TaxTMI 
TaxTMI 
2001 (4) TMI 104
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....ment of value of non-ferrous metal scrap and Special Civil Application No. 12687 of 2000 is concerning polyester chips, POY, PFY, PSF, acrylic fibre etc. A common judgment and order is being passed on these Applications, as this Court is concerned only with the challenge made to the constitutional validity of the provision of Section 151A and the power of the Chief Commissioner of Customs to issue the impugned Standing Orders to its subordinate assessing authorities on the question of assessment of value of various items for imposing Customs duty. The impugned Circulars styled as Standing Order in respect of plastic items are No. 7493 of 1999 dated 3-12-1999, in case of non-ferrous metal scrap No. 7495 of 1999 dated 13-12-1999 and in case of items like polyester chips, POY, PFY, PSF, acrylic fibre etc. No. 7514 of 2000. 3.By the impugned Standing Order No. 7493 of 1999 with regard to valuation of plastic items, the direction issued by the Chief Commissioner of Customs is that the assessing officer should apply what is described as PLATT rate, which is explained as rates or prices maintained in the internationally reputed finance journals, like LME Bulletin, PLATT's Weekly Report....
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....ue for levy of Customs duty, cannot be regulated, restricted or directed in a particular way, by issuance of Standing Orders by the higher authorities. By issuing the Standing Orders, the Chief Commissioner of Customs has, in fact, encroached upon the power and quasi-judicial functions of the assessing authorities. Such Standing Orders, in the nature of mandates, are outside the powers conferred on the Chief Commissioner of Customs under Section 151A of the Act. It is also submitted that such Standing Orders issued are clearly in contravention of Section 14 of the Act and the Rules which elaborately lay down the method of valuation of goods for assessment of Customs duty. Alternatively, on behalf of the petitioners, it is contended that if power to issue such Standing Orders or directions are held to be authorised by provisions of Section 151A of the Act, then the said Section is ultra virus the Constitution, being violative of Article 14 of the Constitution of India. The valuation of imported goods of the same type and variety are required to be assessed on the basis of the nature of the transaction involved and the price paid or payable on the imported goods. Such assessment has ....
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....with the Customs. Therefore, information of international price at which such or like goods are ordinarily sold or offered for sale can be ascertained through reputed finance journals like LME Bulletin, PLATT's Weekly Reports etc. It is submtited that in the case of Mukund Limited, 1999 (107) E.L.T. 653, it was held that LME Bulletin price can be considered to be fair indicator of prevailing market price. The price under Section 14 is not a negotiated price, but deemed price prevailing in the general international market conditions of supply and demand. Hence, on the same reasoning, PLATT's price is also a fair indicator of correct international price for the purpose of Section 14 of the Customs Act. 6.In the reply affidavit of the Union of India, reference is made to decision of the Tribunal in the case of M/s. Plast Fab, 1993 (66) E.L.T. 441 in which it has been held that price paid or payable in respect of any goods would not represent the transaction value under Rule 4 of the Customs Valuation Rules, 1988, if it does not reflect the price at which such or like goods are sold at the time and place of importation. In the absence of contemporaneous imports at higher price, the ....
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....y into Indian currency; (b) "foreign currency" and "Indian currency" have the meanings respectively assigned to them in the Foreign Exchange Regulation Act, 1973 (46 of 1973)." Section 14 provides that for the purpose of assessment to Customs duty the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale. 7.From the provisions of Section 14 what is to be noticed is that in a case of assessment to Customs duty, the relevant enquiry before the assessing authority is for finding out the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade. The international trade and the price in the trade, therefore, is relevant for the purpose of determining the price of ....
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.... with the price of such goods when ordinarily sold or offered for sale at the same time and place in the course of import. It is not in all cases that the 'transaction value' is to be accepted by the Customs authorities as determinative of the value for Customs duty. If the transaction value is found to be ridiculously low or not acceptable on other relevant consideration such as parties being related, the enquiry with regard to international prices of such goods becomes relevant and sometimes necessary. It is for the purpose of determination of international price that the Standing Orders contain the relevant guidelines. Two decisions of Supreme Court one in case of M/s. Shibani Engineering Systems (supra) and the latest decision in Eicher Tractors Ltd. (supra) have been brought to the notice of this Court by the Union of India and the petitioners respectively. It is pointed that in the latest decision of Supreme Court in Eicher Tractors (supra) the provisions of Section 14 and the Assessment Rules have been construed. It has been held that exceptions specificatory of the special circumstances in Section 14(1) quoted earlier. It has been held that unless the price actually paid fo....
