Supreme Court of India
BHARAT SURFACTANTS (PVT.) LTD. & ANR.versusUNION OF INDIA & ANR.
- Citation
- 1989 INSC 196
- Decided
- 17 May 1989
- Disposal
- Dismissed
- Bench
- R S PATHAK
Holding
The rate of customs duty is determined by the date of inward entry recorded in the Customs register, so the duty rate applicable on 31 July 1981 governs.
Summary
The petitioners imported edible oil on the vessel M.V. Kotta Ratu, which made an initial arrival at Bombay on 11 July 1981 but could not secure a berth and sailed to Karachi before returning on 23 July and finally discharging cargo on 31 July 1981. Customs authorities levied duty at 150% on the basis that the "inward entry" date was 31 July 1981, whereas the petitioners argued that the rate applicable on the earlier arrival dates (12.5% on 11 July or 42.5% on 23 July) should apply. The Court examined Section 15(1)(a) of the Customs Act, 1962, which ties the rate of duty to the date a Bill of Entry is presented, and the proviso that if presented before the vessel’s inward entry, the Bill is deemed presented on the inward entry date recorded in the Customs register. Relying on the Madras High Court’s interpretation in Omega Insulated Cable Co. and the statutory scheme, the Court held that the "date of entry inwards" is the date recorded in the register, i.e., 31 July 1981. Consequently, the duty rate in force on that date governs, and the petitioners’ challenge to Section 15 as arbitrary or unconstitutional was rejected. The writ petition was dismissed with costs.
Issues considered
- The appropriate date for determining the rate of customs duty and tariff valuation under Section 15(1)(a) of the Customs Act, 1962.
- Whether the provision of Section 15(1) is vague, arbitrary, and violative of Article 14 of the Constitution.
- Whether the differential duty rate imposed on the petitioners compared to the State Trading Corporation violates the principle of equality.
Legislation cited
- Customs Act, 1962s. 12(1), s. 15, s. 16, s. 46, s. 47, s. 56, s. 68
Subjects
Customs dutyRate of dutyTariff valuationEntry inwardsSection 15Article 32Article 14Statutory interpretationConstitutional challengeEquality before law
Judgment
BHARAT SURFACTANTS (PVT.) LTD. & ANR.
A
v.
UNION OF INDIA & ANR.
MAY 17, 1989
[R.S. PATHAK, CJ., SABYASACHI MUKHARJI, B
S. NATARAJAN, M.N. VENKATACHALIAH AND
S. RANGANATHAN, JJ.]
-r Customs Act, 1962-Sections 15, 16, 46 and 56-Rate of duty and
Tariff valuation-Determination of-Date of presentation of Bill of
• Entry-Relevance of-'Date of entry inwards of vesse/'-Date recorded in
Customs register.
c
By way of writ petition under Article 32 of the Constitution the
petitioners sought relief against the imposition of customs duty at 150
per cent on their import of edible oils into India. Pursuant to the con-
tract entered into by the petitioners with foreign sellers for the supply of D
edible oils the consignment of edible oils was sent by the ocean going
vessel M. V. Kotta Ratu. The vessel approached Bombay and made its
"prior entry" on 4 July, 1981. It actually arrived and registered on 11
July, 1981. As the port authorities at Bombay were unable to allot a
berth to the vessel, the vessel left for Karachi for unloading other cargo
intended for that port. The vessel returned on 23 July 1981 and waited E
for berth. On August 4, 1981 she was allowed to berth in Princess Docks
'C' shed and the Customs authorities made the "final entry" on that
date.
Customs authorities are stated to have imposed duty on the
1mport of edible oil at tlte rate of 150 per cent on the footing that the F
import was made on 31 July, 1981, the date of "Inward Entry". The
case of the petitioners was that the rate of duty leviable on the imports
should be that ruling on II July, 1981, when the vessel actually arrived
and registered in the Port Bombay and that but for the fact that berth
was not available the vessel would have discharged its cargo at Bombay
and would have been liable to pay customs duty at the rate of 12.5% G
which was the ruling rate on that date i.e;, 11 July, 1981. The petitioners
contended that the rate should not have been more than 42.5% because
that was the rate of customs duty ruling on 23 July, 1981 when the
vessel entered the port of Bombay.
