TaxTMI 
TaxTMI 
2006 (9) TMI 181
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....3972 of 2001 2. This appeal has been filed against the judgment and order dated 7th March 2001 passed by the Customs, Excise and Gold (Control) Appellate Tribunal (hereinafter referred to as CEGAT), West Regional Bench, Mumbai. Heard learned counsel for the parties and perused the record. 3. The facts of the case are that the appellant is a regular importer of iron ore pellets falling under Chapter Sub-heading No. 2601.12 of the Customs Tariff Act, 1975. The present appeal relates to 14 consignments of iron ore pellets imported between 14-2-1996 to 21-2-1998. In all these cases, the mother vessel coming from abroad and carrying the cargo anchored at Bombay Floating Light (in short 'BFL'). The cargo on board the mother vessel was then examined by the custom authorities and provisionally assessed to duty. After payment of this duty, the out of charge order was passed on the Bills of Entry permitting clearing of such goods for home consumption. After obtaining the out of charge order, the cargo was discharged at BFL from the mother vessel to the barges which then ferried the cargo to the Dharamtar Jetty. 4. It may be mentioned that. the cargo could not be discharge....
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....ld not be recovered from the appellant. Similar show cause notice dated 17-7-1998 (Annexure P-5 to the Appeal) was also issued. 8. Thereafter the appellant gave its reply and was also heard personally through its authorized representative, but by the order of the Assistant Commissioner of Customs dated 5-10-1998 (Annexure P-6 to the Appeal) the demand was confirmed. The appellant appealed against the said order which was rejected by the Commissioner of Customs (Appeals), Mumbai vide order dated 10-2-1999. 9. Aggrieved, the appellant filed an appeal to the Customs, Excise & Gold (Control) Tribunal which has been dismissed on 7-3-2001. Hence this appeal. 10. The short point before is as to whether the transportation charges for the use of barges for carrying the cargo from the mother vessel which anchored at BFL to the Dharmatar jetty where the goods were unloaded are to be added to calculate the assessable value for the purpose of duty under the Customs Act. 11. Before dealing with the contention of the parties, we may refer to the provisions of the Customs Act, 1962 which are relevant in this case. Section 2(23) defines import to mean 'bringing into India from a ....
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.... (ii) an aircraft; or (iii) a vehicle, carrying imported goods or any other person as may be specified by the Central Government, by notification in the Official Gazette, in this behalf shall, in the case of a vessel or an aircraft, deliver to the proper officer an import manifest prior to the arrival of the vessel or the aircraft, as the case may be, and in the case of a vehicle, an import report within twelve hours after its arrival in the customs station, in the prescribed form and if the import manifest or the import report or any part thereof, is not delivered to the proper officer within the time specified in this sub-section and if the proper officer is satisfied that there was no sufficient cause for such delay, the person-in-charge or any other person referred to in this sub-section, who causes such delay, shall be liable to a penalty not exceeding fifty thousand rupees". Section 31(1) & (2) of the Act state as under : (1) The master of a vessel shall not permit the unloading of any imported goods until an order has been given by the proper officer granting entry inwards to such vessel. (2) No order under sub-section (1) shall....
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....itting clearance of the goods for home consumption". 12. Apart from the above-mentioned provisions in the Act, it is necessary to mention certain provisions in the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (hereinafter referred to as 'The Rules'). Rule 4(1) & (2) state as under : (1) The transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of these rules. (2) The transaction value of imported goods under sub-rule (1) above shall be accepted : Provided that - (a) the sale is in the ordinary course of trade under fully competitive conditions; (b) the sale does not involve any abnormal discount or reduction from the ordinary competitive price; (c) the sale does not involve special discounts limited to exclusive agents; (d) objective and quantifiable data exist with regard to the adjustments required to be made, under the provisions of rule 9, to the transaction value; (e) there are no restrictions as to the disposition or use of the goods by the b....
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....ue of the imported goods shall be the value of such goods, for delivery at the time and place of importation and shall include - (a) the cost of transport of the imported(a) goods to the place of importation; (b) loading, unloading and handling charges(b) associated with the delivery of the imported goods at the place of importation; and (c) the cost of insurance(c) : Provided that -- (i) where the cost of transport referred to in clause (a) is not ascertainable, such cost shall be twenty per cent of the free on board value of the goods; (ii) the charges referred to in clause (b) shall be one per cent of the free" on board value of the goods plus the cost of transport referred to in clause (a) plus the cost of insurance referred to in clause (c); (iii) where the cost referred to in clause (c) is not ascertainable, such cost shall be 1.125% of free on board value of the goods; Provided further that in the case of goods imported by air, where the cost referred to in clause (a) is ascertainable, such cost shall not exceed twenty per cent of free on board value of the goods: Provided also that where the fr....
