V.C. Daga, J.@mdashHeard.
Perused petition.
Rule, returnable forthwith.
Learned Counsel for respondents waives service.
Heard finally by consent of parties.
2. This petition, filed under Article 226 of the Constitution of India is seeking a writ of mandamus directing respondents and their subordinates to allow clearance of the consignment covered by bill of entry dated 1st February, 2010 by accepting the transaction value as u/s 14(1) of the Customs Act, 1962. Incidentally, the Circular No. 4/2008 Cus. dated 12th February, 2008 issued by the Ministry of Finance, Govt. of India laying down certain guidelines regarding valuation practice of second hand machinery is also a subject matter of challenge in the petition.
THE FACTUAL SCORE:
3. The factual score emerging from the petition is that the petitioners are Public Ltd. Co. regularly importing raw materials as well as capital goods (both new and second hand) for the purposes of manufacturing automotive components. Some times imports are also made by the petitioners from their Group Companies.
4. The petitioners, in the case in hand, imported a second hand machinery vide bill of entry No. 877592, dated 1st February, 2010 and sought assessment of the same on the basis of the declared invoice value. The petitioners claimed to have submitted examination report on 19th February, 2010 certifying therein that the value declared by the petitioners was fair, based on the physical condition of the capital goods.
5. The petitioners have also obtained clarification from Chartered Engineer vide his letter dated 11th March, 2010, submitted to the Customs Department on 15th March, 2010. The petitioners, vide their letter dated 4th March, 2010 requested the Additional Commissioner of Customs to intervene in the matter and to clear imported consignments of the petitioners as the same is pending clearance since more than a month incurring heavy detention and demurrage charges. The petitioners vide their letter dated 8th March, 2010 submitted to the Commissioner of Customs (Exports) again requested for assessment of the goods and allowing them to clear as per the value declared. According to the petitioners, as yet no action has been taken by the respondents to assess and clear the consignment of the petitioners.
6. The petitioners having left with no other alternative, invoked writ jurisdiction of this Court to seek declaration of invalidity of the circular dated 12th February, 2008 issued by the CBEC vide prayer Clause (a) and consequent directions in terms of prayer Clause (b) in the matter of clearance of consignment.
RIVAL SUBMISSIONS:
7. Mr. Sridharan, learned Counsel appearing on behalf of petitioners submits that the transaction in question meets the requirements of Section 14 of the Customs Act and Rule 3(1) of the Customs (Determination of Value of Imported Goods) Rules, 2007 framed thereunder (''the Rules'' for short), as such the transaction value ought to be accepted by the respondents in the case in hand.
8. Mr. Shridharan, while elaborating his submissions, submits that as per Section 14 of the Act, the value for the purpose of customs duty is a transaction value i.e. price actually paid or payable for the imported goods. According to him, as per Rule 3(1) of the Rules, the value of the imported goods should be the transaction value, i.e. the price paid or payable for the imported goods as per Section 14 read with Rule 2(2) (g) of Customs Valuation Rules, 2007.
9. Mr. Sridharan submits that Special Valuation Branch, Chennai had also investigated more or less a similar transaction between the petitioners and their group companies, and vide letter dated 7th May, 2008, pleased to accept the transaction value of the imported goods under Rule 3(3) of the Rules holding that the relationship with the group companies need not affect the pricing of the imports made. According to him, the said Special Valuation Branch order is valid till 6th May, 2011.
10. Mr. Sridharan further submits that in the case of petitioners themselves, the Apex Court vide its decision dated 23rd April, 2008 held that the second hand capital goods should be assessed as per Transaction Value i.e price paid by the petitioners.
11. Mr. Sridharan submits that the depreciated value as per Circular dated 19th December, 1987 is not required to be considered, as the said circular is in contravention of the provisions of the Act and Rules framed thereunder. He placed reliance on the Apex Court judgment in the case of
It is essential to bear in mind the fact that in the business world consideration of relationship with the customer is also a relevant factor. Thus the Supreme Court held that even the negotiated price is a price in the course of international trade and the same is acceptable.