The Court rejecting the claim of petitioners, H
367
368 SUPREME COURT REPORTS [1989] 3 S.C.R.
HELD: The rate of duty and tariff valuation has to be determined
A in accordance with S. 15(1) of the Customs Act. Under s. IS(l)(a), the
rate and valuation is the rate and valuation in force on the date on
which the Bill of Entry is presented u/s 46. According to the proviso,
however, if the Bill of Entry has been presented before the entry
in»ards of the vessel by which the goods are imported, the Bill of Entry
B shall be deemed to have been presented on the date <Jf such entry
inwards. [373B-C]
The date on which a Bill Entry is presented under S. 46 is, in the
case of goods entered for home consumption, the date relevant for
defrrmining the rate of duty and tariff valuation. Where the Bill of
Emry is presented before the date of Entry Inwards of the Vessel, the
c Bill of Entry is rlt·••med to have been presented on the date of such Entry
Inwards. [375B]
The amendment made in S. 16 of the Act appears to have been
made by way of clarification and does not detract from the conclusion
D that "the date of entry inwards of the vessel" is the date recorded as
such in the Customs register. [375F] '
In the present case, "the date of inwards entry" is mentioned as
31st July, 1981. In the absence of anything else, it may be taken that the ~'
entry was recorded on that date itself. Accordingly, the rate of import
E duty and the tariff valuation shall be that in force on 31st July 1981.
The contention of the petitioners that the rate of import duty and tariff
valuation »ill be that ruling on July 11, 1981 cannot be sustained and is
rejected. [375G]
(l)Shawney v. M/s. Sylvania & Laxman Ltd., 77 Born. L.R. 380;
F (2) Apar Private Ltd. & Ors. v. Union of India & Ors., 185 (1985) 22
E.L.T. 644; (3) Jain Shudh Vanaspati Ltd. v. S.R. Patankar, Asstt.
Collector ~f Customs, Bombay"& Ors., [1988] 33 E.L. T. 77; (4) M/s.
Omega Insulated Cable Co., (India) Ltd. v. The Collector of Customs,
Madras, approved. Writ Appeal No. 537 of 1969 decided by the Hon'ble
Kailasam and Paul, JJ. on 9 July, 1975, referred to.
0
ORIGINAL JURISDICTION: Writ Petition No. 3130of 1981.
(Under Article 32 of the Constitution of India).
Soli J. Sorabjee, Harish N. Salve, K.K. Patel, Ujwal Rana, Rajiv
H Dutta and K.K. Mohan for the Petitioners.
BHARAT SURFACTANTS v. U.0.1. [PATHAK, CJ.] 369
K. Parasaran, Attorney General, B. Datta, Additional Solicitor
A
General, Kuldip Singh, Additional Solicitor General, Ms. A.
Subhashini, C.V. Subba Rao, Mrs. Sushma Suri, A. Subba Rao, A.K.
Srivastava and P.P. Singh for the Respondents.
The Judgment of the Court was delivered by
B
PATHAK, CJ. By this writ petition under Art. 32 of th: Con-
stitution the petitioners seek relief against the imposition of customs
duty at 150 per cent on their import of edible oils into India.
The petitioners entered into a contract with foreign sellers for
the supply of edible oils. The consignment of edible oils was sent by
the ocean going vessel M.V. Kotta Ratu. The vessel approached c
Bombay and made its "prior entry" on 4 July, 1981. It actually arrived
and registered in the Port of Bombay on 11 July, 1981. The petitioners
say that the Port authorities at Bombay were unable to allot a berth to
the vessel, and as she was under heavy pressure froll) the parties whose
goods she was carrying she left Bombay for Karachi for unloading D
other cargo intended for that port. It is alleged that the vessel set out
on its return journey from Karachi and arrived in the Port of Bombay
on 23 July, 1981 and waited ·for a berth. On 4 August, 1981 she was
allowed to berth in Princess Docks 'C' Shed and the Customs
Authorities made the "final entry" on that date. The petitioners point
out that when the vessel made its original journey to Bombay and was E
waiting in the waters of the Port the petitioners presented the Bill of
Entry to the Customs authorities on 9 July, 1981, that the Bill of Entry
was accepted by the Import Department and an order was passed by
'
the Customs Officer on the Bill of Entry on 18 July, 1981 directing the
examination of the consignment.
