania Laxman's case") (77 Bom. L.R. 380) after ref....
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....der granting entry inwards for the said vessel. A bill of entry for the clearance of these goods was presented by the Respondents on 27th April 1967. The goods were actually cleared on 6th June, 1967. Accepting the contention of the Respondents that the goods were imported before 31st March 1967 upto which date the exemption granted under the said notification was operative, the Customs Authorities cleared the goods without levying any duty of customs. Later, on 23rd September, 1967 the Assistant Collector of Customs issued a notice to the Respondents to show cause why customs duty amounting to ₹ 1,40,558.75 due from them should not be levied. This demand was made on the footing that on the day when the bill of entry was presented and the goods were cleared, the exemption notification was no longer in force and the goods were chargeable to duties of customs. The Court held that as the taxable event occurs when the goods are imported into the territorial waters of India the chargeability of the goods to customs duty ha to be determined with reference to that date. As that event took place much prior to 31st March 1967 when the exemption notification was operative, the demand m....
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....ticular date, the basic requirement is that the goods are dutiable in the first instance. In other words, there must be chargeability to duty on the date of importation. Section 12 is the only charging section, which says that subject to the provisions of this Act, viz., the Customs Act, the rates of duty will be those mentioned in the Indian Tariff Act, 1934. Since the Tariff Act is subject to the provisions of the Customs Act, one has to read the Notification under Section 25(1) as on the date of actual importation, viz., 29th March, 1967. On that date there was total exemption, which means that the glass tubes in question were not dutiable goods at all on March 29, 1967, when actually imported. If that is so, can we apply the subsequent rate which is now prevalent after the 1st April, 1967, to these goods. The learned Judges pointed out that this cannot be done. The goods which were not liable to pay duty at all when imported cannot be subjected to the duty by the procedure to be adopted under Section 15 for clearance." (Emphasis supplied by us). On the basis of the judgment in Sylvania Laxman's case when it was argued for the Customs Authorities that the rate of customs duty a....
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....e reference to the Full Bench is not called for. We agree with Mr. Cooper that the Division Bench in Synthetics' case did not disagree with the principle laid down in Sylvania Laxman's case. In fact, in arriving at the conclusion that although importation into India is complete on the date when the goods enter territorial waters, if they are not totally exempt from duty at that point of time and some customs duty is chargeable, those goods would be liable to the levy of customs duty at the rates in force on the dates mentioned in Section 15 of the Customs Act. In the later case the principle enunciated in Sylvania Laxman's case that the chargeability to customs duty under Section 12 (1) is to be determined with reference to the date on which the goods enter territorial waters of India was accepted. On that footing the Division Bench found that on the date when the goods were imported into territorial waters, were not wholly exempt from duty Customs duty but were chargeable to duty and therefore customs duty payable was to be computed and quantified at the rate prevalent on the dates mentioned in Section 15(1), i.e. the date on which they are cleared for home consumption. The Court ....
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....t in entire agreement with the view expressed in Sylvania Laxman's case and that they were of the view that it required reconsideration, in the light of the Supreme Court decisions in Empress Mills v. Municipal Committee, Wardha (AIR 1958 SC 341). In Re: Sea Customs Act (AIR 1963 SC 1760); Prabhal Cotton and Silk Mills v. Union of India (1982 E.L.T. 203); Shri Ramlinga Mills v. Assistant Collector of Customs (1983 E.L.T. 65) and Union of India & Ors. v. Khalil (1970 Cr. L.J. 417) is further clear from what is stated in paragraph 20 of the order of reference extracted below : ".........the decision in Sylvania's case (77 Bom. L.R. 380) followed by this Court in Synthetics case (1981 E.L.T. 414) is primarily based on the view that the event of importation takes place when the goods cross territorial waters and not when they come on the land and are either cleared from the warehouse or the bill of entry presented as required under Section 15(1) of the Customs Act, 1962" Inasmuch as the Bench in referring the case has observed that the view taken in Sylvania Laxman's case has to be reconsidered in the light of the above mentioned decisions, we proceed to consider the same. 6.&e....
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....ayment of duty does not arise and no special order granting exemption from payment is necessary. Only where goods are not exempt under sub-section (1) of section 25 and the Central Government having regard to special circumstances deems it necessary exempt from payment of duty on goods on which duty is leviable would it be necessary to make a special order under sub-section (2) of section 25. Once exemption is granted under section 25(1) it would mean that as envisaged by section 12 of Customs Act, the exemption notification "provides otherwise" and the goods are not chargeable to duty under section 12. Thus section 25(1) of the Customs Act empowers the Central Government to exempt goods from levy of duty generally and under section 25(2) from payment of duty by a special order. If as provided under section 25(1) exemption is granted from the whole of the duty leviable on certain goods, customs duty itself is not leviable on such imported goods, no question of calculating the customs duty leviable at any particular rate specified either under the Customs Tariff Act or any other law for the time being in force arises. The crucial question, therefore, would be : When can the goods b....
