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1993 DIGILAW 60 (CAL)

KANCHANJANGA PVT. LTD. v. COLLECTOR OF CUSTOMS

1993-02-09

SUBHAS CHANDRA SEN

body1993
SUHAS CHANDRA SEN, J. ( 1 ) THIS case arises an interesting question of law. ( 2 ) THE petitioner had imported 31. 616 M. Ton of Prime Virgin HDPE Blow Moulding Grade at the price of U. S. $ 890 per M. Ton, c. i. f. Calcutta. The vessel carrying the said goods arrived at the Port of Calcutta some time in the 2nd week of January, 1991. On 29th January, 1991 the petitioner filed the Bill of Entry for warehousing of the said goods. The assessable value of the goods declared on the basis of the agreed price was U. S. $ 890 per metric ton, c. i. f. , Calcutta. On 5th March, 1991 the Bill of Entry for warehousing was assessed by a proper officer of the Customs Department and an endorsement was made on the Bills of Entry that the same was being assessed provisionally and the valuation aspect was being kept open. ( 3 ) THE case of the petitioner is that thereafter the Clearing Agent as well as the representative of the petitioner went to the Customs Department's office and met the Assistant Collector of Customs for Appraisement Group II and the Customs Appraiser, Group II, Respondents Nos. 3 and 4 respectively to request them to assess the said Bills of Entry finally but the Respondents Nos. 3 and 4 failed to do so. On May 24, 1991 the petitioner requested the Additional Collector of Customs, Calcutta, Respondent No. 2 herein to look into the matter personally so that the said Bills of Entry and the petitioner could remove the goods. ( 4 ) THE case of the petitioner is that, while all these things are happening, the international price of the imported goods had started coming down and apprehending huge loss, the petitioner requested for assessment of the Bills of Entry at a higher price than what had been declared by the petitioner, without prejudice to its rights and contentions. However, repeated requests made by the petitioners, both orally and verbally yielded no result. ( 5 ) THE petitioner filed a writ petition in this court complaining about the inaction on the part of the respondent authorities and for a direction upon the Customs Authorities to discharge their statutory duties and functions in accordance with law. However, repeated requests made by the petitioners, both orally and verbally yielded no result. ( 5 ) THE petitioner filed a writ petition in this court complaining about the inaction on the part of the respondent authorities and for a direction upon the Customs Authorities to discharge their statutory duties and functions in accordance with law. In that writ petition, an interim order was passed directing the Customs Authorities to allow clearance of the goods on making payment of the admitted amount of duty and upon furnishing P. D. Bond for disputed amount of duty. On November 19, 1991, however the said interim order was modified. ( 6 ) ON December 12,1991 the Respondent No. 3, the Assistant Collector of Customs for Appraising Group II for the first time woke up and issued a Show Cause Notice in respect of the goods imported by the petitioner. The said writ petition was finally disposed of on 15th January, 1992 by extending the time for giving reply to the Show Cause Notice by 7 days and the Respondents were directed to deal with and dispose of the adjudication proceedings as expeditiously as possible after giving a hearing to the petitioner. All questions of law and fact were left open to be decided by the adjudicating authority. ( 7 ) THE petitioner filed its reply to the Show Cause Notice on 21-1-1992. The Respondents finally passed an order on 16-11-1992. By that order, the Bills of Entry for ex-bond clearance of the goods for home consumption was finally assessed by the Customs Department accepting the assessable value of the goods as declared by the petitioner, that is at U. S. $ 890 per metric ton c. i. f. Calcutta. ( 8 ) THE dispute is now about the rate of duty and also the claim of interest made by the respondents. The case of the petitioner is that the petitioner cannot be blamed for the inordinate delay on the part of the Customs Officers to complete the assessment; there was no reason for the goods to remain in the bonded warehouse indefinitely and the inaction or inability on the part of the Customs Officers to complete the assessment within a reasonable period resulted in serious consequences. The petitioner is now being called upon to pay not only interest but also enhanced duty under the Finance Act of 1992, which came into force on 1st March, 1992. If the Bills of Entry for ex-bond clearance of the goods for home consumption which were lodged by the petitioner on 29th March, 1991 had been assessed expeditiously there would not have been any question of payment of enhanced duty or interest. The goods remained in the bonded warehouse during the said period of about one year and eight months not due to any act or omission on the part of the petitioner but due to wrongful inaction on the part of the Customs Authorities in discharging their statutory duties and functions. It has been argued on behalf of the petitioner that under Section 68 of the Customs Act, 1962, read with Section 17 of the Customs Act, it was the statutory duty and function of the Customs Authorities to assess the said Bills of Entry and to determine the duties payable on the goods in question. In the instant case, the Customs Authorities failed and/or neglected to carry out their said statutory duties and functions for a long period of about one year and eight months. During the said entire period of about one year and eight months, the only action taken by the Customs Authorities was to issue a show cause notice on 19-12-1991, that is, after about nine months of the filing of the Bills of Entry and that