F
It is stated that the Customs authorities have imposed customs
duty on the import of the edible oils effected by the petitioners at the
rate of 150 per cent on the footing that the import was made on 31 July,
1981, the date of "Inward Entry". The case of the petitioners is that
the rate of duty leviable on the import should be that ruling on 11 July,
1981, when the vessel actually arrived and registered in the Por1. of G
Bombay, and that but for the fact that a berth was not available the
vessel would have discharged its cargo at Bombay, and would not
left that Port and proceeded to Karachi to return to Bombay towa1 ds
the end of July, 1981. Alternatively, .the case of the petitioners is th."l 11
. it l:>e found that the rate .of customs duty attracted by the import
effected by the petitioners is 150 per cent the levy is unconstitutional H
370 SUPREME COURT REPORTS [1989) .3 S.C.R.
A and void as a violation of Art. 14 of the Constitution inasmuch as Y
customs duty at 5 per cent only was levied on the State Trading Cor-
poration on similar Imports of edible oils made by it as an importer.
The petitioners have also challenged the validity of s. 15 of the
Customs Act, 1961 under which the rate of duty and tariff valuation is
determined.
B
To resolve the issue between the parties it is necessary to ascer-
tain the effective date with reference to which customs duty becomes
payable on imports into India. Section 15(1) of the Customs Act, 1962
provides:
"(1) The rate of duty and tariff valuation, if any, appli-
c cable to any imported goods, shall be the rate and valua-
tion in force,-
(a) in the case of goods entered for home consi:mp-
tion under section 46, on the date on which a bill
D of entry in respect of such goods is presented
under that section;
(b) in the case of goods cleared from a warehouse
under section 68, on the date on which the goods \ .
are actually removed from the warehouse; "'--
E
(c) in the case of any other goods, on the date of
payment of duty:
Provided that if a bill of entry has been presented
before the date of entry inwards of the vessel by which the
F goods are imported, the bill of entry shall be deemed to
have been presented on the date of such entry inwards."
'
The rate of duty and tariff valuation applicable to the imported
goods is governed by cl. (a) of s. 15(1). In the case of goods entered for
home consumption under s. 46, it is the date on which the Bill of Entry
G in respect of such goods is presented under that section. S. 46 provides
that the importer of any goods shall make entry thereof by presenting
tr the proper officer a Bill of Entry for home consumption in th~
prescribed form, and it is further provided that a Bill of Entry may be
presented at any time after delivery of the Import Manifest or an
Import report. The Bill of Entry may be presented even before the
H delivery of such Manifest if the vessel by which the goods have been
BHARAT SURFAC!"ANTS v. U.0.1. [PATHAK, CJ.I 371
shipped for importation into India is expected to arrive within a week A
from the date of such presentation. Section 47 empowers the proper
offiq:r, on being satisfied that the goods entered for home consump-
tion are not prohibited goods and that the importers had paid the
import duty assessed thereon as well as charges in respect of the same,
to make an order permitting clearance of the goods for home
consumption. B
According to the petitioners, the cargo of edible oil could not be
unloaded in Bombay during the original entry of the ship into the Port
for want of an available berth, and it is for no fault of the petitioners
that the vessel had to proceed to Karachi for unloading other cargo.