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....r are to include certain things which, but for the interpretation clause, they would not include ................... *            *            *            * An interpretation clause which extends the meaning of a word does not take away its ordinary meaning........................... An interpretation clause of this kind is not meant to prevent the word receiving its ordinary, popular and natural sense whenever that would be properly applicable, but to enable the word as used in the Act when there is nothing in the context or the subject-matter to the contrary, to be applied to some things to which it would not ordinarily be applicable.** **" 10. It is true that in ascertaining the intention of the legislature in using a particular word, how the word is commonly understood must undoubtedly be given weight. If the word is used with reference to or in the context of a particular trade or business, it must receive the same meaning in which the particular trade or business understands it. In other words, the ....
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....eux v. Jacobs (1875) LR 7 HL 481 at page 493, the interpretation clause should not be understood as requiring extended meaning in all circumstances, for the definition clause itself says "unless the context otherwise require". However, even where such an expression is employed it is only where the contrary intention appears from the context that the definition clause may be given a go by and the word understood as is understood in common parlance. But then, as stated above, when the definition clause employs the word "includes" and enjoins that "unless the context requires otherwise, it shall include" as stated therein, the Court cannot, unless there are compelling circumstances and reasons having regard to the context in which the word defined is used, the interpretation clause cannot give a go by to the definition. The effort of the Court should be to give effect to the meaning intended by the Parliament as made clear by defining the words employed by it in the enactment "unless the context otherwise requires". 12. Mr. Talyarkhan, learned Counsel for one of the petitioners-inter-venors placed reliance upon the decision of the Supreme Court in Vanguard Fire and General Insur....
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....he opening words of the definition clause declared "unless there is anything repugnant in the subject or context". Even there it was laid down that the meaning to be given to a word is that given in the definition clause itself, unless there is anything repugnant in the subject or context. 13. Reliance was also placed on the judgment of the Supreme Court in Commissioner of Gift Tax, Madras v. Getty Chettiar (AIR 1971 SC 2410 at page 2413) in which the Supreme Court took a view similar to the one taken in Vanguard Fire and General Insurance Company's case (AIR 1960 SC 972). Thus as discussed above, ordinarily, the special meaning given to the interpretation clause should be given effect to. Where a word is defined in a Statute to mean a certain thing, wherever that word is used in that statute, it shall mean what is stated in the definition unless the context otherwise requires. 14. In our view having regard to the definition of the word "India" under the Customs Act with which we are presently concerned which is an inclusive definition and which is prefaced by the clause "unless the context otherwise requires", the more appropriate principle that would apply is the one ....
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....ression "unless the context otherwise requires", it shall mean or include those things or situations, it is not open to the Court to give any other meaning to those words except when the context requires otherwise. The expression "unless the context otherwise requires" excludes all situations except those for compelling reasons the intended definition has to be abandoned. Section 2 directs that in this Act, "unless the context otherwise requires", the words occurring in the Act shall be understood as defined therein. In other words, "India" commonly understood is the geographical entry comprising only of the land mass. For certain purpose the country referred to as "India" may extend into the sea upto the limit of "territorial waters" or "contiguous zone" or "continental shelf" or "exclusive economic zone" or "other maritime zones". Section 3(2) of the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976, provides that a distance of twelve nautical miles from the nearest point of low tide along the baseline of India constitute territorial waters of India. Whatever the word "India" may mean in common parlance and under other enactment's, ....
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....vied, in the context means not merely chargeability but also quantification of the duty, that is the valuation of goods for the purpose of levy of duty, the rate at which the duty should be levied and also recovery of such duty. According to him, the expression "imported into India" occurring in Section 12 must therefore be interpreted not only keeping in view when the goods became chargeable to duty but also the dates with reference to which the goods are to be valued and the event with reference to which the rate at which duty is to be levied and quantified. 16. In order to appreciate this contention, it is necessary to notice the various steps required to be taken under the Customs Act for levy of duty on goods imported into India. As stated above, Section 12 declares that duties of customs shall be levied on all goods imported into India. The goods imported shall have to be valued under Section 14 and the duty payable shall have to be determined according to the rates specified under Section 15 of the Customs Act read with the Tariff Act. Every importer of goods is required under Section 46(1) of the Customs Act to make an entry with the proper officer by presenting a bil....