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....fered for sale" do not refer to the contract between the supplier and the importer, but to the prevailing price in the market on the date of importation or exportation" 15. The above decision thus clearly held that it is not the actual price mentioned in the contract between the supplier and the importer which has to be seen, but the prevailing price in the market has to be seen. This again lends support to the view we are taking that Section 14 is a deeming provision and we have not to take specific cases for determining the value of the imported goods unless the same is in accordance with Section 14 of the Act. 16. Hence, while determining the value of Section 14, we must never lose sight of the fact that Section 14(1) is a deeming provision which creates a legal fiction. 17. Legal fictions are well-known in law. In the oft-quoted passage of Lord Asquith in East End Dwelling Co. Ltd. v. Finsbury Borough Council - (1951) 2 All ER 587, it was observed : "If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequence and incidents which, if the putative state of affairs had in....
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....f course the submission of the learned counsel for the Revenue could be sustained. However, in our opinion, Rule 9(2) has to be read along with Section 14 and it cannot be read independently. As already stated above, Section 14 creates a legal fiction and we have to see the ordinary value of the imported goods in the course of international trade at the place and time of import. This means that specific cases of import should be ignored. In fact, it is for this reason that Rules 4, 5 and 6 of the Rules have been promulgated. The actual price paid for the goods can only be taken into consideration provided the sale is in the ordinary course of trade under fully competitive conditions and the other provisions of Rule 4 are satisfied. 22. It is well-known that there are sales in which there is under-invoicing or over-invoicing or for some other reasons the sale is not under full competitive conditions. In such a case, Rules 5 & 6 have to be resorted to and the actual price has not to be seen. Thus, the Rules have been created to serve the object of Section 14 which was to determine a deeming price and not the actual price of the imported goods. 23. In our opinion it there are tw....
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....les of Interpretation, Second Edition p. 71). 28. It is deeply regrettable that in our Courts of Law, lawyers quote Maxwell and Craies but nobody refers to the Mimansa Principles of Interpretation. Few people in our country are aware about the great intellectual achievements of our ancestors and the intellectual treasury they have bequeathed us. The Mimansa Principles of Interpretation is part of that intellectual treasury, but it is distressing to note that apart from a reference to these principles in the judgment of Sir John Edge, the then Chief Justice of Allahabad High Court, in Beni Prasad v. Hardai Devi, (1892) ILR 14 All 67 (FB), and in the judgments of one of us (Markandey Katju, J.) while a Judge of Allahabad High Court (which have been annexed to the Second Edition of K.L. Sankar's book), there has been almost no utilization of these principles even in our own country. 29. It may be mentioned that the Mimansa Rules of Interpretation were our traditional principles of interpretation laid down by Jaimini in the 5th Century B.C. whose Sutras were explained by Shabar, Kumarila Bhatta, Prabhakar, etc. The Mimansa Rules of Interpretation were used in our country for ....
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....aveda are to be recited. Are these Samaveda verses to be recited in a low voice or loud voice? The answer, as given in the above Sutra, is that they are to be recited in low voice, for although they are Samaveda verses, yet since they are being recited in a Yajurveda ceremony their attribute must be altered to make it in accordance with the Yajurveda. 31. In the Shabar Bhashya translated into English by Dr. Ganga Nath Jha, published in the Gaekwad Oriental Series, the Sutra is read as follows : "Where there is a conflict between the use and the substance greater regard should be paid to the use" Commenting on Jaimini 3:3:9 Kumarila Bhatta says : "The Siddhanta laid down by this Sutra is that in a case where there is one qualification pertaining to the Accessory by itself and another pertaining to it through the Primary, the former qualification is always to be taken as set aside by the latter. This is because the proper fulfillment of the Primary is the business of the Accessory also as the latter operates solely for the sake of the former. Consequently if, in consideration of its own qualification it were to deprive the Primary of its natural accomplishment....