Section 15, the petitioners contend, is arbitrary and vague and there- C
fore unconstitutional because it provides no definite standard or norm
for determining the rate of duty and tariff valuation and does not take
into account situation which are uncertain and beyond the control of
an importer. The petitioners contend that the rate of customs duty
chargeable on the import of goods in India is the rate in force on the
date when the vessel carrying the goods enters the territorial waters of D
India. The petitioners point out that s. 12(1) declares that customs
duty will be levied at the rates in force on goods imported into India,
and the expression 'India', they urge, is defined bys. 2(27) as including
the 'territorial waters of India'. In other words, the petitioners contend
thaCwhen the vessel entered the territorial waters on 11July,1981 the
rate of customs duty at 12.5 per cent ruling on that date was the rate E
which was attracted to the import. In any event, the petitioners con-
tend, the rate should not have been more than 42.5 per cent because
that was the rate of customs duty ruling on 23 July, 1981 when the
vessel entered the port of Bombay. To preserve the validity of s. 15 the
petitioners urge, we must read the expression "the date of entry
inwards" in the proviso to s. 15(1) as the date on which the vessel F
enters the territorial waters of India. Learned counsel for the peti-
tioners says that if this interpret_ation cannot reasonably be given to the
provisions of s. 15( 1) then it becomes necessary to question the
constitutional validity of s. 15 on the ground that the terms of that
section are vague and arbitrary, and therefore no recourse can be had
~s-~(D. G
Considerable reliance has been placed by the petitioner on
Shawney v. Mis, Sylvania and Laxman Ltd., 77 Born. LR. 380 in
support of the submission thaMhe taxable event occurs when the ves-
sel enters the territorial waters of India and it is that date which should
determine the rate at which import duty can be levied. It is desirable, H
372 SUPREME COURT REPORTS [1989] 3 S.C.R.
A we think, to appreciate what was said in that case. The Bombay High
Court held there that the date on which the vessel enteres the territo-
rial waters is the relevant date for determining whether the import of ~ -<
goods carried by it falls within the scope of the Customs Act. If the
import of. the goods is exempt from the operation of the Act ~n ti: •t
date, the learned Judges said, the provisions of s. 15 of the Act will not
B come into play, and. therefore the import will be. free· from duty. A
distinction was made between a case where the import of goods stands
exempted on the date when the vessel enters the territorial waters of
India and a case where the import falls within the operation of the Act
on that date but the duty is rated at nil or at a certain figure. The "(
distinction was discussed by a Full Bench of the Bombay High Court in
C Apar Private Ltd. and Others v. Union of India and others, [1985] 22'
E.L.T. 644 where Madhava Reddy, C.J., ·speaking for the Court,
observed:
'.'If the goods were wholly exempt from basic customs duty
leviable under the Customs Act, when they entered the
D · .. territorial waters of India, no basic duty of customs would
( be leviable thereon even if such exemption were withdrawn
· under Section 25( 1) of the Customs Act before the goods
are released for home consumption ................... .
. . . , :·; ............................ ' ...... Only if the
goods ·were chargeable to some basic customs duty under
E the Customs Act, when· they entered the territorial waters
of India, than the rates in force at the time when the bill of
·entry is presented oranhe 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." ·
And in Jain Shudh Vanaspati Limited v. S.R. Patankar, Asstt.
' Collector of Customs, Bombay and Others, [1988] 33 E.L.T. 77 the
Bombay High Court proceeded on the basis that where the imported
goods were totally exempt from payment of customs duty on the date
when the vessel entered the territorial waters of India, the taxable
G event was not postponed to the date when the goods were. cleared for
human consumption.
In the present case, there is no dispute that on the date when the 1
·.vessel first entered the territorial waters of India by July, 1981 the rate 1.-
of customs duty was 12.5% on the import of the goods in question and
H thereafter when the vessel returned from Karachi and entered the
BHARAT SURFACTANTS v. U.0.L [PATHAK, CJ.I 373
territorial waters of India the rate of duty was 42.5%.
A
We express no opinion on the soundness of the view taken by the
Bombay High Court in the cases mentioned above; it is sufficient to
point out that on the facts they afford no assistance to the petitioners.
