| This Judgment has been overruled by : Union of India and others Vs. Apar Private Ltd. and Others, |
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Madhava Reddy, C.J.@mdashFour questions arising under the Customs Act, 1962 (52 of 1962) are referred to the Full Bench and they are :-
1. Under the Customs Act, 1962, when can the event of importation be said to occur ?
2. At what point of time or date the rate of Customs duty to which imported goods are liable was to be determined under the Customs Act, 1962 ?
3. Whether it would make any difference to the answer to the second question in cases where at the date of import the goods were totally exempt from duty, either basis or additional, as against being partially exempt from such duty ?
4. Whether the countervailing or additional duty payable u/s 2A of the Indian Tariff Act, 1934, or u/s 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 u/s 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 But, by the time these goods were sought to be removed from the bonded warehouse, the Exemption Notification was rescinded and the exemption granted thereunder was withdrawn.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 referring to the observations of their Lordships of the Privy Council in Wallace Brother and Co., Ltd. v. Commr. of Income Tax 50 Bom. L.R. 482 , which were referred to with approval of the Supreme Court in
"These observations fully justified the clear distinction that exists, inter alia, between the chargeability in respect of a tax or duty and the qualification of the amount payable in respect thereof. The only charging section in respect of levy of customs duty is s. 12(1)............ such levy is subject to other provisions of the Act or any other law for the time being in force. The chargeability in respect of levy customs duty arises when the goods are imported into India, i.e. when they cross the customs barriers as stated above............ Chargeability arises simply by reason of s. 12(1) of the Act and that takes place only when the goods are imported into India i.e. into the territorial waters of India............. clearance of imported goods can take place only after the importation is complete. ............ There is nothing in any of the provisions (of the Customs Act) to indicate that the chargeability in respect of levy of customs duty is postponed until a bill of entry is presented. ............ it is impossible to accept the view that the taxable event in respect of levy of customs duty takes place only when a bill entry is presented or thereafter."
That was a case in which the exemption notification dated 3rd September 1966 issued by the Government of India, Ministry of Finance, Department of Revenue and Insurance, exempted glass tubes used in the manufacture of fluorescent lamps when imported into India from the whole of that portion of the duty of customs leviable thereon which is specified in the First Schedule to the Indian Tariff Act, 1934 (hereinafter referred to as "the Tariff Act"). The exemption granted by the notification was to remain in force upto and inclusive of 31st March 1967. Order for purchase of glass tubes was placed by the Respondents with Sylvania International of New York, U.S.A. The goods shipped by s.s. "Steel Fabricator" on 2nd February 1967 arrived at the port of Bombay on 29th March 1967. On the same day the import manifest of the said vessel was duly filed with the Customs Authorities and the Customs Authorities issued an order 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 Rs. 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 has 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 made by the Assistant Collector was contrary to law. The Court accordingly quashed the said demand.
3. A later Division Bench of this Court in Synthetics and Chemicals v. S.C. Coutinho 1981 E.L.T. 414 (for short Synthetics and Chemicals'' case) was dealing with a case of import of "disproportionate Resin Acid" which were chargeable to customs duty under item No. 87 of the Customs Tariff Act at 60% ad valorem. The ship carrying these goods arrived at Bombay Port on 20th August 1968. On the same day the Appellants presented a bill of entry for warehousing of these goods. After the formalities in that behalf were completed they were actually warehoused. The Appellants claimed that on their representation the Government of India issued a notification dated 12th October 1968 u/s 25(1) exempting these goods from all such customs duty as was in excess of 27.1/2%.
In other wards, customs duty leviable at 60% on item No. 87 was reduced to 27.1/2%. The Court held that Section 15(1)(b) applied to the facts of that case and that (pate 417) :
"......... The opening clause of sub-section (1) points out that the rate of duty as well as the rate of exchange applicable to imported goods shall be the rate and valuation in force and u/s 68 it shall be on the date on which the goods were actually removed from the warehouse...... in this case the goods arrived in the Indian Customs waters and were removed to the warehouse on 20th October 1966. They were cleared u/s 68 only from and after December 1968 till June of 1969. ........ where the goods are cleared from a warehouse u/s 68, the date on which they were actually removed is the relevant date. December 1968 onwards are, therefore, the relevant dates on which the goods have been actually removed............".
Referring to the Division Bench Judgment in Sylvania Laxman''s case. The Court observed (page 420) :
"............ what the Division Bench pointed out......... was that in the facts and circumstances of that case the primary investigation must relate to the chargeability of goods on the date of importation. The actual importation here had been 29th March, 1967, when there was total exemption from any duty so far as the fluorescent lamp tubes or glass tubes were concerned. The argument which is very logically presented is that in order to work out the rate of duty on any particular date, the basis requirement is that the goods are dutiable in the first instance. In other wards, 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 u/s 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 u/s 15 for clearance."
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 also should be the rate which was in force on the date when the goods entered the territorial waters of India, the Bench pointed out (page 420) :
"......... In order that any commodity should be made to pay duty, the primary or basic requirement, according to us, is that on the date of importation it must be chargeable to duty. The primary fact to be remembered is that if on the date of importation there was total exemption, which means that the Entry was not there, then they were not liable to pay any duty whatsoever on imports. Even if the operation of the Notification ceases and a certain rate contemplated by the Indian Tariff Act become operative, it shall have no relevance to those imports for which initially there was total exemption."
Proceeding on that basis the Court opined (page 421) :
"......... Where there is initial chargeability, whether as per rates under the Tariff Act or the reduced rate under an exemption Notification u/s 25 of the Customs Act, the Division Bench Judgment Sylvania Laxman''s case does not apply."
The Court then declared (page 420) :
"......... There may be other cases where on the date of importation the goods are liable to duty. It must mean that they are chargeable to duty. At what rate must they be actually taxed on the date of removal ? As an illustration, suppose a Notification exempts certain goods from payment of a part of duty or whereby the duty payable is reduced to 27 per cent. If such a Notification comes to be withdrawn or ceases to have operation on the date on which the goods are actually removed from the warehouse, what would be the effect ? Should these goods pay 27.1/2% or 60%, which is the normal tariff rate. We have to answer in favour of determination of the rate of 60 per cent the reason being that the goods were not totally exempt. Once they are chargeable to duty on importation the rate being irrelevant - the rate prevalent on the date of actual clearance will apply u/s 15(1)(b)."
In that view, the court quashed the orders of the Assistant Collector of Customs refusing to give benefit of the exemption notification in force on the date of clearance of the goods from the warehouse for home consumption and demanding duty at 60%.
4. Mr. Cooper, learned counsel for the Petitioners at the outset argues that the two Division Benches have not expressed divergent views and therefore 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 u/s 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 pointed out that "Section 15 permitted the goods for the purpose of home consumption to be charged to duty as on the date on which a bill of entry in respect of such goods is presented, and in respect of goods warehoused (on completion of the certain formalities as laid down u/s 69, the goods could be removed from the warehouse on payment of duty) as on the date of removal." Only if the goods are chargeable to duty on the date they enter territorial waters, the question of determining the rate at which goods are chargeable to duty, would arise. Are they to be charged at the rate in force on the date on which they entered the territorial waters ? Or at the rate prevalent on the date on which they are cleared for home consumption as laid down in Section 15(1) of the Customs Act ? On the question of chargeability to customs duty the decision in Synthetics'' case does not express a view different from the one taken in Sylvania Laxman'' case. On the contrary, it adopts that view and points out the distinction between chargeability and quantification of the duty and holds that the goods are chargeable to duty, the rate at which the goods are to be assessed is the rate prevalent on the day on which the bill of entry is presented and if warehoused, on the date the goods are cleared u/s 15, as the case may be.
5. That, however, is not the only reason for referring these questions to the Full Bench. As can be gathered from that what is stated in paragraph 19, the Division Bench making the reference appears to be of the opinion that the view taken in Sylvania Laxman''s case itself require reconsideration. The Division Bench observed :
"......... There would be a difference between chargeability of goods for Customs duty and they being temporarily exempted either wholly or partially from the payment of Customs duty. Their chargeability would arise on their being put in the Schedule and merely because they are wholly exempted from payment of Customs duty they cannot be considered to have cased to be chargeable to Customs duty. Effect of total exemption from Customs duty only was that during the existence of the notification the goods were chargeable for ''nil'' Customs duty. In our view, therefore, the said view of the Court in Synthetics'' case (must be Sylvania Laxman''s case) would require reconsideration."
That they were not 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
"......... the decision in Sylvania''s case (77 Bom. L.R. 380) followed by this Court in Synthetics'' case 1981 ELT 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 u/s 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. The Customs Act is an Act to consolidate and amend the law relating to customs. Chapter V thereof deals with levy of and exemption from customs duty. Section 12, which is the charging section, is in the following words :
"12. Dutiable goods :- (1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975, or any other law for the time being in force, on goods imported into, or exported from, India.