12. Mr. Sridharan, further submits that the aforesaid judgment is followed by the Apex Court in the case of
13. Mr. Sridharan further submits that the circular dated 12th February, 2008 is liable to be quashed in so far it holds that if the declared value of the second capital goods is lower than the value determined on the basis of depreciation, then declared value is to be rejected. He expressed apprehension that the respondents may rely on the said board circular dated 12th February, 2008 to reject the transaction value as declared by the petitioners. He also tried to press into service the principles of Res Judicata contending that the point of law has already been determined by the Apex Court in the identical set of facts, as such, he prayed that the board circular dated 12th February, 2008 be declared as invalid and the directions in the nature of writ of mandamus directing respondents to accept the transaction value declared by the petitioners as value of the imported goods u/s 14(1) of the Act.
PER CONTRA:
14. Mr. Jately, learned Counsel for the respondents submits that the petition is premature, as yet the Department has not passed any order either assessing the transaction value of the imported goods or applying the Circular dated 12th February, 2008.
15. Mr. Jately submits that so far as the board Circular dated 12th February, 2008 is concerned, it is nothing but a compilation of principles laid down in various judicial pronouncement just to facilitate the Revenue Officers to take a proper view of the matter keeping the provisions of the Act and Rules in mind. He further submits that the apprehension entertained by the petitioners has no foundation as on date giving rise to the cause of action so as to enable the petitioner to invoke extra ordinary writ jurisdiction of this Court. He, thus, submits that this is not a fit case wherein, this Court should intervene exercising writ jurisdiction in favour of the petitioners at this stage.
CONSIDERATION:
16. Having heard both the parties, the provisions relating to the determination of transaction value for the purposes of Customs duty is governed by Section 14 and Rule 3 of the Rules.
17. So far as the Board Circular reproduced in the petition is concerned, it lays down certain guidelines based on the analysis of the various decisions of the Tribunal and the Apex Court judgments on the issue of valuation of second hand machinery and lays down certain guidelines for the guidance and assistance of the Revenue Officers. This circular does not mean, one should ignore the provisions of the Act and Rule and judicial precedents holding the field. The proper Officer is bound to consider the case of the petitioners independent of the guidelines. The Apex Court in the case of
18. It is now well settled that the power of judicial review of the Court under Article 226 of the Constitution of India includes all cases where the orders are passed by the authorities or even where the authorities have failed to exercise jurisdiction vested in them. It may be stated that the statutory discretion cannot be fettered by self created rules or policy. Although it is open to an authority to which discretion has been entrusted to lay down to regulate exercise of discretion, it cannot, however, deny itself the discretion which the statute requires it to exercise in individual cases. The proper authority notwithstanding board circular dated 12th February, 2008 is required to consider the prayer of the petitioners on its own merits well within the scope of Section 14 of the Act and the Customs Valuation Rules by a reasoned order following principles of natural justice.
19. In the instant case, the proper officer is yet to exercise discretion. As such, as on date, the petition in our considered view, is a premature. Though both the parties have tried to justify their rival contentions even on merits, we do not propose to dwell on the contentions raised in this behalf since the proper Officer is yet to take proper view of the matter. In absence of any reasoned order it will not be proper on the part of this Court to prevent the proper Officer from exercising his discretion and to undertake the job of the adjudication officer.
20. So far as applicability or non applicability and/or invocation or non invocation of the circular is concerned, the issue being premature, needs no consideration at this stage.
21. In the aforesaid facts and circumstances of the case, justice would be done by directing the proper Officers to adjudicate upon the issue and assess the bills of entry with immediate effect so as to enable the petitioners to clear the goods. Before passing the order of assessment, we have no manner of doubt that the proper Officer shall afford an opportunity of hearing to the petitioners so as to pass the reasoned order following principles of natural justice. All rival contentions on merits including challenge to the board circular are kept open.
22. In the result, Rule is made absolute in terms of this order with no order as to costs.