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....own the date for determination of rate of duty and tariff valuation of imported goods. The expression "the rate of duty and tariff valuation, if any, applicable" occurring in section 15 is significant. Section 15 itself envisages that in respect of certain goods, no rate of duty or tariff valuation may be applicable. The customs duty would be payable only if they are chargeable to duty. What is enjoined by Section 15 would become relevant only if goods are chargeable to duty. Only then for the purpose of determining the amount of duty payable on imported goods the rate at which the duty has to be levied has to be determined as envisaged by Section 15. 19. Under all taxing statutes, whether Customs Act, Central Excise and Salt Act, Income-tax or Gift Tax or Estate Duty Act what has to be first determined is when exactly did the taxable event occur ? It is with reference to that point of time, that the chargeability or leviability of the tax or duty, as the case may be, has to be determined. That is the crucial date. In Wallace Brothers and Company Ltd. v. Commissioner of Income-tax (16 ITR 240) the Privy Council held (page 244) : "The general nature of the charging section is....
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....lways to the legislative competence of the taxing authority, the said tax can be levied at a convenient stage so long as the character of the impost (that is, it is a duty on the manufacture or production) is not lost. The method of collection does not affect the essence of the duty, but only relates, to the machinery of collection for administrative convenience." That decision further laid down (at page 1775) : "Similarly in the case of duties of customs including export duties though they are levied with reference to goods, the taxable event is either the import of goods within the customs barriers or their export outside the customs barriers." (Emphasis supplied) All these decisions make it clear that a taxing statute does not envisage that the taxable event, valuation of goods, income or estate as the case may be, rate of duty or tax and quantification of duty or tax should be completed at any single point of time, or with reference to one and only one point of time, nor that they must be necessarily postponed until all the stages are completed; nor that each of these events could not occur or each of these steps could not be taken at different points of time. Parliament tak....
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.......... Now, what is the true matter of an import or export duty ? 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. Such a condition is imposed by way of exercise of the power of the Union to regulate the manner and terms on which the goods may be brought into the country from a foreign land. Similarly an export duty is a condition precedent to other lands. It is not a duty on property in the sense of Art. 289(1)." In that case the Supreme Court was discussing as to whether imposition of customs duty on import of goods is a tax on property, that is, on the goods or on the act of import of goods. The Court held that the taxable event is the act of import of goods into India and the duty is not on property as such, but on the act of importation of goods. The Court was not concerned in that case as to when the goods can be said to have been imported; nor did the Supreme Court, lay down that taxable event does not occur when the goods enter the territorial waters. What all the Supreme Court said w....
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....of collection is to be located where the statute declares it. Collection of duty and levy of duty are two different things." The Supreme Court further observed : ".........while the nature of an excise is indicated by the fact that it is imposed in respect of the manufacture or production of an article, the point at which it is collected is not determined by the point of time when its manufacture is completed but will rest on consideration of administrative convenience, and that generally it is collected when the article leaves the factory of the first time." 26. In our view, the above decisions also make it clear that the taxable event may occur at one time and the duty chargeable upon that event occurring, may be quantified and collected at a later date but there is nothing in the Customs Act which indicates that the chargeability itself is postponed to a later date. What is postponed is quantification and collection and not chargeability. These decisions though rendered in the context of levy of excise duty lend support to the view we have taken, namely, while import duty is on the act of importation which is complete when the goods enter the territorial waters of India,....
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....oreign countries but also to commodities which were the subject of inter-state commerce, importation was not complete so long as the goods were in the original package and hence the State had no power to tax imports until the original package was broken or there was one sale while the goods were still in the original package. The Supreme Court declared that having regard to scheme of legislation that has been outlined in the Government of India Act and in the present Constitution, in which the various entries in the legislative Lists have been expressed in clear and precise language, this doctrine has no place. 29. Another theory propounded is that only upon the goods forming part of the land mass they become imported goods. 30. Reference to the theory that goods become imported goods only when they form part of the land mass and not until then, made in In Re Sea Customs Act (AIR 1963 SC 1760) may now be examined in the context of the Customs Act, 1962. The Supreme Court in the said case was dealing with the Sea Customs-Act, on a comparison of the provisions in the Canadian and Australian Constitution with the provisions in the Constitution of India and considering the ....
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....g the customs barriers, became imported goods. 31. Another contention raised is that unless the goods are brought to port there is no import. Very strong reliance was placed by Mr. Dalal learned Counsel for this contention upon the decision of the High Court of Australia in Wllson v. Chambers & Co. Pvt. Ltd. (38 C.L.R. 131). That was a case in which a certain quantity of paint was shipped from England to a consignee in Melbourne, Sydney, Australia. The paint would have been dutiable under the Customs Tariff Act if imported into the Commonwealth. The ship did not go to Sydney but entered another port in New South Wales. The ship was about to discharge the paint there, and the consignee was willing to take delivery. While the ship was in the port, an arrangement was made between a person C, acting on behalf of the consignee, and the captain of the ship, whereby the paint was taken over for the use of the ship. No Customs entry was made in respect of the paint and it was not landed. By permission of the Customs Officer at the port, guarantee having been given by the captain to furnish a list of all dutiable stores consumed on the voyage to Melbourne, the next port of call, the s....