(2) The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government.
7. Under this Section all goods imported into or exported from India are liable to customs duty unless the Customs Act itself or any other law for the time being in force provides otherwise. Customs duty shall be levied at such rates as are specified under the Customs Tariff Act or any other law for the time being in force. The Customs Tariff Act or any other law for the time being in force is relevant only for the purpose of determining the rate at which the duty is leviable and not for the purpose of determining when the goods become imported goods and whether they are exempt from duty. Although Section 12 provides that the duty shall be leviable on all goods imported, it itself envisages that some other provision of the Customs Act or any other law may make an exception. Such a provision is made in Section 25 which authorises Central Government to "exempt......... goods from the whole or any part of duty of customs leviable thereon." It is important to note that the power vested in Central Government u/s 25(1) is not merely one of granting any exemption from payment of customs duty, but is one of exempting generally "goods of any specified description from the whole or any part of duty of customs leviable thereon". It is only under sub-section (2) of Section 25 that while the goods may be dutiable and may not be exempted under sub-section (1) of section 25, that the Central Government may be "special order in each case exempt from the payment of duty, under circumstances of an exceptional nature to be stated in such order, any goods on which duty is leviable." Once goods are exempted from levy of duty under sub-section (1) of section 25, question of payment 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 u/s 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 u/s 12. Thus section 25(1) of the Customs Act empowers the Central Government to exempt goods from levy of duty generally and u/s 25(2) from payment of duty by a special order. If as provided u/s 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 be said to be "imported into India" and at what stage do they become chargeable to customs duty ? That must depend upon what exactly does the expression "goods imported into India" occurring in section 12 mean ? The chargeability of goods to customs duty arises when goods are "imported" and only when such import is "into India". Both the words "import" and "India" have been defined under the Customs Act. The word "import" is defined in section 2(23) of the Customs Act as under :
"import with its grammatical variations and cognate expression means bringing into India from a place outside India".
The word "India" itself may mean geographically defined land mass or extend to either "territorial waters" or "continental shelf" or "exclusive economic zone" or "other maritime zones". Each of these expressions extends the territory of India beyond the land mass into the sea to varying extents. In order to give certainty to what is meant by "India" in the context of the Customs Act and chargeability of goods to customs duty, the Parliament thought it expedient to also define "India" in Section 2(27) as under :
"''India'' includes the territorial waters of India";
The expression "imported goods" is also defined in section 2(25) in the following words :
"''imported goods'' means any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption".
8. The definitions of these crucial words to not however put the issue beyond controversy. In fact what is the scope and extent of these definitions and how far they must give way to the context has to be ascertained for the interpretation clause in section 2 opens with the words : "unless the context otherwise requires."
9. It is argued for the customs authorities that the definitions do not take away the ordinary meaning of the words and hence the word "India" occurring in the Customs Act need not always include its "territorial waters" as well. They contend that as ordinarily understood India means only its "land mass" and not "the territorial waters". Reliance is placed in this regard to the statement in Craise "On Statute Law", Seventh Edition, at pages 212 to 214 :
"In most modern Acts of Parliament, there is an ''interpretation clause'' enacting that certain words when found in the Act are to be understood as regards that Act in a certain sense, or are to include certain things which, but for the interpretation clause, they would not include.........................
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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.
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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 ordinary meaning of the word should be given effect to for the legislature could not have had the intention to mean otherwise. Where the Parliament being aware of the ordinary meaning of a word, expressly defines it in the interpretation clause of an enactment, differently from its ordinary meaning it makes its intention manifest that the particular word or expression defined by it should be ordinarily understood in that Act in the manner defined and not as generally understood. Otherwise the very purpose of defining a particular word or expression, the ordinary meaning of which is clear, would be defeated; the definition itself would become redundant. The definition clause makes the intention of the Parliament explicit. That the Parliament intended the word "India" employed in the Customs Act should be understood as defined is further emphasized by employing the expression "in this Act unless the context otherwise requires" the word shall mean or include as stated therein.
11. Francis Bennion in his treaties "Statutory Interpretation", 1984 edition, at page 278 states :
"...... Whether the defining enactment says so or not, a definition applies only where the contrary intention does not appear. This is because the legislator is always free to misapply a definition, whether expressly or by implication........"
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Richard Robinson said :
"In stipulating a meaning for a word, a writer demands that his reader shall understand the word in that sense whenever it occurs in that work. The writer thereby lays upon himself the duty of using the word only in that sense, and tacitly promises to do so, and tacitly prophesies that he will do so. But sometimes a writer does not use the word only in the sense he has stipulated. Then his stipulation implied a false promise and a false prediction."
Where it is clear that the draftsman has forgotten his definition, the Court may need to give the term its ordinary meaning."
It is precisely to meet such a contingency the definition clauses invariably limit the scope of the definition by using the expression "unless the subject or context otherwise requires" or some such qualifying words. As laid down in Meux 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-interveners placed reliance upon the decision of the Supreme Court in
"...... It is well settled that all statutory definitions or abbreviations must be read subject to the qualification variously expressed in the definition clauses which created them and it may be that even where the definition is exhaustive inasmuch as the word defined is said to mean a certain thing, it is possible for the word to have a somewhat different meaning in different sections of the Act depending upon the subject or the context. That is why all definitions in statutes generally begin with the qualifying words similar to the words used in the present case, namely, unless there is anything repugnant in the subject or context. Therefore, in finding out the meaning of the word ''insurer'' in various sections of the Act (Insurance Act), the meaning to be ordinarily given to it is that given in the definition clause. But this is not inflexible and there may be sections in the Act where the meaning may have to be departed from on account of the subject or context in which the word has been used and that will be giving effect to the opening sentence in the definition section, namely, unless there is anything repugnant in the subject or context. In view of this qualification, the Court has not only to look at the words but also to look at the context, the collocation and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words under the circumstances. Therefore, though ordinarily the word ''insurer'' as used in the Act would mean a person or body corporate actually carrying on the business of insurance it may be that in certain sections the word may have a somewhat different meaning.
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...... the word may also refer in the context of certain provisions of the Act to any intending insurer or quondam insurer."
In this decision their Lordships were concerned with a case where the 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
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 laid down by the Supreme Court. In
"2. In this Act, unless the context otherwise requires, -
(29) ''modify'' and ''modification'' shall include the making of additions and omissions."
That definition which is an inclusive definitions also employs the qualifying expression "unless the context otherwise requires just as the Customs Act does in defining the word "India". The Supreme Court observed (page 68) :
"The noticeable feature of this definition is that it is an inclusive definition and, where in a definition clause, the word ''include'' is used, it is so done in order to enlarge the meaning of the words or phrases occurring in the body of the statute and when it is so used, these words or phrases must be construed as comprehending not only such things which they signify according to their natural import, but also those things which the interpretation clause declares that they shall include ........ wherein a word is defined to mean a certain things, wherever that word is used in that statute, it shall mean that as is stated in the definitions unless the context otherwise requires. But where the definition is an inclusive definition, the word not only bears its ordinary, popular and natural sense whenever that would be applicable but it also bears its extended statutory meaning. At any rate, such expansive definition should be so construed as not cutting down the enacting provisions of an Act unless the phrase is absolutely clear in having opposite effect.............. where the definition of an expression in a definition clause is preceded by the words ''unless the context otherwise requires'', normally the definition given in the section should be applied and given effect to but this normal rule may, however, be departed from it there be something in the context to show that definition should not be applied............... it would thus appear that ordinarily one has to adhere to the definition and if it is an expansive definition the same should be adhered to............"
In our view where the definition itself says that a particular word shall mean or a particular word shall include certain things and such a clause is preceded by the expression "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 enactments, for the purpose of the Customs Act it is made clear under the definition clause 27 of section 2 of Customs Act that, "India" includes territorial waters of India. Reading the two definitions together it would be manifest that if goods are brought into India, meaning thereby into the territorial waters of India from outside India, that is, from outside the territorial waters of India there is import of goods and the goods become "imported goods". These definitions thus make it clear that no sooner than the goods are brought from outside the territorial waters of India into the territorial waters of India, they become imported goods and become chargeable to duty and upto the moment they are cleared for home consumption, they constitute imported goods for the purpose of the Customs Act. No sooner than they are cleared for home consumption they cease to be imported goods. That "India" includes the territorial waters and wherever the word "India" occurs in the Customs Act that meaning should be given or so understood, is enjoined by Section 2 using the expression "unless the context otherwise required". Hence for the purpose of the Customs Act, ordinarily "India" must be understood as including its territorial waters. There must be something in the context of Section 12 or other provisions of the Customs Act read with Section 12 which must compel us to give the word "India" a different meaning and as not "including the territorial waters of India". We may, therefore, now examine the provisions of the Customs Act to see if there is anything therein which requires us to hold that the words "import" or "import into India" do not mean bringing goods from outside into territorial waters of India but that it would mean bringing them to the land mass of India. In other words, could it be said that there is no "impact" of goods into India when they enter the territorial waters but these would be import only after they are unloaded on the land mass of India.