too, after the petitioner had filed a writ petition. The petitioner duly submitted its reply to the said notice on 21-1-1992. However, in spite of this, no step was taken by the Customs Authorities for a period of about ten months and the Bills of Entry was finally assessed on 16-11-1992. ( 9 ) ON behalf of the Customs Authorities it has been contended that the mode for determination of the rate of duty and tariff valuation of the imported goods is fixed by Section 15 of the Customs Act. ( 9 ) ON behalf of the Customs Authorities it has been contended that the mode for determination of the rate of duty and tariff valuation of the imported goods is fixed by Section 15 of the Customs Act. It has been clearly laid down in Sub-section (1) (b) of Section 15 that the rate of duty and tariff valuation, if any, applicable to any imported goods, shall be the rate and tariff valuation in force in case the goods are cleared for home consumption from the warehouse, under Section 68, on the date on which the goods are actually removed from the warehouse. It has been contended that the statutory duty cannot be changed on the ground of hardship or prejudice. Strong reliance was placed on a judgment of the Supreme Court in the case of Priyanka Overseas Pvt. Ltd. v. Union of India where the Supreme Court had categorically laid down as follows :"32. Section 15 of the Act provides for determination of rate of duty on imported goods. The rate of duty and tariff valuation, if any, applicable to any imported goods, shall be the rate and valuation in force in the case of goods cleared from a warehouse under Section 68, the date on which the goods are actually removed from the warehouse. There can be no manner of doubt that the term 'actual removal' is even more stronger than the term 'physical removal' and the intention of the Legislature in using these words clearly stipulates the actual removal of the goods from the warehouse. The rate of duty and tariff valuation on the imported goods may be changed from time to time and as such the Legislature has clearly expressed its intention under Section 15 as to on what date the rate of duty and tariff valuation is to be determined. We cannot introduce the concept of deeming provision while determining the question of actual removal of the goods from the warehouse. The rate has to be determined on the basis of the date on which the goods are actually removed from the warehouse and thereafter the question would be examined as to how the relief is to be moulded in case it is found that the Customs authorities were themselves responsible in preventing the importer of goods from actually removing the goods from the warehouse. In a case of the present kind where there is no ambiguity in the expressed intention of the Legislature in determining the date for applying the rate of duty, no juristic principle of deemed removal of the goods, can be applied as contended by Mr. Sen. Many contingencies may happen in between the filing of bill of entry and actual removal of the goods from the warehouse for which sometimes the importer of goods may himself be responsible, in some cases the responsibility may lie on the Customs Authorities and there may also be contingencies beyond the control of both the parties. In any case the intention of the Legislature being clear, rate of duty is to be applied, as may be in force on the date of actual removal of goods from the warehouse under Section 15 (1) (b) of the Customs Act. " ( 10 ) IT has been contended on the strength of the aforesaid observations of the Supreme Court that even if there was delay on the part of the Customs Officer in making the assessment, the duty payable must be the duty in force on the date of actual removal of the goods from warehouse. ( 11 ) BEFORE examining the judgment of the Supreme Court, it must be noted that under Section 68 of the Customs Act, an importer of any warehoused goods may clear them for home consumption if (i) the Bill of Entry in the prescribed form had been presented, (ii) import duty leviable on such goods and all penalties, rent, interest and other charges in respect of such goods had been paid and (iii) an order for clearance of such goods for home consumption had been made by the proper officer. Section 61 of the Customs Act provides for a period of time for depositing of goods in a warehouse. There were certain categories of goods mentioned in sub-clause (a) of Clause 1 of Section 61. The petitioner's goods falls under sub-clause (b) of Clause 1 of Section 61 for which the prescribed period of time is three months after the proper officer made an order and Section 60 permits deposit of the goods in a warehouse. There were certain categories of goods mentioned in sub-clause (a) of Clause 1 of Section 61. The petitioner's goods falls under sub-clause (b) of Clause 1 of Section 61 for which the prescribed period of time is three months after the proper officer made an order and Section 60 permits deposit of the goods in a warehouse. In other words, the underlying assumption of the statute is that the goods would normally be cleared within a period of three months from the date on which the officer made his order under Section 60 permitting the deposit of the goods in a warehouse. ( 12 ) ACCORDING to the petitioner the Customs Authorities remained totally inactive for a period of about one year and eight months and did not assess the said Bills of Entry in spite of repeated visits of the petitioner's clearing agent and representatives. Ultimately, on 16-11-1992, the Bills of Entry were assessed by Customs Authorities by accepting the claim of the petitioner as regards determination of assessable value on the basis of the invoice price of US $ 890 per MT. The contention of the petitioner that the petitioner should not be made to suffer financially because of the inordinate delay