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....1895, it was wholly exempt from duty, but the very next day, before the sugar was cleared, it was subject to duty. The question with which we are now concerned squarely arose for decision in that case and the question was, what is the date of importation of the sugar. The Court observed : "The real question............is whether the sugar was 'imported' within the meaning of Section 4 of the Tariff Act, 1894, before or after May 3, because it is by that Section as amended by the Act of 1895, that duty is imposed." The Court was of the view : ".........that question depends on the construction and effect to be given to the Customs Tariff Act and certain sections of the Customs Act," and proceeded to consider Section 4 of the Customs Tariff Act, 1894, which reads as follows : "Section 4. Subject to the provisions of this Act and to the requirements of the Customs Act, Section 32 of the Revised Statutes as amended there shall be levied, collected and paid upon all goods enumerated or referred to as not enumerated in Sched. A to this Act the several rates of duties of customs forth and described in the said schedule and act opposite to each class respectively or charged thereon as....
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.... date, the Crown was entitled to it. But their Lordships do not find it necessary to adopt the appellants' constructions of Section 150. Every clause of a statute should be construed with reference to the context and the other clauses of the Act, so as, so far as possible, to make a consistent enactment of the whole statute or series of statutes relating to the subject-matter." Dismissing the appeal the Court held (Page 741) : "......According to this construction, the port spoken of in Section 150 would be the port at which the goods arc to be landed mentioned in Section 31. And this construction appears to their Lordships to place a consistent, rational, and probable meaning on the whole of the sections referred to when read together............ The object of the definition in Section150 is not to define the port of importation, or the meaning of 'imported', but the time when the goods are to be deemed to be first imported." It would be seen that that decision turned on the interpretation of Section 150 of the Customs Act, 1886, which was in the following words : "Sec. 150 (as amended by 52 Vict. C. 14, S. 12). Whenever, on the levying of any duty, or for any other purp....
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.... goods lodged in the warehouse need not be cleared in one lot; they could be cleared in instalments. Even in respect of goods unloaded on the land mass on the same day or even at the same time, Section 15 of the Customs Act clearly envisages different rates of duties with reference to the date of clearance. Then there will be different dates of importation for the goods unloaded on the land mass on the same day but removed from the warehouse for home consumption on different dates. That being so at what point of time anterior to the actual clearance do the goods become imported goods ? Is it when they enter the territorial waters of India ? Or is it when the vessel carrying the goods calls at any port in India ? Or is it when the goods are unloaded on the land mass of India ? If it could be any of these, then, in our view, the definition of the word "India" for the purpose of the Customs Act must clinch the issue. After all, words and expressions are defined in a statute to make the intention of the legislature explicit and precise where such words and expressions are susceptible of several meanings. The combined effect of the definitions of the words "import" and "India" under Sec....
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....n they enter the territorial waters of India would be further clear from the several provisions of the Customs Act, to which we will presently refer. 37. As rightly contended, the provisions of an Act have to be construed in the light of the scheme of the Act more especially if a particular provision is susceptible of several interpretations. In fact, both the learned Counsel far from disputing this position relied upon several provisions, to which we will presently refer to contend that those provisions give an indication of the legislative intent, which, according to the importers, clearly point out that the goods are imported into India no sooner than they enter the territorial waters of India, and according to the learned Counsel for the Customs authorities, only when they are sought to be cleared for home consumption. The provisions referred to in this regard are Sections 13, 21, 23, 31, 32, 33, 34, 37, 45, 46, 48, 49 and 53 and we may proceed to examine them. 38. Section 13 of the Customs Act, which deals with duty on pilfered goods, reads as follows : "13. Duty on pilfered goods. - If any imported goods are pilfered after the unloading thereof and before proper ....
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....torial waters and before they are brought on to the land mass and cleared for home consumption. So too, Section 22, which makes provision for abatement of duty on damaged or deteriorated goods, could have been enacted only on the basis that the goods become imported goods and such goods were damaged or deteriorated during or after unloading but before clearance. Such a provision would not have been necessary if the goods were not subject to duty until unloaded and sought to be cleared. Similar provision is made in Section 23 for remission of duty on goods lost, destroyed or abandoned at any time before clearance for home consumption, which again would not have been necessary unless the goods had become imported goods earlier and became liable to duty. Sections 31, 32, 33 and 34 prohibit imported goods from being unloaded from vessel until entry inwards is granted and mentioned in import manifest or import report. They require goods to be unloaded at approved places only and under supervision of Customs officer. The legislature evidently made these provisions and placed restriction on these goods only because as per the definitions in the "Act, the goods become imported goods even b....