15. Mr. Dalal, learned counsel appearing for the Customs authorities, contends that not only definitions of the words, India and Import into India but also the various connotations of the word "levied" occurring in section 12 must be kept in view in deciding when the "import into India" occurs. According to him, the word "levied" in Section 12 of the Customs Act which declares that duties of customs shall be levied, 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 u/s 14 and the duty payable shall have to be determined according to the rates specified u/s 15 of the Customs Act read with the Tariff Act. Every importer of goods is required u/s 46(1) of the Customs Act to make an entry with the proper officer by presenting a bill of entry for home consumption or warehousing in the prescribed form. The goods may be unloaded only at the approved place and under the supervision of the Customs Officer as laid down in Section 31 to 34 of the Customs Act. Section 29 prohibits the person-in-charge of a vessel or aircraft entering India from any place outside India from permitting the vessel or aircraft to call or land at any place other customs port or a customs airport. Within twenty-four hours of arrival the person-in-charge is required by Section 30 to deliver an import manifest or an import report. The person-in-charge of a conveyance which has brought any imported goods or has loaded any export goods is prohibited by Section 42 from leaving the customs station without authority. Section 45 enjoys that all imported goods unloaded in customs area shall remain in the custody of such person as may be approved by the Collector of Customs until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII. Only the proper officer may clear the imported goods for home consumption after he is satisfied that they are not prohibited goods and the importer has paid the import duty, if any, assessed thereon. Irrespective of whether the goods are dutiable or not the goods may be cleared only after an order permitting clearance of goods for home consumption is made. If the Assistant Collector of Customs is satisfied that the goods cannot be so cleared within a reasonable time, he may permit the storage of imported goods in a warehouse pending clearance.
17. Goods refereed to in Section 14 are goods on which duty of customs in chargeable by reference to their value. It would be clear that Section 14 by itself does not lay down when or what goods are chargeable to customs duty. It only deals with valuation of the goods imported which are chargeable to customs duty. If they are chargeable to customs duty and are chargeable by reference to their value, then the value has to be determined as laid down in Section 14. It does not lay down at what point of time the goods became imported goods. Whether they are chargeable at all to duty and if so, when they become chargeable must be determined with reference to the other provisions of the Customs Act. That other provisions is only Section 12.
18. So too section 15 only lays down 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 clear. First, the charge for tax at the rate fixed for the year of assessment is a charge in respect of the income of the ''previous year'', not a charge in respect of the income of the year of assessment as measured by the income of the previous year......... ....................
Second, the rate of tax for the year of assessment may be fixed after the close of the previous year and the assessment will necessarily be made after the close of that year. But the liability to tax arises by virtue of the charging section alone, and it arises not later than the close of the previous year, though quantification of the amount payable is postponed."
20. In
"...... Thus income is chargeable to tax independently of the passing of the Finance Act but until the Finance Act is passed no tax can be actually levied.
...... according to the scheme of the Act the quality of chargeability of any income is independent of the passing of the Finance Act."
The Supreme Court declared (page 783) :
"This Court, therefore, accepted the principle that the liability to pay tax arose under the Income Tax Act, though its quantification dependent upon the passing of the Finance Act. If there was no liability under the Income Tax Act during the relevant accounting year, no question of escaped assessment during that year would have arisen in that case."
21. In
"Under the Indian Income Tax Act liability to pay Income Tax arises on the accrual of the income, and not from the computation made by the taxing authorities in the course of assessment proceedings; it arises at a point of time not later than the close of the year of account."
In this behalf reference is made to the discussion in Supreme Court in Re Sea Customs Act (AIR 1963 SC 1760) regarding duties of Excise and Customs wherein it was declared :
"......... subject always 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."
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 taking cognizance of the fact and having regard to the nature of the levy of customs duty that the word "levied" occurring in section 12 has several connotations appears to have advisedly specified under different provisions of the enactment the different stages i.e. the stage when goods become chargeable to duty, the stage when the goods have to be valued and the stage when the duty has to be quantified. Under the Customs Act, chargeability is u/s 12, valuation of goods u/s 14 and the rate at which the duty should be assessed is u/s 15. As discussed above, these different events may occur at different points of time, but unless the goods are chargeable to duty and the taxable event occurs, the question of valuation of goods and quantification of duty payable at any particular rate obviously cannot arise. The taxable event has to occur at some particular point of time and cannot in respect of the goods imported at one and the same time occur at different points of time for some when they were unloaded, for some on the different dates as and when they are cleared from the warehouse. That would create confusion and it would be impossible to ascertain which point of time should be taken for the purpose of determining the chargeability of the goods to customs duty. May be, the legislature has the power to fix in respect of goods imported at one and the same time different dates as the dates when the taxable event occurred having regard to the different dates on which they are actually cleared for home consumption. But the question is, has it so fixed under the Customs Act. We have only Sections 12, 14 and 15 with reference to which we have to determine, in the light of the scheme of the Act, as to when the taxable event occurs.
22. Strong reliance is placed by Mr. Dalal, learned counsel for Customs, on the decision of the Supreme Court in Re Sea Customs Act (AIR 1963 SC 1760) to contend that the taxable event occurs in the case of import of goods into India only when the stage for paying the import duty is reached and without paying which the goods cannot be allowed to cross the customs barrier :
"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............... 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 was that the importer cannot take the goods beyond the customs barrier without first fulfilling the condition of payment of import duty. The Court was not required to consider sections 12, 14 or 15 of the Customs Act, 1962, and determine when the taxable event occurred. There can be no doubt that unless the duty is paid, dutiable goods cannot be carried across the customs barrier but that is not necessarily the time when the goods become chargeable and no opinion on that aspect was expressed on that aspect in that case. The Court only held that the payment of duty is a condition without fulfilling which goods imported into India cannot be taken beyond the customs barrier. In our view, in the context of Section 12 import into India, which includes its territorial waters, must mean that for the purpose of chargeability u/s 12, taxable event occurs when the goods enter the territorial waters.
23. In
"...... Excise duty is primarily a duty on the production or manufacture of goods produced or manufactured within the country ............... Therefore, subject always 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.
24. In
"...... that in order to be an excise duty (a) the levy must be upon ''goods'', and (b) the taxable event must be the manufacture or production of goods. Further the levy need not be imposed at the stage of production or manufacture but may be imposed later."
25. The same principle is reiterated in
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, the goods may be valued and the duty quantified and collected later as laid down in section 14 and 15 of the Customs Act. The rate itself can be fixed at a later date. But, what is crucial to be determined is : When was the act of importation complete ? And were the goods chargeable to duty at that point of time ? Once they are chargeable, they may be subject to duty on such value and at such rate as is laid in Sections 14 and 15 respectively and recovered in such manner as is laid down in the other provisions of the Customs Act.
27. If this essential distinction between chargeability and quantification is kept in view then, the position would immediately become clear. For determining when the taxable event occurs under the Customs Act reference to other enactments and to the decisions thereunder would not be of much help for those decisions would term upon the context of that particular enactment and the wording of the charging Sections.
28. In
"......... the same word may mean different things indifferent enactments and in different contexts. It may even mean different things at different places in the same statute. It all depends on the sense of the provisions where it occurs. Reference to dictionaries is hardly of any avail, particularly in the case of words of ordinary parlance with a variety of well-known meanings. Such words take colour from the context."
Proceeding to consider the meaning of the word ''import'' in section 2(23) of the Customs Act, the Court observed (page 680) :
"...... ''bringing into India from out of India'', that it is not limited to importation for commerce only but includes importation for transit across the country......... interpretation far from being inconsistent with any principle of International Law, is entirely in accord with International Conventions and the Treaties between India and Nepal."
Keeping this in view we may examine the several theories that were propounded as to when goods brought from a foreign country become imported goods. One such theory is the theory of original package. The Supreme Court in State of Bombay v. F. H. Balsara (AIR 1951 SC 318), observed that according to the doctrine of original package evolved in America with doctrine was applied not only to commodities imported from foreign 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 nature of the customs duty the Supreme Court observed : (page 1776) :
"...... Now, what is the true nature 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."