on the part of the Customs Officer to finalise the assessment is not without substance. In this case, there is no extenuating circumstances in favour of the Customs Officer. The value disclosed by the petitioner had been accepted by the Customs Department in toto and they took 18 months to accept this valuation. On behalf of the respondent it has been contended that inordinate time was taken to make enquiry before making the assessment. The question is, can the petitioner be made to suffer financially for that. ( 13 ) MOREOVER the very basis of the claim for interest appears to be non-existent. Interest may be allowed under Sub-section (2) of Section 61 where any warehoused goods remained in a warehouse beyond the period provided under Clause (1) of Section 61. The provision for period for extension is contained in the proviso to Section 61 which is as under :"provided that - (i) In the case of any goods which are likely to deteriorate, the aforesaid period of one year or three months, as the case may be, may be reduced by the Collector of Customs to such shorter period as he may deem fit. (ii) In the case of any goods which are likely to deteriorate, the aforesaid period of one year or three months, as the case may be, may on sufficient cause being shown be extended by the Collector of Customs for a period not exceeding six months and by the Board for such further period as it may deem fit. " ( 14 ) IN the instant case, the petitioner has not applied for any extension of time. The Customs Authorities are demanding interest under Section 61 (2) of the Customs Act after expiry of the free period of ninety days from the date of warehousing. The goods were warehoused on 23-3-1991 and the said period of ninety days therefrom expired on 18-6-1991. Long before expiry of the said period of ninety days, the petitioner had filed the Bills of Entry for ex-bond clearance for home consumption on 26-3-1991 itself. The goods remained in the warehouse thereafter solely due to inaction on the part of the Customs Authorities in assessing the Bills of Entry. ( 15 ) SECTION 61 (2) of the Customs Act can apply only if the importer avails the warehousing facilities and thereafter does not clear the goods within the prescribed period. The said Section 61 (d) does not and cannot have any application to cases where even though the importer is ready and willing to take clearance of the goods, the goods are not allowed to be cleared by the Customs Authorities. Section 61 (2) does not have any application to cases where the delay in clearance of the goods from the warehouse occurs not due to any act or omission on the part of the importer but due to inaction on the part of Customs Authorities. It is to be borne in mind that the assessable value, as declared by the petitioner was ultimately accepted by the Customs Authorities. It is not a case of suppression of fact or mis-interpretation or any unlawful action on the part of the petitioner. The petitioner could not clear the goods within the prescribed time because the Customs Officer would not pass any order within a reasonable period of time. When untimately the order was passed it was found that the petitioner's declared value had been accepted in toto. The petitioner could not clear the goods within the prescribed time because the Customs Officer would not pass any order within a reasonable period of time. When untimately the order was passed it was found that the petitioner's declared value had been accepted in toto. Therefore, the levy of interest in a case like this is entirely unjustified and not warranted by the provisions of Section 61 (2) of the Customs Act. ( 16 ) SO far as the question of levy of duty at the enhanced rate introduced by the Finance Bill of 1992 is concerned, it is to be noted that provisions came into effect from 1st March, 1992. The petitioner's goods were lying warehoused for nearly one year due to total inaction on the part of the Customs Authorities. ( 17 ) THE petitioner had done its statutory duty and filed the Bill of Entry for ex-bond clearance for home consumption on 26th March, 1991. The petitioner as well its Clearing Agent requested the Assistant Collector of Customs for making expeditious assessment of the Bills of Entry. On May 24,1991 the petitioner also requested the Additional Collector of Customs to look into the matter personally so that the assessment of duty on the basis of the Bill of Entry could be made and the petitioner could remove the goods. Nothing came out of these efforts of the petitioner. Lodgment of the Bill of Entry for ex-bond clearance for home consumption took place on 26th March, 1991. The provisions for payment of the enhanced rate of duty came into effect on 1st March, 1992, i. e. nearly one year after the lodgment of the Bill of Entry with the proper officer of the Customs Department. There is no satisfactory explanation by the Customs Officers as to why this long delay took place. ( 18 ) IN view of the peculiar circumstances of this case and following the principles laid down by the Supreme Court in the case of Priyanka Overseas Pvt. Ltd. v. Union of India, it must be held that there was no valid reason for demanding enhanced rate of duty from the petitioner. The petitioner, therefore, is entitled to the delivery of the goods after payment of the duty which was in force before 1st March, 1992. The petitioner, therefore, is entitled to the delivery of the goods after payment of the duty which was in force before 1st March, 1992. ( 19 ) THE writ petition is disposed of by directing the Customs Department to release the goods of the petitioner without charging any interest but charging only duty at the rate which was in force before the Finance Bill, 1992 came into effect. In other words, the duty chargeable must be calculated at the rate which was in force before 1st March, 1992.