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....o sooner than they entered the territorial waters of India were to be regarded as "imported goods" and duty was leviable thereon, but thought it advisable to exempt goods which are not intended to be unloaded on the land mass and are merely in transit for being unloaded elsewhere and accordingly made provisions exempting them from payment of duty. It is thus manifest that under the Act goods on entering the territorial waters of India became imported goods and chargeable to duty under Section 12, but if not unloaded are exempt from payment of duty by virtue of the specific provisions. It is significant to note that such goods are not exempted from the operation of Section 12, but by virtue of this and the other provisions of the Act are allowed to be transited without payment of duty. Similar provision is made in Section 54 in respect of goods imported into a customs port or customs airport but are intended for transhipment. It, as contended for the Customs authorities, the goods become imported goods only when they are sought to be cleared for home consumption or placed in such a position as to be mixed with the goods on the land mass, all the provisions referred to above would be....
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.... are brought to India as defined under Section 2 (27) of the Customs Act, that is, into the territorial waters of India, they become "imported goods". They continue to be imported goods until cleared for home consumption. The taxable event occurs upon the goods entering the territorial waters of India. If at that point of time, the imported goods are chargeable to duty, then the duty has to be assessed as per the valuation made under Section 14 and at rates specified under Section 15. Except as otherwise provided in the Customs Act or other law in force for the time being, all such goods would be chargeable to customs duty as laid down under Section 12 of the Customs Act. But by value of some of the provisions referred to above, duty may not be leviable or remission or abatement of duty may be granted on these imported goods either because they are damaged, pilfered or not unloaded at the port or cleared for home consumption but transitted. The goods may not be chargeable to customs duty also because the Central Government chooses to exempt from duty by issuing a notification under Section 25 of the Customs Act. In this context, it is necessary to note the distinction between ....
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....5 of the Act. The observation in the order of reference that chargeability of the goods to customs duty arises on account of the goods being listed in the Schedule ignores the opening words "Except as otherwise provided in this Act or any other law for the time being in force" occurring in Section 12. We are unable to agree with that observation. If on account of exemption granted under Section 25 (1) the goods imported into India are not chargeable to duty and no duties of customs can be levied, obviously there is no occasion to ascertain the tariff valuation of the goods imported under Section 14 or the rate at which the duty is payable under Section 15. Sections 14 and 15 would apply only in a case where duties of customs are leviable under Section 12 and the Customs Act or any other Act does not provide otherwise. In other words, if the Customs Act read with the notification issued under Section 25(1) thereof provides otherwise, duties of customs shall not be levied under Section 12 and consequently. Section 15 does not come into operation in respect of these goods and the question of valuation of the goods under Section 14 does not arise for the purpose of assessment. That is ....
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.... and the Customs Tariff Act established by Section 12 is severed by the notification under Section 25(1) and the Schedule to the Customs Tariff Act ceases to apply and no notion of "nil" duty can be imported where the goods are wholly exempt from duty under the notification. The metaphysical concept of "nil duty" cannot be invoked so as to subject to duty goods wholly exempt from levy when the taxable event occurred, that is, when they entered the territorial waters of India even if the exemption notification were withdrawn by the time these goods came to be cleared for home consumption. 44. Two other decisions of this Court (i) Synthetics and Chemicals Ltd. v. S.C. Coutinho and others (1981 Excise Law Times 414), discussed above and i(ii) New Chemi Industries Pvt. Ltd. and another v. Union of India and others (1981 Excise Law Times 920) have concurred with the view taken in Sylvania Laxman's case. The latter case was of imported goods which were partially exempt from duty on the date when the ship carrying them entered the territorial waters and that partial exemption was withdrawn subsequently. The learned Single Judge rejecting the claim of the importer for partial exempti....
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.... context, the Court held : "By giving to the words 'imported into or exported from' their derivative meaning without any reference to the ordinary connotation of these words as used in the commercial sense, the decided cases in India have ascribed too general a meaning to these words which it appears from the setting, context and history of the clause was not intended. The effect of the construction of 'import'or 'export' in the manner insisted upon by the respondent would make rail-borne goods passing through a railway station within the limits of a Municipality liable to the imposition of the tax on their arrival at the railway station or departure therefrom or both which would not only lead to inconvenience but confusion, and would also result in inordinate delays and unbearable burden on trade both inter State and intra State. It is hardly likely that that was the intention of the legislature. Such an interpretation would lead to absurdity which has, according to the rules of interpretation, to be avoided." It must be noticed that that was a case arising under an enactment in which the words 'import' and 'export' were not defined and it was a case of terminal tax leviable und....