Very strong reliance was placed on these observations of the Supreme Court to contend that only when the goods form part of the goods on the land mass the condition of payment of duty has to be fulfilled. According to the Revenue it is at that point of time that the goods become imported goods and the taxable event occurs and not until then. The Court there was concerned mainly with the question whether the customs duty was a tax on goods and opined that customs duty is not a tax on the goods as such but on the act of importation of goods into India. But whether "India" in that context included territorial waters or not was not required to be considered. The opinion was rendered in the context of the Sea Customs Act which did not contain a definition such as the one in S. 2(25) of Customs Act, 1962. In our view, the observations of the Supreme Court are torn out of their context to seek support for the contention that the goods become imported goods only when they form part of the land mass. A reading of the entire discussion makes it clear that the Supreme Court recognises that the taxable event may occur earlier and the tax itself may be collected or recovered at any later stage; but nonetheless what attracts the tax is the taxable event. In making the above observations the Supreme Court merely declared that imposition of an import duty "results in a condition which must be fulfilled before the goods can be brought inside the customs barriers". It did not lay down that import itself occurred at that point of time or that they become imported goods only when they were sought to be removed for home consumption or formed part of the goods on the land mass of the country. The Supreme Court merely declared that payment of duty is a condition precedent for bringing the goods inside the custom barrier. It did not determine at what point of time or at what point of time prior to the goods reaching the customs barriers or prior to the goods being cleared for home consumption after crossing 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 Wilson 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, Sydnev, 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 ship left the port with the paint on board. No duty was paid in respect of this paint. In that case, the learned Judges construing a provision of the statute which did not define the word ''imported'', held :
"......... that goods are imported whenever they are brought into port for the purpose of being discharged there. So far as the ship is concerned the goods have at that time arrived at their destination, and their character as goods imported into Australia cannot, I think, be effected by an agreement subsequently made under which they are not in fact landed at the port at which the ship arrived. In the circumstances of this case I think it is clear that the paint in question was imported when the ship arrived in port Kembla, and that the obligation to make an entry arose at that time."
32. What is laid down therein cannot be applied to a situation arising under the Customs Act, 1962, which defines the words ''Import'' and ''Imported into India''.
33. We may at this stage take note of the fact that while Mr. Dalal contended that the taxable event occurred and the goods must be deemed to have been imported when they are sought to be cleared, Mr. Talyarkhan contended that they would be deemed to have been imported when the goods arrived at the port in the ship and are set for off leading on the terra firma or the land mass of India.
34. Reliance was then placed by Mr. Dalal on a decision of the Privy Council in Canada Sugar Refinery Company v. The Queen 1898 A.C. 735, where the Court had to decide whether Her Majesty''s Government was entitled to recover from the applicants a sum of 39,937 dollars as duty payable by the appellants on raw sugar imported by them from Hamburg into Canada in the s.s. Cynthiana in which their Lordships were required to consider two related questions and they were :-
(a) Was the sugar "imported into Canada within the meaning of the Customs Tariff Act before May 3, 1895, on which day the statute 58 and 59 Vict. C. 23, imposing the said duty, came into force ?
(b) Does the fact that an entry of the said sugar was, under the circumstances detailed, made at the Customs on May 2, 1895, as if the said sugar were free from duty, in the circumstances of this case prevent the Crown from subsequently claiming the duty ?
The undisputed fact in that case was that when the entry of sugar was made on May 2, 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 S. 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 :
"Sec. 4. Subject to the provisions of this Act and to the requirements of the Customs Act, S. 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 not enumerated when such goods are imported into Canada or taken out of warehouse for the consumption therein."
Section 34 of the Customs Act, 1886 (49 Vict. C. 32) with which the Court was concerned in that case laid down that every importer of goods by sea or from any place out of Canada shall within three days after the arrival of the importing vessel make due entry inwards of such goods and land the same. The importers of sugar made entry at the Montreal Customs House of the goods on May 2, 1895, when the goods were not subject to duty. The Court held (Page 740) :
"(1) The imposition of the duties is contained only in the direction for their payment. There are no words which render the goods liable for the duty or make the duty (as it is said) attach at date prior to the date of payment. (2) The words ''when such goods are imported into Canada'' express the time at which the duties are to be paid. If, therefore, the goods are imported into Canada when the vessel enters a port of call on her way to her ultimate destination, the duties would be payable at that date, which is highly improbable, and contrary to the express provisions of S. 31. (3) The duties are payable at one of two dates - either the date of importation or the date when they are taken out of warehouse. There is no real contrast between the date of arrival at a port of call and the date when the goods are taken out of warehouse, because if the words mean in the first case that the duty attaches when the vessel arrives at the port of discharge they are delivered to the importer or warehouse in bond. The true contrast is that which their Lordships have just indicated, and the words appear to them to mean when the goods are landed and delivered to the importer or to his order, or when they are taken out of warehouse, if instead of being delivered they have been placed in bond. (4) The result is that, in the opinion of their Lordships, the words ''imported into Canada'' must, in order to give any rational sense to the clause, mean imported at the port of discharge, and cannot be used in the sense attributed to the word ''imported'' by the appellants, in accordance with the construction placed by them on the definition in S. 150 of the Customs Act. (5) If the goods were ''imported'', within the meaning of the Tariff Act, on or after May 3, (in other words) if the duty became payable after that date, the Crown was entitled to it.
But their Lordships do not find it necessary to adopt the appellants'' constructions of S. 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 S. 150 would be the port at which the goods are to be landed mentioned in S. 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 S. 150 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 purpose, it becomes necessary to determine the precise time to the importation of any goods, or of the arrival or departure of any vessel, such importation, if made by sea, coastwise or by inland navigation in any decked vessel, shall be deemed to have been completed from the time the vessel in which such goods were imported came within the limits of the port at which they ought to be reported, (underlined to draw attention to the distinction) by land or by inland navigation in any undocked vessel, then, from the time such goods were brought within the limits of Canada."
That decision which turned on the specific provision of the Statutes in force in Canada cannot affect the view we have taken on a construction of the various provisions of the Customs Act and especially the specific definitions in the context of the Act. In our view as the enactment specially defines the words ''import'', ''India'' and ''imported goods'', when there is nothing in the context of Section 12 or even Sections 14 and 15 which suggests to the contrary, these definitions cannot be brushed aside in interpreting Section 12.
35. If according to the contention of the customs authorities goods do not become imported goods when they enter the territorial waters of India, apart from the fact that would be contrary to the definition of "imported goods", then at what point of time do these goods become imported goods ? One contention is that they become imported goods when they are sought to be removed for home consumption. If they are not imported goods merely because they are sought to be removed for home consumption, how do they become imported goods ? After all the goods sought to be removed for home consumption would have by then not only entered the territorial waters of India but would have been unloaded on to the land mass of India. But then, even according to the learned Counsel for the Customs when the goods are brought to the land mass they do become imported goods. It is common knowledge, goods unloaded on the land mass are not immediately cleared for home consumption. The Customs Act itself gives two options to an Importer. The importer may clear the goods forthwith or lodge them in a warehouse for clearance from time to time. In the latter event when do they become imported goods ? Is it only when they are cleared from the warehouse for home consumption. The 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 Sections 2(23) and 2(27) of the Customs Act, to our mind, is that import can be said to take place as soon as goods are brought into the territorial waters of India. The taxable event occurs, when, as laid down by Section 12, goods are imported into India and since "India" includes its territorial waters, the taxable event occurs no sooner than the goods enter the territorial waters of India and does not postpone till they are actually off loaded on the land mass or till the goods are valued u/s 14 or till the date for determining the rate at which the customs duty should be levied u/s 15 arrives. Even though as contended by Mr. Dalal, learned Counsel for the Customs, the word "levied" has several meanings viz. chargeability, valuation, determination of duty or tax and/or recovery of the same, there is nothing in the Customs Act which indicates that the chargeability stands suspended until a bill of entry is presented or until the goods are valued and duty payable is ascertained. It would be pertinent to note that Section 12 uses the words "shall be levied". The taxable event occurs u/s 12 when the goods are brought into the territorial waters of India. From that moment the goods are imported goods and continue to be imported goods, as defined in Section 2(25), until they are cleared for home consumption. In other words, they acquire the character of imported goods within the meaning of Section 12 no sooner than they enter the territorial waters of India and thus become subject to the levy of customs duty. The chargeability does not remain suspended until they are cleared for home consumption. In fact, the moment they are cleared for home consumption and they become part of the goods on the land mass, they cease to be imported goods for the purpose of levy of customs duty; of course, they are cleared for home consumption only on payment of duty. Even on a reading of Section 12 in the context of the scheme of the Customs Act and in particular in conjunction with Sections 14 and 15, we find nothing which requires a different meaning to be given to the expression "imported into India". We, therefore, hold that goods from outside India, no sooner than they enter the "territorial waters of India" become "goods imported into India" and acquire the character of imported goods.
36. That they become imported goods no sooner than 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 officer has made an order for clearance for home consumption or deposit in a warehouse, the importer shall not be liable to pay the duty leviable on such goods except where such goods are restored to the importer after pilferage."