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....irections of the Board : Provided that no such orders, instructions or directions shall be issued - (a) so as to require any such officer of Customs to make a particular assessment or to dispose of a particular case in a particular manner; or (b) so as to interfere with the discretion of the Commissioner of Customs (Appeals) in the exercise of his appellate functions." 13.What is to be noticed from the above quoted provision is that it authorises the Board and its delegate to issue instructions for the purpose of uniformity in classification of goods for levy of duty. The directions or guidelines issued by the Board or its delegate are not be treated as taking away the quasi-judicial power of the Customs authorities to deal with a particular transaction at a particular place. A proviso has been added which clearly lays down that there would be no power to issue directions, orders and instructions as would require any such officer of Customs to make a particular assessment or to dispose of a particular case in a particular manner. 14.In challenging the impugned standing orders issued i....
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....lf the power of encroaching upon the quasi-judicial function of the Excise authorities dealing with individual cases for determining the Excise duty. The case of Orient Paper Mills (supra) was followed by Supreme Court subsequently in the case of same party [1978 (2) E.L.T. (J382) (S.C.) = AIR 1970 SC 1498] and is also a case under the Central Excises and Salt Act, where no provision analogous to Section 151A, as is found in Customs Act, exists. The instructions were struck down by the Supreme Court in the subsequent decision of Orient Paper Mills (supra), because the assessment for levy of Excise duty was made by the lower authority on the instructions of the Collector to whom the appeal lay against the order of the Subordinate Officer. That was clearly a case where appellate authority interfered with the judicial functions of the assessing authority which was subordinate to him, such is not the case here. The decision in B. Rajagopala Naidu (supra) AIR 1964 SC 1578 of the Supreme Court was concerning the validity of Government Order issued under Section 43A of the Motor Vehicles Act. By the order issued under Section 43A of the Motor Vehicles Act, pending appeals before the appel....
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....hority completely inconsistent with the well-accepted nation of judicial process. It is true that law can regulate the exercise of judicial powers. It may indicate by specific provisions on what matters the tribunals constituted by it should adjudicate. It may by specific provisions lay down the principles which have to be followed by the tribunals in dealing with the said matters. The scope of the jurisdiction of the tribunals constituted by statute can well be regulated by the statute and principles for guidance of the said tribunals may also be prescribed subject of course to the inevitable requirement that these provisions do not contravene the fundamental rights guaranteed by the Constitution. But what law and the provisions of law may legitimately do cannot be permitted to be done by administrative or executive orders." 16.What is to be noticed is that Section 43A of the Motor Vehicles Act, as introduced by amendment by Madras Legislature, which came up for consideration before the Supreme Court in the case of Rajagopala Naidu (supra) is not analogous or comparable to Section 151A of the Customs Act with which we are dealing in this case. As is clear from the opening part ....
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....the international price as disclosed in Foreign Finance Journals becomes relevant. The provisions of the Act and the Rules are exhaustive enough to regulate the exercise of power and discretion by the Customs authorities. Merely, because there are elaborate provisions in the Act and the Rules, standards and guidelines which structure the exercise of power and discretion in a way which nevertheless allows the circumstances of particular cases to be taken into account, cannot be held to be impermissible under Section 151A of the Act. The Standing Orders impugned before us are liable to be sustained by reading them down as not rigid directions or mandates, but only as instructions containing flexible guidelines. Flexible standards are required to be laid down for the purpose of achieving uniformity in levying customs duty on articles and items of similar nature imported in similar conditions. Such standards or guidelines gradually develop in the course of exercise of powers. They are sometimes necessary to structure the exercise of statutory and discretionary power. They are very useful and beneficial provided they are not followed rigidly so as to exclude the essence of power and dis....