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....has already been included for delivery at the Dharamtar jetty and has already been paid to the seller in the CIF or FOB contract. Hence, a further addition to the transport charges in the form of barge charges for the transportation by barges cannot be said to be contemplated by Section 14 of the Act. 35. Learned counsel for the Revenue has relied upon a decision of this Court in Garden Silk Mills Ltd. v. Union of India - 1999 (13) E.L.T. 358 (S.C.), in which it was observed thus: "It was further submitted that in the case of Apar's Private Limited 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 water, the import is complete. We do not agree with the submission. This Court in its opinion in Re. The Bill to Amend Section 20 of the Sea Customs Act, 1878 and Section 3 of the Central Excises and Salt Act, 1944, 1964(3) SCR 787 at page 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 cus....
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....s, Apar Industries case (supra) has also nothing to do with the question-which we were dealing with in the present case. 39. In Dhiraj Lai H. Vohra & Others v. Union of India & Others - 1993 (Supp. 3) SCC 453, the facts were that the appellants' ship arrived on February 20, 1989 at Madras port and was ready to discharge the cargo. It delivered the import manifest under No. 116 on the said date but due to continued strike the cargo could not be handled. On February 27, 1989 the petitioner presented the bill of entry "for clearance of goods for home consumption" and it was entered at No. 012036 which was received in the appraising section of the group on February 28, 1989. The ship arrived into the port and was berthed on March 2, 1989. The entry inward was granted on March 2, 1989. From March 1, 1989 the rate of excise duty was altered. It was increased to 150 per cent ad valorem plus Rs. 300 per piece for certain sizes and for other sizes duty was raised to 150 per cent ad valorem plus weight-based duty. The result was that pre-tariff duty was Rs. 15,73,611.05 while as per the new tariff levy effective from March 1, 1989 the difference came to Rs. 1,80, 46,092.64. 40. On ....
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.... case of goods entered for home consumption, the date relevant for determining the rate of duty and tariff valuation. Where the Bill of Entry is presented before the date of Entry Inwards of the vessel, the Bill of Entry is deemed to have been presented on the date of such Entry Inwards". 45. In our opinion, this case has no relevance in the present case. The facts there were that although the ship in question entered Bombay port and registered itself there but was unable to secure a berth in the port of Bombay at that time. Hence the vessel under pressing circumstances left for Karachi port for unloading other cargo intended for that port. On return to Bombay port, it was asked to pay a higher rate of duty which had been increased in the meantime. It was in that connection that the aforesaid observation was made by the Constitution Bench. Clearly, this decision has nothing to do with the present case, because it was not concerned with transportation charges by a barge. 46. Thus, it appears that most of the decisions cited by learned counsel for both the parties in this case are not very relevant for deciding the controversy in issue here. 47. It must be remembered in this....
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....ce is placed. Observations of courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgment of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgment. They interpret words of statutes; their words are not to be interpreted as statutes". 51. In London Graving Dock Co. Ltd. v. Horton - 1951 AC 737 at p. 761, Lord Mac Dermot observed : "The matter cannot, of course, be settled merely by treating the ipsissima verba of Willes, J as though they were part of an Act of Parliament and applying the rules of interpretation appropriate thereto. This is not to detract from the great weight to be given to the language actually used by that most distinguished Judge". 52. In Home Office v. Dorset Yacht Co. - 1970(2) All ER 294 Lord Reid said, "Lord Atkin's speech is not to be treated as i....
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....rmission had been obtained under Section 33 under the supervision of the proper officer under Section 34, and the goods were accompanied by a Boat Note under Section 35 of the Customs Act. Hence, unloading of the goods from the mother ship at the BFL was valid, since it was done in accordance with Sections 33 and 34 of the Customs Act. No doubt, the BFL had not been approved as proper place under Section 8(a), but it was a place where the mother ship could anchor. Hence, in our opinion, there is no illegality. 57. In the impugned order dated 7-3-2001 the Tribunal has based its decision on its conclusion that the place of import was the Dharamtar Jetty and not the BFL (vide paragraphs 9 to 18 of The Tribunal's order). Without commenting on the correctness or otherwise of this view, we are of the opinion that whether we treat the place of import as BFL or the Dharamtar jetty it will make no difference to the conclusion we have reached viz. that charges for transport of the goods by barges from BFL to Dharamtar jetty cannot be included in the valuation of the goods. 58. It is not disputed that the freight upto the Dharamtar jetty had been paid by the buyer. Hence we cannot a....