This provision absolves the importer of the liability to pay duty if the goods are pilfered before an order for clearance for home consumption or deposit in a warehouse, is made. In our view, the question of liability of the importer to pay duty on pilfered goods would not have arisen if the goods become liable for duty only when they were sought to be cleared for home consumption; only such goods as were then available would have been subject to duty and no provision declaring that the goods pilfered "shall not be liable" for duty was necessary and would have been made. This provision clearly postulates that the goods become imported goods and are subject to duty if not on entering territorial waters of India, at least after that they are landed and before they are cleared. But the words "If any imported goods are pilfered after the unloading" in Section 13 are very significant and are not to be ignored. It would be explicit from these words that the goods become imported goods even before they are unloaded. If they became imported goods earlier to unloading that could happen either when the ship carrying the goods entered the territorial waters or when the ship called at the port. Having regard to the definition of the words "imported" and "India", we must hold that the legislature in enacting Section 13 further disclosed its intention that the goods become imported goods on their entering the territorial waters of India. There is nothing to indicate that the goods did not become imported goods even after entering the territorial waters until the ship called at the port of unloading.
39. Section 21 makes provision for goods derelict, wreck etc. It reads as follows :
"21. Goods derelict, wreck, etc. - All goods, derelict, jetsam, flotsam and wreck brought or coming into India, shall be dealt with as if they were imported into India, unless it be shown to the satisfaction of the proper officer that they are entitled to be admitted duty-free under this Act."
When the legislature declared that such goods are liable to duty, it could be only on the footing that thy become imported goods no sooner than they entered the territorial 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 before they are unloaded; certainly much before the goods are sought to be cleared for home consumption and before they are unloaded. So, when does import occur ? Let us examine the Scheme of the Act to see at what point of time they acquire that character of "imported goods". Section 37 empowers the proper officer to board any conveyance carrying "imported goods", that is, even when the conveyance is afloat and even before the goods are unloaded. That would indicate that the goods become imported goods even while they are in the ship or the vessel. That is made further clear by what is contained in Chapters VII and VIII of the Customs Act. Section 45 refers to all imported goods unloaded in a customs area and directs that they shall remain there until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII. Section 46 requires the importer of any goods other than goods intended for transit or transhipment to make an entry thereof by presenting a bill of entry for home consumption or warehousing. Section 48 authorises disposal of goods not cleared for home consumption or warehoused or transhipped within two months after unloading. It speaks of such goods also as imported goods. It is the imported goods that are permitted to be stored for warehousing u/s 49. Chapter VIII, which deals with goods in transit, makes the position much more clear that the goods become imported goods when they enter the territorial waters of India and exempts the same from complying with certain provisions. Section 53 makes provision for transit of goods in the same vessel or aircraft in the following terms :
"53. Transit of goods in same vessel or aircraft. - Subject to the provisions of Sec. 11, any goods imported in a vessel or aircraft and mentioned in the import manifest as for transit in the same vessel or aircraft to any port or airport outside India or any customs port or customs airport may be allowed to be so transited without payment of duty."
If on entering the territorial waters of India the goods did not become imported goods and would not so become until unloaded on the land mass and were not subject to levy of customs duty u/s 12, such a provision would have been wholly unnecessary. The legislature obviously intended, that primarily goods brought from outside the country, no 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 u/s 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 rendered wholly redundant. They would not be imported goods and would not be liable to customs duty until they are actually cleared or sought to be cleared after being lodged in the warehouse. These provisions, in our view, make the legislative intent abundantly clear that the goods become imported goods no sooner than they enter the territorial waters of India, which provisions would have been wholly unnecessary if goods become liable to customs duty only at the time of clearance.
40. If the contention of Mr. Dalal that taxable event occur only when the goods are sought to be cleared is accepted, it would lead to some absurd results. What would happen if the goods are brought not only into territorial waters but off-loaded on the land mass of India but are not cleared through Customs but smuggled across the customs barrier ? If the goods become imported goods only on landing, then before they are unloaded on the land mass, no goods could ever be treated as smuggled goods. There would have been no necessity for making any provision in this behalf as is made in Section 38 of the Act.
41. It is argued that if the goods become imported goods as soon as they enter territorial waters of India, the goods cannot become export goods until they are removed from the land mass and pass out of the territorial waters of India. We do not see how that follows. In the case of import, the words used are "imported goods" and in the case of export, they are "export goods" and not "exported goods". The duty in the case of export goods has to be paid before they are exported; in the case of imported goods they become liable to duty no sooner than they are imported. While in the case of import the duty is attracted if the goods become imported goods, in the case of goods sought to be exported, duty has to be paid when they are still "export" goods and not after they are exported. This distinction has been made and maintained throughout the Customs Act. An examination of these provisions further fortifies our conclusion that the goods become imported goods no sooner than they are brought from outside the country into the territorial waters of India and the taxable event is not postponed till a bill of entry is filed or till they are sought to be cleared for home consumption.
42. What follows from the above discussion is that when goods from a place outside India are brought to India as defined u/s 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 u/s 14 and at rates specified u/s 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 u/s 12 of the Customs Act. But by virtue 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 transited. The goods may not be chargeable to customs duty also because the Central Government chooses to exempt from duty by issuing a notification u/s 25 of the Customs Act. In this context, it is necessary to note the distinction between the notification under sub-section (1) of Section 25 of the Customs Act and an exemption notification issued under sub-section (2) of Section 25 thereof. Under sub-section (1) the Government may exempt absolutely or subject to conditions goods of any specified description from the whole or any part of duty of customs leviable thereon. Duty is leviable u/s 12 of the Customs Act and not under the Schedules of the Tariff Act. If duty is leviable u/s 12, then only for the calculation of the duty the Schedules of the Tariff Act become relevant and have to be looked into. A notification u/s 25(1) of the Customs Act exempts goods themselves from the levy of duty u/s 12. A notification under sub-section (2) of Section 25 does not exempt goods from levy of the tariff. A notification thereunder only exempts by special order in each case from payment of duty under circumstances of exceptional nature. While under sub-section (1) of Section 25 goods themselves are exempt from the levy of duty, under sub-section (2) of the goods continue to be chargeable to duty but the importer is only exempted from payment of such duty. If the notification under sub-section (1) wholly exempting goods from duty subsists on the date of importation that is, when they entered the territorial waters of India then duty is not at all leviable. The subsequent withdrawal of the notification before the clearance of the goods does not render such goods chargeable to duty. But where notification under sub-section (2) is issued and is in force on the date when goods are imported, that is, when the goods enter territorial waters of India, as those goods continue to be chargeable to duty and the importer is only exempted from paying it, if any the time they are removed for home consumption that notification is withdrawn, duty would be payable at the time of removal of goods as laid down in Sections 14 and 15 read with Section 12. If the goods are not chargeable to customs duty in view of any of the provisions of the Customs Act or the provisions of any other law, then neither their valuation u/s 14 nor calculation of the duty payable at the rates as mentioned in Section 15 of the Customs Act would be required. Same would be the position when a notification wholly exempting the goods from levy of customs duty is issued under sub-section (1) of Section 25 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 u/s 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 u/s 14 or the rate at which the duty is payable u/s 15. Sections 14 and 15 would apply only in a case where duties of customs are leviable u/s 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 u/s 25(1) thereof provides otherwise, duties of customs shall not be levied u/s 12 and consequently, Section 15 does not come into operation in respect of these goods and the question of valuation of the goods u/s 14 does not arise for the purpose of assessment. That is what this Court held in Sylvania Laxman''s case.
43. It was, however, contended that when goods are exempted from duty by a notification issued u/s 25, they are still chargeable to duty u/s 12, but at nil rate. It was argued that the effect of granting exemption u/s 25 from payment of the whole of customs duty leviable, the Customs Act does not render the imported goods free from chargeability. According to the learned Counsel, when the goods are wholly exempted from duty, in law, "nil duty" is still chargeable. The goods are chargeable to duty so long as they are shown in the Schedule to the Customs Tariff Act as chargeable to duty is not payable in view of the exemption notification u/s 25 of the Customs Act. The argument for the Customs authorities proceeds on the footing that u/s 12 "nil" duty is payable in view of the exemption notification and, therefore, at that point of time no rate of duty need be calculated; but if by the time they are sought to be cleared for home consumption, the exemption notification is withdrawn, the goods which were chargeable to "nil" duty would then become chargeable at the rate in force when they are sought to be so cleared. This assumption of "nil" duty being chargeable is a concept difficult to accept. Goods imported into India would be chargeable according to the rates specified in the Schedule to the Customs Tariff Act. The power vested u/s 25(1) is exercised by the Central Government and that is to exempt the goods from the levy of duty itself and not merely from the rate of duty. What is levied u/s 12 is wholly exempted in exercise of the power u/s 25. The fact that the goods are still shown in the Schedule as chargeable under the Customs Tariff Act does not render the goods subject to levy of duty. Only if the goods are chargeable to duty under the Customs Act, the duty will be at the rates specified in the Schedule to the Customs Tariff Act. But, inasmuch as where the notification u/s 25(1) exempts imported goods covered by the notification from the levy of whole of the duty leviable thereon it cannot be said that "nil" duty is chargeable on these goods. The Schedule to the Customs Tariff Act ceases to apply to the Customs Act, no sooner than the notification u/s 25(1) is issued. The link between the Customs Act and the Customs Tariff Act established by Section 12 is severed by the notification u/s 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 ELT 414, discussed above and (ii) New Chemiscal Industries Pvt. Ltd. and another v. Union of India and others (1981 ELT 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 exemption from payment of customs duty on goods imported, referring to the decision in Synthetics and Chemicals Ltd. v. S. C. Coutinho and others observed :
"The Division Bench held that if the goods were totally exempted on the date of its entry, within the custom''s barrier, then duty cannot be recovered merely because such total exemption was withdrawn on the date of the clearance, but in cases where there is only partial exemption available on the date of entry in the custom''s barrier, then withdrawal of such partial exemption would make the importer liable to pay the normal duty, if on the date of clearance of the goods exemption stands withdrawn."