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....terminal' as a prefix to the word tax discussed." This makes it abundantly clear that where the words 'import' and 'importation' are defined, they have to be given full effect. When the word 'India' is also defined under the Customs Act, in deciding when the goods could be deemed to have been imported into India, we cannot ignore this definition and apply the general notions as to import and importation. Though what was laid down in this judgment by the Supreme Court was not considered in Sylvania Laxman's case decided later, in our view that does not in any way affect the conclusion reached therein. 49. The next case referred to is In Re : Sea Customs Act (AIR 1963 S.C. 1760) in which the Supreme Court gave its opinion on special reference. As already noticed the Supreme Court held that 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 barrier; duties of customs though they are levied with reference to goods, the taxable event is import of goods within the customs barriers. The Supreme Court was not concerned with the question whether the customs barrier lay at the outer limit of t....
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....he Customs Act itself between the "Imported goods" and "export" goods. Under the Customs Act, while "import" goods do not attract duty until they are "imported goods", goods sought to be exported attract duty when they are "export" goods and are sought to be taken across the customs barrier. There is nothing inconsistent in so reading the two expressions which deal with totally different activities, one an act of import of goods and the other an act of export of goods. No anachronism or incongruity arises by so reading the expressions. There is no principle of law which overrides the provisions of the Customs Act and the definitions therein which compels the Court to hold that if the import of goods occurs when the goods enter territorial waters, the goods would not become "export" goods until they leave the territorial waters of India. We are unable to agree with the conclusion of the Gujarat, High Court that Section 12 in using the expression goods "imported into India" has reference to the land mass of India and not to the territorial waters of India. In that case the Court proceeded on that basis to consider as to how the assessable value of the goods should be arrived at under....
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.... waters of India for it would amount to importation of goods into India. So also customs duty would be payable even when the ship which enters the territorial waters changes its course, turns back and leave the territorial waters before landing the goods on the land mass. Such a construction leading to absurdity should be avoided as observed in Mercy Docks and Harbour Board v. Twigge, (1898) 67 LJQB 604. It would be difficult to countenance an interpretation which would lead to such results." This difficulty would not have been countenanced if only the provisions contained in Sections 52 to 56 of the Act relating to goods in transit were brought to the notice of the Court as also the other provisions relating to remission of duty on pilfered goods, goods derelict, jetsam, floatsam and wreck or goods lost, destroyed or abandoned, which we have referred to in detail and discussed above. The Gujarat High Court expressly referred to Sylvania Laxman's case (77 Bom. Law Reporter 380) and observed (Page 213) : "Besides, the considerations which we have outlined in the earlier part of our judgment were not highlighted before the Bombay High Court. We are not prepared to uphold the conten....
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.... for the purpose of valuation of goods and not for determining the chargeability of goods to duty. Since valuation has to be made under Section 14 full effect has to be given to what is contained in that section. If in international trade the price has to be ascertained with reference to the time and place when the goods are so placed as to become part of the land mass, it does not mean that the goods become "goods imported into India" at that point of time; the goods become goods imported into India and become chargeable to duty under Section 12 when they enter the territorial waters of India. In adopting this distinction we are only giving effect to the provisions of the Customs Act and the several meanings of the word "levied" employed in Section 12 which word takes within its ambit the chargeability, the assessment of the value of the. goods dealt with by Section 14, the determination and calculation of rate of duty dealt with under Section 15 and the recovery of duty for which provision is made under several other sections of the Customs Act. In our view, such an interpretation far from leading to any anachronism or incongruity gives full effect to all the relevant provis....
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....the date they were imported into India. 52. In K. Jamel Co. v. union of India (1981 Excise Law Times 162) a learned Single Judge of the Madras High Court, in a very short judgment in which there is not much of discussion, was of the view that the definition of "import" as contained in Section 2(23) of the Customs Act stating : " 'Import' with its grammatical variations and cognate expression, means bringing into India from a place outside India. 'Bringing into India' obviously would mean the clearance of the goods and Section 15, which reads as under puts the matter beyond doubt : *            *            *            * Therefore, the relevant date is the date of the presentation of the bill of entry,* * *'." That was a case where the goods were wholly exempt from duty when the ship arrived and the total exemption was withdrawn and partial exemption was all- owed before they were cleared for home consumption. The Court repelled the contention that the goods were imported into India no sooner than they en....