45. In Sundaram Textiles Ltd., Madurai v. Assistant Collector of Customs, Madras and another (1983 E.L.T. 909) a learned Single Judge of the Madras High Court, after considering the judgment of the Bombay High Court in Sylvania''s Laxman''s case, discussed the matter at length in the light of the Supreme Court decision in
46. Even on a reconsideration of the question decided in Sylvania Laxman''s case 77 Bom. L.R. 380 we see no reason to take a view different from the view expressed therein.
47. In the order of reference, Rege, J., speaking for the Bench observed that the view in Sylvania Laxman''s case may require reconsideration in the light of the decisions of the Supreme Court in Express Mills v. Municipal Committee, Wardha AIR 1963 S.C. 1760; Prabhat Cotton and Silk Mills Ltd. v. Union of India 1982 E.L.T. 203; Shri Ramlinga Mills Private Ltd. and others v. Assistant Collector of Customs and another 1983 E.L.T. 65 (Kerala) and
48. The first Supreme Court case,
"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 made 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 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 u/s 66(1)(o). That provision authorised the imposition of "a terminal tax on goods or animals imported into or exported from the limits of a Municipality". It is in the context of such a tax that the words "import into or within the Municipal limits" were required to be construed by the Supreme Court in relation to goods in transit through the Municipal limits. The Supreme Court construing such a provision, observed :
"Import is not merely the bringing into but comprises something more i.e., incorporating and mixing up of the goods imported with the mass of the property in the local area. The concept of import as implying something brought for the purpose of sale of being kept is supported by the observations of Kelly C.B. in Harvey v. Corporation of Lyme Regis, (1869) 4 Ex. 260 at p. 262 (B). There the claim for a toll was made under the Harbour Act and the words for construction were ''goods landed or shipped within the same cobb or harbour''. Considering these words Kelly C.B. said :
''The ordinary meaning and purport of the words is perfectly clear, namely that tolls are to be paid on goods substantially imported; that is, in fact, carried into the port for the purpose of the town and neighbourhood.''"
The meaning of word ''import'' or ''importation'' under the C.P. and Berar Municipalities Act was so construed by the Supreme Court in that manner only having regard to the provision in Section 66(1)(o) and the nature of the terminal tax. In fact, the observations in paragraph 15 of the judgment would lead to the inference that if the word ''import'' were defined in a particular statute the general meaning of the words ''import'' or ''importation'' drawn by the Supreme Court, in the absence of such a definition would not apply. Referring to the cases of
"The word ''import'' was there given the meaning ''carried into''. But the decision was based on the definitions given in the Statutory Rules to the word ''import'' which was ''bringing into the terminal tax limits from outside those limits''. In none of these cases was the argument as to the qualification stemming from the use of the words ''terminal tax'' considered nor was the signification of the word ''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 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 the territorial waters of India or at the point where the goods are cleared for home consumption on payment of duty. The Supreme Court was concerned with the question whether the duties of customs were on the goods or on the act of import and it was held that they were on import and not on the property, i.e. the goods.
50. In Prabhat Cotton and Silk Mills Ltd. v. Union of India 1982 E.L.T. 203 a Division Bench of the Gujarat High Court while considering the question whether landing charges are includible in the assessable value of the goods u/s 14 of the Customs Act held (Page 209) :
"......... as per Section 12(1) duties of customs are levied on goods imported into or exported from India and the expression ''India'' in so far as Section 12 is concerned refers to the India land mass and not the Indian territorial waters. .......................................
* * * *
What requires to be underlined is a reference to ''goods imported into, or exported from, India''. Surely the expression ''goods exported from India'' cannot mean goods exported from the territorial waters of India."
If this hypothesis is correct, perhaps the rest follows as argued therein; but the whole point is, is this correct ? Proceeding on that basis, the Court proceeded to conclude (Page 209) :
"......... Once this view is taken in the context of exportation from India, the expression ''imported into'' which forms a part of the expression ''imported into or exported from India'' cannot carry any other meaning; the expression ''India'' must mean land mass of India whether it is in the context of ''exportation from India'' or ''importation into India'' of goods within the meaning of dutiable goods in the context of Section 12(1) of the Act."
The Division Bench further observed (Page 210) :
"......... To construe the expression ''goods exported from India'' to mean goods exported from land mass of India on the one hand and to interpret the expression following on its heels the ''goods imported into India'' to mean goods imported into territorial waters of India and not the land mass of India would introduce an anachronism and so incongruity."
In our view, this reasoning ignores the distinction made by the 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 u/s 14 and held (Page 210) :
"......... As per the analysis made by us, the price of the goods has to be determined (1) on the basis of the price at which ordinarily such goods are offered for sale, (2) such price is required to be determined with reference to the time and place of importation of goods (i.e. when they are unloaded on the land mass of India), (3) the price must be the price at which the goods are ordinarily sold or offered for sale in accordance with the international trade, and (4) the price must be genuine price between a commercial seller and a commercial buyer unrelated to each other ................ And the goods will have to be valued at the point of time of being unloaded on the land mass of India and at the place where they are unloaded."
It would be seen that the Division Bench failed to take into consideration that chargeability is one thing and ascertaining the assessable value of the goods is another and further that the statute can expressly or by implication lay down different points of time at which the goods may become chargeable and at which the assessable value of the goods may be arrived at. Referring to the judgments of the Supreme Court in
"If the argument of the counsel for the petitioners were right, customs duty would be payable even if the ship were to stray into the territorial 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 BOML R 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 contention of the petitioners on the basis of the aforesaid decision rendered by the Bombay High Court."
It would be seen that while not expressly disagreeing with the judgment of this Court, the Court refused to apply that rule so far as the valuation of goods for the purpose of determining the duty payable was concerned. As noticed at the outset, the Division Bench of the Gujarat High Court was concerned with the point of time with reference to which the assessable value of the goods imported was to be arrived at and not with the question at which point of time the goods became imported goods and chargeable to duty. We must observe that the point of time with reference to which the assessable value of the goods envisaged by Section 14 has to be arrived at need not necessarily coincide with the time and place when the goods become imported goods and become chargeable to duty. They become chargeable to duty u/s 12 when they enter the territorial waters of India but they have to be valued u/s 14 for the purpose of determining the duty payable and the rate at which the duty is payable must be determined u/s 15 of the Customs Act. Even for arriving at the assessable value of the goods it is not always the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation, as laid down in Section 14(1)(a) that would govern. Where such price is not ascertainable, the nearest ascertainable equivalent thereof in accordance with the rules made in this behalf as directed u/s 14(1)(b) would be the assessable value of the imported goods for the purpose of determining the customs duty payable. There is yet a third mode of ascertaining the value of the goods and that is u/s 14(2) under which the Government is vested with the power to fix by notification, tariff values for any class of imported goods or export goods having regard to the trend of value of such or like goods. Thus the valuation of goods for the purpose of assessment of duty is the price at which such goods or the like are ordinarily sold, or offered for sale, for delivery at the time and place of importation 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. That is only for the purpose of valuation of goods and not for determining the chargeability of goods to duty. Since valuation has to be made u/s 14 full effects 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 u/s 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 u/s 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 provisions of the Customs Act.
51. In
"It is thus the clear requirement of cl. (b) of sub-sec. (1) of S. 15 of the Act that the rate of duty, rate or exchange and tariff valuation applicable to any imported goods shall be the rate and valuation in force on the date on which the warehoused goods are actually removed from the warehouse................... The Central Government were quite right in taking the view that the rate of duty applicable to the imported goods had to be determined according to the law which was prevalent on the date they were actually removed from the warehouse, namely, the amended Ss. 14 and 15 of the Act. There is therefore no force in the argument that the requirement of the amended S. 15 should have been ignored simply because the goods were imported before it came into force, or that their bills of lading or bills of entry were lodged before that date."
It must be noticed that this was not a case of goods which were totally exempt from customs duty. They were chargeable to customs duty u/s 12 and only the rate of duty at which they were chargeable was in question. Are they to be charged at the rate prevalent on the date they were imported or at the rate in force when they were sought to be removed from the warehouse ? As discussed above, on the day the goods were imported, that is, when they entered the territorial waters of India, the taxable event occurred and if on that day the goods were wholly exempt from duty, the question of calculating the rate does not arise at all and, therefore, the further question whether the rate prevalent on the date of importation, i.e. when they entered the territorial waters or when they are sought to be removed from the warehouse for home consumption also does not arise. There is nothing in this decision which warrants a different conclusion than the one we have reached in respect of goods which were totally exempt from duty on the date they were imported into India.
52. In K. Jamel Co. v. Union of India 1981 ELT162 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 allowed before they were cleared for home consumption. The Court repelled the contention that the goods were imported into India no sooner than they entered the Indian territorial waters and the notification totally exempting them was in force. We do not think it necessary to discuss this judgment at length for it overlooks the definition of the word "India" in Section 2(27) and equates import into India with presentation of the bill of entry. We do not think this view is sustainable. It is enough to note that the learned Judge himself on a more exhaustive consideration of the matter in Sundaram Textiles Ltd., Madurai v. Assistant Collector of Customs, Madras and another (1983 ELT909), to which reference has been made above, conferred with the view expressed in Sylvania Laxman''s case (1983 Mah. Law Journal 909) unhesitatingly declared :
"I do not think, I can stick to my old view which was arrived at without reference to these decisions, all of which fully bring about the distinction between the chargeability under Sec. 12 and the assessment u/s 15."
53. We may now refer to the decisions relied upon by the learned Counsel for the Customs which have taken a contrary view. A Single Judge of the Calcutta High Court in
".......... to give the words their literal meaning would lead to an absurdity because a person may bring goods into India by a ship and may not clear the goods in India and may re-export it. In that case, would Customs duty be chargeable as soon as the vessel arrives in India ? Take another case of an Aircraft landing in any Air Port in this country in course of transit. Would Customs Duty be chargeable for any goods being carried in the Aircraft although no Customs clearance is sought for ?"
In so observing, we must respectfully note that 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 u/s 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 territorial waters of India are not co-extensive. Customs waters extend beyond territorial waters as defined in Section 5 of the Territorial Waters, ContinentalShelf, 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 purpose of being imported contrary to any prohibition imposed by or under the Customs Act or any other law for the time being in force, in our view, does not in any way support the contention that the import is not complete until goods are unloaded on the land mass. It only lays down that no sooner than the goods are brought into the customs waters for the purpose of being imported, the provisions of the Customs Act are attracted and if they are not complied with would become liable to the penalties mentioned in Section 111(d). It does not throw light on when the act of import of goods is completed, much less does it lead to the conclusion that import is not complete when the goods enter territorial waters of India. That provision does not militate against the conclusion we have reached that goods become imported goods when they enter territorial waters of India.
54. In Jain Shudh Vanaspati Ltd. v. Union of India 1983 E.L.T. 1688 the Division Bench of the Delhi High Court was considering a case of exemption from the whole of the customs duty leviable on PVC Resin classified under Chapter 39 of First Schedule to the Tariff Act under Item No. 39.01/0.6. Expressly disagreeing with the view taken by this Court in Sylvania Laxman''s case 77 Bom. L.R. 380, the Court observed :
"Section 12(1) specifically provides that "Except as otherwise provided in this Act,............ duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975."
The Division Bench felt that it was otherwise provided by Sections 14 and 15 of the Customs Act. With great respect, we are unable to share this view.
Sachar, J. further observed (Page 1697) :
"............ it would be wrong to read that Section 15 covers only the quantification but the date with referenced to which quantification is to be done could relate back to the earlier period of time when the ship had entered the territorial waters. Statute is clear that irrespective of the date when ship enters territorial waters, calculation for the purpose of rate of duty must be done with reference to the date mentioned in Section 15 in various circumstances."
These observations, in our view, assume that chargeability to duty and quantification of duty payable under the Customs Act should be with reference to the same date. For this assumption there is no justification when Section 15 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 u/s 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 prohibition and other restrictions placed on the import and the manner of import of those goods. But entry in the territorial waters, though amounting to import, yet will not for fiscal purposes, determine the date and time for the purpose of calculating the rate of duty which is leviable under the Customs Act and for which we have to look to Section 15 of the Act."
We also agree with this view, but we find it difficult to accept that merely because the rate of duty has to be determined u/s 15 the question of chargeability of the goods to duty also should be determined with reference to the dates mentioned in Section 15. Chargeability is different from assessing the duty payable which has to be done with reference to the dates mentioned in Section 15 having regard to Section 14. Even as Sachar, J. has observed, "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 taxability is determined on the date when the goods enter the territorial waters and amount of duty payable with reference to the dates mentioned in Section 15. Sachar, J. did not accept the distinction sought to be made in regard to the meaning of the word "import" on the basis of the definitions of the words "import" and "India" contained in Section 2(23) and 2(27) of the Customs Act, and held that the connotation of the word "import" as stated in
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
"That provision will apply even to cases where there has been a nil assessment in which case the entire duty later on assessed must be considered to be the duty originally short-levied."
It must be noticed that the Supreme Court was making that observation with regard to goods which were dutiable goods and through inadvertance no duty was levied at all. Non-levying of duty on dutiable goods was also treated as short-levy. The Delhi High Court tears the observation of the Supreme Court from its context to hold that even after the goods are exempted u/s 25(1) they should be deemed and to be subject to "nil" duty.
55. The Delhi High Court further observed that in Sylvania Laxman''s case the Bombay High Court "Miss appreciated the position in law, for as we have pointed out above, notwithstanding the total exemption, goods remain chargeable by virtue of Section 12(1) of the Act (the entry in Tariff Act is not deleted). Only effect is that duty is not payable because of total exemption. Goods can be said to be not chargeable only when the said goods do not fall within the entry in the Tariff Act." The Delhi High Court is thus of the view that where goods are exempted from duty by notification u/s 25 such exemption would be only from the rate of duty and are in fact chargeable at ''Nil Rate'' and when that notification is withdrawn or modified and a certain rate is fixed it would be chargeable to duty at that rate. We are unable to agree with either of these propositions. These observations overlook the distinction pointed out by us earlier between an exemption under sub-section (1) of Section 25 which exempts goods from the levy of duty itself, and the exemption under sub-section (2) which only exempts from payment of duty. In the former case goods cease to be dutiable goods u/s 12 and in the latter case while the goods remain dutiable u/s 12, they are only exempt from payment of duty. As discussed above, the effect of exemption notification under sub-section (1) of Section 25 is that the goods are not chargeable at all to any duty. In
".... there is no import within the meaning of the Customs Act in a case where the goods are entrusted u/s 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(1) 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 passenger contains any article which is dutiable or the import of which is prohibited and in respect of which a true declaration has been made u/s 77, the proper officer may, at the request of the passenger, detain such article for the purpose of being returned to him on his leaving India. In the context of these provisions it was held that unless the goods are brought into the country for the purpose of use, enjoyment, consumption, sale or distribution so that they are incorporated in and mixed up with the mass of the property in the country, they cannot be said to have been imported or brought into the country. This decision, in our view, is with reference to the special provisions contained in Sections 79 and 80 of the Act and does not, in any way, limit the ambit of Section 12, which deals with goods which are intended to be brought to the land mass of India and become imported goods the moment they enter the territorial waters of India. That decision merely lays down that goods which form part of the personal baggage of a passenger, are not liable for confiscation as imported goods before they pass the customs barrier, it does not declare that taxable event does not occur at the moment the goods enter the territorial waters of India. The subject and context of Sections 79 and 80 required such a construction.
56. A Single Judge of the Kerala High Court in
"As there is no decision of this Court or of the Supreme Court to bind me, I would venture to suggest that a different approach is possible in the case of total exemption also."