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.... the provisions contained in Chapter VIII relating to goods in transit were wholly lost sight of. Specific provision is made in respect of such goods and they are declared not liable for customs duty and in our opinion that was necessitated only because under Section 12 all goods brought from foreign countries on entering the territorial waters of India become imported goods and become subject to levy of customs duty. In observing that the words "imported into India' have a wider meaning and that would be apparent on a reference to Section 111(d) of the Act, it was overlooked that "Indian Customs Waters" as defined in Section 2(28) of the Act and territorial waters of India are not co-extensive. Customs waters extend beyond territorial waters as defined in Section 5 of the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 (Act No. 80 of 1976); they may change from time to time just as territorial waters. Section 111 (d) which authorises confiscation of goods and conveyances and imposition of penalties in respect of any goods which are imported or attempted to be imported or are brought within the Indian Customs Waters for the pur....
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....5 itself gives an indication that even in regard to goods imported on the same day (whether importation means, importation into the territorial waters or on to the land mass) the rate of duty will have to be determined under section 15 with reference to different dates on which they are cleared for home consumption whether immediately or after warehousing. If imported goods are kept in a warehouse, the quantum of duty leviable will further vary having regard to the rate of duty in force on the date on which each consignment is .cleared from the warehouse. In conclusion, Sachar, J. Held (Page 1708): "......... We are of the view that the time of import of goods and the time for taxability of goods must not be taken to be co-extensive and to coalesce at the same time." The learned Judge further observed (Page 1708): "............It may be that the goods are imported in the sense of bringing them within India which includes territorial waters of India. It is true that the moment ship with goods enters the territorial waters of India it would be subject to the control of the customs authorities and would also be subject to the provisions of the Customs Act and the provisions of pro....
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....e Sea Customs Act was recast and amended by Act XLV of 1951 and the Supreme Court observed that sub-section (2) thereof has borrowed most of its words from the provisions of clause (2) of Art. 259. In the absence of any special definition of the word "import" and in the face of Section 20 which dealt with goods imported by sea into any customs port, the meaning of importation explained in paragraph 26 of the judgment in In Re : Sea Customs Act's case (AIR 1963 S.C. 1760) (at page 1776) cannot be bodily lifted and applied to a situation required to be considered under Section 12 of the Customs Act. To hold that that view will prevail would be ignoring the special definition contained in the Customs Act. If it is borne in mind that the question of rate of customs duty comes only when the goods are chargeable to duty and while chargeability is determined under Section 12, the duty payable is determined having regard to the rates mentioned in Section 15 on the value of the goods assessed under Section 14, the whole scheme of the Act unfolds itself and everything would fall into its place. In observing that "Synthetics Chemicals' case (1981 E.L.T. 414) came to the correct conclusion tha....
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....uty. We are, therefore, unable to agree with the view taken by Sachar, J. that import is when the goods are unloaded from the ship and so placed as to form part of the mass of goods in the country for consumption. The compelling reason for reaching that conclusion according to the learned Judge is that if the goods in a ship entering the territorial waters of India were deemed to be imported goods and the ship was only on the onward journey to another country, customs duty would be payable. But that totally overlooks the provisions contained in Chapter VIII of the Customs Act. Sachar, J. further observed (page 1704) : "............Where there is total exemption it amounts to nothing more than saying that 'nil' rate of duty is payable. This does not in any manner make Section 15 of the Act inapplicable." To lay down that proposition support was sought to be gained from the observation of the Supreme Court in N.B. Sanjana v. E.S. & W. Mills (AIR 1971 S.C 2039)==1978 E.L.T. (J 399) (S.C.) made with reference to Rule 10 of the Central Excise Rules which provides that where duties or charges have been short-levied through inadvertence the persons chargeable with the duty or charge so....
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....there is no import within the meaning of the Customs Act in a case where the goods are entrusted under Section 80 and are not carried by the passenger beyond the customs barrier." The case turned upon the construction of the term "baggage" as used in Sections 77 and 80 of the Act and the Tourist Baggage Rules, 1958. On the question whether provisions of Sections 111(d) and 110(l) of the Act which deal with confiscation of improperly imported goods was attracted, the court held that Sections 79 and 80 were not confined merely to bona fide baggage within the meaning of Section 79 of the Act or to personal effects as defined by clause (3) of the Tourist Baggage Rules but also includes any article contained in the baggage even though it be in commercial quantities. Section 79 exempts bona fide baggage of a passenger from levy of duty. Section 79 authorises the officer to allow such baggage to pass free of duty if he is satisfied that it has been in use for such minimum period as may be specified in the rules. He may also allow it to pass free of duty if he is satisfied that it is for the use of the passenger or his family. Section 80 further provides that where the baggage of a passen....