The learned Judge proceeded to hold on an examination of Section 2 read with sections 12, 14, 15, 17, 25, 30, 32, 33, 34, 37 and 45 to 49 and the relevant definitions as under (page 188) :
".... The charge u/s 12 is on ''imported goods''. Though the Section uses the expression ''goods imported into India'' Sections 13, 15, 17 and many other relevant provisions show that the legislative intention is to impose 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 u/s 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 u/s 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 u/s 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 they are cleared for home consumption as defined in Section 2 of the Customs Act, the taxable event must occur at some particular point of time. We have to ascertain if duty was leviable with reference to the time when the taxable event occurred. Unless the legislature expressly provided otherwise, duty is leviable u/s 12 on goods imported at that point of time the duty is not imposed on the goods as such but on the act of importation. In our view if the goods acquire the character of imported goods as soon as they enter territorial waters of India, even as accepted in that judgment, the taxable event occurs, at that moment. The fact that they continue to be imported goods until they are cleared does not mean that taxable event occurs once again at any subsequent point of time or as and when they are sought to be cleared. The learned Single Judge also held (page 189) :
"It is not easy to imagine that the policy of the Act is to impose a duty on the more act of bringing goods into the territorial waters of India, without regard to the question whether they are unloaded, cleared and allowed to become part of the mass of the goods within the country. Chargeability cannot be considered in isolation or in the abstract, without reference to the goods on which the charge falls, and the importer who has to meet the charge............................ ............................. The inclusive definition in Section 2(27) is not designed to pinpoint the only point of time at which chargeability u/s 12 could attach to the goods; at the most, the definition specifies only the earliest point of time from which the goods could be treated as dutiable. It does not preclude a charge being imposed at any subsequent point of time, so long as the goods continue to be "imported goods" for the purpose of Section 12."
We do not see any contradiction in fixing chargeability of goods to duty with reference to the time when the goods acquired the character of imported goods, that is, when the taxable event occurred and the rate of duty with reference to date of clearance. In so construing, the question of taxability is neither being viewed in isolation nor in the abstract without reference to goods or the importer who has to pay the charge. Even while keeping those factors in view, we are only giving effect to the principle that tax or duty is attached when the taxable even occurs. 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
58. If the goods are wholly exempt from duty as against being partially exempt from such duty, when the goods enter the territorial waters, they cannot be subjected to duty even if the exemption notification is withdrawn or modified before the bill of entry is presented or the goods are cleared for home consumption, as the case may be. But, if the goods, when they enter the territorial waters of India are subject to levy of some customs duty by virtue of partial exemption from duty granted u/s 25(1) of the Customs Act, the goods being chargeable to customs duty, it will be charged at the rates in force on the date when the bill of entry was presented or on the date when the goods are sought to be cleared for home consumption, as the case may be. Having considered the matter in the light of the several decisions referred to above, we are of the opinion that the opinion expressed in Sylvania Laxman''s case 77 Bom. L.R. 380 still holds goods. In view of the foregoing discussion our answers to question Nos. 1 and 2 are as follows.
59. Question No. 1 : Under the Customs 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 u/s 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 u/s 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 Act envisages only levy of duties of customs and no other duties. It makes provision for levy of duties of customs at such rates as may be specified under the Customs Tariff Act, 1975 or any other law for the time being in force. Reference to the Customs Tariff Act, 1975 or any other law for the time being in force in Section 12 of the Customs Act is only for the purpose of rates at which duties of customs envisaged by the Customs Act are to be levied. Any other duty mentioned in the Customs Tariff Act or any other law for the time being in force would not be customs duty; those would be such other duties as are leviable under those enactments. The countervailing duty envisaged u/s 2A of the Tariff Act on any article imported into India is in addition to the customs duty leviable thereon u/s 12 of the Customs Act. The provisions of the Customs Act, 1962 and the rules and regulations made thereunder are made applicable to the duty chargeable u/s 2A of the Tariff Act by sub-Section (5) thereof. Likewise, u/s 3 of the Customs Tariff Act additional duty is leviable on goods imported, that is, in addition to the customs duty chargeable u/s 12 of the Customs Act. Countervailing duty or additional duty may partake the same character as basic customs duty which is admittedly leviable u/s 12 of the Customs Act. Such additional duty is still distinct from basic customs duty as such. Whether the charging section for the levy of countervailing duty and additional duty is Sections 2A and 3 respectively of the Tariff Act and the Customs Tariff Act or Section 12 of the Customs Act, it is only u/s 25(1) of the Customs Act that the Central Government may exempt goods from the whole or any part of the duty leviable thereon. As basic customs duty is distinct from countervailing duty and additional duty, a notification u/s 25(1) of the Customs Act may exempt goods of any description from the whole or any part of basic customs duty and likewise from the whole or any part of countervailing duty or additional duty. A notification under sub-section (1) of Section 25 may exempt the imported goods from the whole or any part of the duty of customs leviable thereon or by a special order under sub-section (2) of Section 25 from the payment of such duty.
Under sub-section (5) of Section 2A of the Tariff 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 u/s 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."
As the provisions of the Customs Act are thus made applicable to the respective enactments in regard to grant of any exemptions, any exemption from the levy of countervailing duty or additional duty would be an exemption granted by 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 enactments.
A notification u/s 25(1) of the Customs Act read with Section 3(6) of the Customs Tariff Act may exempt such goods wholly or partially from the levy of additional duty as well. When exemption is granted by the Central Government u/s 25(1) of the Customs Act, that can operate only in respect of such duty as is specifically mentioned in the particular notification. A notification u/s 25(1) exempting goods from levy of basic customs duty cannot by itself exempt such goods from the levy of countervailing duty or additional duty leviable under the Tariff Act or the Customs Tariff Act, 1975. Merely because goods are exempted from levy of basic customs duty leviable u/s 12 of the Customs Act, it does not follow that they are also exempt from levy of countervailing duty or additional duty; nor does exemption from levy of countervailing duty or additional duty, wholly or partially, result in exemption of the goods from the levy of basic customs duty, wholly or partially. As exemption granted from the levy of basic customs duty u/s 25(1) read with Section 12 of the Customs Act does not by itself operate as exemption from the levy of countervailing duty or additional duty under the Tariff Act or the Customs Tariff Act, goods imported, even though exempted from basic customs duty, may still be subject to the levy of additional duty under the respective enactments and they would be so subject unless and until they are specifically exempted by the Competent Authority in exercise of the powers vested under those respective enactments from such additional duty. In fact, a reference to the notifications issued from time to time show that the Central Government in exercise of this power of exemption u/s 25(1) of the Customs Act in some cases exempted the goods only from levy of basic customs duty, wholly or partially, and in some cases only from the levy of additional duty, wholly or partially. Some notifications may have even exempted the goods wholly or partially from the levy of both basic customs duty and additional duty.
Our answer to the third question, therefore, is : If the goods were wholly exempt from basic customs duty leviable under the Customs Act, when they entered the territorial waters of India, no basic duty of customs would be leviable thereon even if such exemption were withdrawn u/s 25(1) of the Customs Act before the goods are released for home consumption. Even if such goods were not exempt from the levy of countervailing duty u/s 2A of the Tariff Act or additional duty u/s 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 after the partial exemption was withdrawn in respect of only basic customs duty, then the basic customs duty will be chargeable under Sections 14 and 15 of the Customs Act at the value and the rates prevalent on the date of clearance. Likewise, if partial exemption from the levy of additional customs duty is withdrawn before the date of clearance of the goods they would be chargeable on the value and at the rates mentioned in sections 14 and 15 of the Customs Act.
In short, if the goods are wholly exempt from basic customs duty irrespective of whether they are exempt from the levy of additional duty, wholly or partially, they would still be exempt from the levy of basic customs duty, even if the exemption notification were withdrawn before the date of clearance of the goods. The crucial date for determining whether basic customs duty was leviable is the date on which the goods were imported, that is, when they entered the territorial waters of India. If on that date they were wholly exempt from the levy of basic customs duty they would not be liable for such duty even if they were liable for levy of additional duty. Withdrawal of exemption from levy of additional duty will not affect the levy of basic customs duty. Likewise, withdrawal of exemption from the charge of basic customs duty after the goods are imported and before they are cleared for home consumption will not affect levy of additional duty. If the goods were wholly exempt from the levy of customs duty on the date when they were imported, it would not make any difference to our answer to the second question even if such goods were chargeable to countervailing duty or additional duty on that date and the notification exempting the goods from basic customs duty is withdrawn before those goods were released for home consumption.
The answer to the second question would also not be affected in any way by the fact that additional duty or countervailing duty was leviable on the date of import of the goods or the goods were wholly exempt or partially exempt from such levy. It would also not make any difference to our answer whether countervailing duty or additional duty is held to be a duty chargeable u/s 2A of the Tariff Act and u/s 3 of the Customs Tariff Act respectively or those duties are chargeable u/s 12 of the Customs Act. In other words, whether Section 12 of the Customs Act is the charging section or Section 2A of the Tariff Act or Section 3 of the Customs Tariff Act respectively are the charging sections in respect of countervailing duty or additional duty, our answer to the second question would remain unaffected.
62. Question No. 4 : In view of our answer to the third question, it is unnecessary to answer the fourth question.
63. Matters may now be placed before the Division Bench along with the answers to the questions referred to the Full Bench.
64. Ordered accordingly.
65. Costs in this matter will be costs in the writ petitions.