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.... customs duty on 'imported goods', as defined in Section 2(25). Under the definition clause, the goods retain the character of imported goods till they are cleared for home consumption under Section 46 or 68. The provisions of Section 12 would, therefore, continue to apply to them until they are cleared. Even if they were totally exempt from duty at the time they entered the territorial waters, a rate of duty could still fasten on them under Section 12, so long as they retain the character of imported goods, if an appropriate notification is issued in the meanwhile. And if a rate becomes applicable at any time before clearance, that will be a rate for the purpose of Section 12, the determination of which will have to be done under Section 15. In other words, the circumstance that there was no duty at the point of time when the vessel entered the territorial waters, does not altogether take the goods from out of the provisions of .Section 12 the charge under the Section can arise and operate at a rate at any time after such entry and before the goods are cleared." While we agree that the goods continue to be imported goods from the moment they enter the territorial waters and until....
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..... May be, the legislature has power to fix different dates of taxable events; but when the Customs Act does not do so fix, chargeability has to be determined with reference to the point of time at which the goods become imported goods and that as discussed above occurs when the goods enter the territorial waters of India. Apart from Section 12, we are unable to see which other section is the charging section. The rest of the provisions merely deal with assessment and quantification. 57. The observation in paragraph 14 of the judgment in Aluminium Industries case [1934 (16) E.L.T. 183] "as pointed out by Sukumaran, J. in Shri Ramalinga Mills v. Assistant Collector (1982 K.L.J. 314) the concept of the charge attaching to the goods the moment they reach the territorial waters of India breaks down when, as happens on some occasions, the vessel enters the waters and then sails a way without unloading goods in a customs port" also overlooks the specific provisions contained in Chapter VIII with regard to goods in transit. In all these cases, it is assumed that unless goods are so placed as to enter the main stream of trade and mix with the goods on the land mass, import is not comp....
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.... Act the event of importation occurs when the goods from a place outside India enter the territorial waters of India. 60. Question No. 2 : The rate at which imported goods are chargeable to customs duty has to be determined under Section 15 of the Customs Act, provided such goods were not wholly exempt from customs duty when they entered the territorial waters of India. Customs duty has to be charged on imported goods if they are being cleared immediately at the rate in force on the date of presentation of Bill of Entry, and if warehoused, at the rate in force on the date when the goods are sought to be cleared for home consumption. If, however, the goods were wholly exempt from customs duty by virtue of a Notification under Section 25(1) of the Customs Act on the date when the goods entered the territorial waters of India, no customs duty would be levied even if the exemption were withdrawn before the goods are cleared for home consumption; hence the question as to at what rate the customs duty should be levied on such goods, does not arise. 61. Question No. 3 : The Customs Act is an Act to consolidate and amend the law relating to customs. Section 12 of the Customs Ac....
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....f Act the provisions of the Customs Act, 1962 and the rules and regulations made thereunder including those relating to refunds and exemptions from duties are made applicable to duties chargeable under Section 2A of the Tariff Act. So is the position with respect to additional duties envisaged by Section 3 of the Customs Tariff Act and the exemptions from the said levy. Sub-section (6) of Section 3 of the Customs Tariff Act provides as under : "The provisions of the Customs Act, 1962 (52 of 1962), and the rules and regulations made thereunder, including those relating to drawbacks, refunds and exemption from duties, shall, so far as may be, apply to the duty chargeable under this section as they apply in relation to the duties leviable under that Act." (Emphasis, supplied). As the provisions of the Customs Act are thus made applicable to the respective enactment's in regard to grant of any exemptions, any exemption from the levy of countervailing duty or additional duty would be an exemption granted by the Central Government in exercise of the powers conferred under sub-section (1) of Section 25 of the Customs Act read with the provisions of the respective enactment's. A notific....
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.... Customs Act before the goods are released for home consumption. Even if such goods were not exempt from the levy of countervailing duty under Section 2A of the Tariff Act or additional duty under Section 2 of the Customs Tariff Act, they would still be treated as goods wholly exempt from customs duty for the purpose of the levy of basic customs duty. Only if the goods were chargeable to some basic customs duty under the Customs Act, when they entered the territorial waters of India, then the rates in force at the time when the bill of entry is presented or at the time when the goods are sought to be cleared for home consumption, as the case may be, would be applicable and the basic duty would be quantified and demanded at those rates. If the goods were wholly exempt from the levy of basic customs duty as well as additional duty and the exemption from additional duty is withdrawn before the goods are cleared for home consumption, even then, it would have no effect in regard to the exemption from levy of basic customs duty. Basic customs duty would not be leviable thereon. If the goods partially exempt from the levy of basic customs duty and additional duty are sought to be cleared....