The rate of duty and tariff valuation has to be determined in B
accordance withs. 15(1) of the Customs Act. Under s. 15(1)(a), the
rate and valuation is the rate and valuation in force on the date on
which the Bill of Entry is presented under s. 46. According to the
·x proviso, however, if the Bill of Entry has been presented before the
entry inwards of the vessel by which the goods are imported, the Bill of
Entry shall be deemed to have been presented on the date of such
entry inwards. In the present case the Bill of Entry was presented on 9 C
July, 1981. What is "the date of entry inwards" of the vessel? We may
refer to the detailed procedure in this matter set forth in the counter-
affidavit of Shri R.S. Siddhu, then under Secretary to the Government
of India.
D
Before the arrival of the vessel the Master of the vessel or his
Agent informs the Port authorities and the Customs authorities of the
probable date of arrival of the vessel. This information is technically
known as presentation of the Import General Manifest. In this
•.. ~ Manifest the Master intimates the details with regard to the cargo
carried by the vessel. In the instant case the Manifest was conveyed by E
the Steamer Agent on 6 July, 1981 by his letter No. IM/394/81/1116.
Admittedly this intimation or presentation of the Manifest on 6 July,
• 1981 was prior to the arrival of the vessel. The presentation of the
Manifest can be effected either before the arrival of the vessel or after
its arrival in the usual course. In the forwarding letter dated 6 July,
· 1981 mentioned above, the Shipping Agent informed the authorities F
that the ship would be arriving at Bombay 12 July, 1981. According to
the normal procedure, if the intimation or presentation of the Manifest
is made on the arrival of the vessel it is accompanied by an applicat~on
for Entry Inward within 24 hours of arrival. In the instant case since
the vessel was to arrive later there was no application accompanying
the letter dated 6 July, 1981. The vessel arrived on 11 July, 1981. On G
receipt of the Manifest a "prior entry" is made in the Register, which
>--1' is called the Register of Inward/Outward Entry of vessels. Upon the
recording of (he "prior entry" a rotation number is given and con-
veyed to the Shipping Agent or the Master of the vessel. In the instant
case the "prior entry" or rotation number allotted was 743/PE. The
Customs authorities display daily, on receipt of the Import General H
374 SUPREME COURT REPORTS [1989) 3 S.C.R.
Manifests, the details of the vessels on a notice board for the informa-
A
tion of importers. On noticing the arrival or expected arrival of the
vessel from the Import General Manifest the importer or his clearing
agent files his Bill of Entry. In this case the Bill of Entry was filed on 9
July, 1981. An entry with regard to presentation of the Bill of Entry is
made in the Import General Manifest against the entry with regard to
the consignment belonging to the importer.
The procedure thereafter is as follows.
A vessel on arrival in the territorial waters has to await the
allotment of a berth by the Port Trust. The Port Trust authorities, on
receipt of information about the arrival of a ship, allot a berth, if it is
c available, for the discharge of the cargo. In the instant case, since no
berth was available, the vessel left for Karachi to discharge the cargo
meant for that Port. The vessel arrived at Bombay on 23 July, 1981.
Before its arrival, the Steamer Agent had presented a supplementary
Manifest on 18 July, 1981 under cover of his letter No. IM/394/81/
D 1223. The "prior entry" made earlier in the Register of Inward Entry
remained the same and the rotation number also continued to remain
the same. Against the rotation No. 743 in column No. 3 of the Register
of Inward Entry the date of the arrival of the vessel was indicated as 23
July, 1981, and in column No. 2 the date of Inward Entry was
mentioned as 31 July, 1981. On 30 July, 1981 the Master of the vessel
fi had made a declaration certifying that the vessel could discharge its
cargo on 31 July, 1981, and it is on this basis that the Customs
authorities granted the Entry Inward to the vessel for the purposes of
discharging its cargo.
It is urged on behalf of the petitioners that the import of the
flgoods must be deemed to have taken place on 11 July, 1981, when the
ship originally arrived in Bombay Port and registered itself. The rate
of customs duty prevailing on that date was 12.5 per cent, and that,
learned counsel contends, should be the rate applicable to the edible
oil consignment under s. 15 of the Act. The circumstance that the
vessel was unable to secure a berth in the Port of Bombay compelled it
G to proceed to Karachi to discharge the cargo pertaining to that Port,
and but for the non-availability of the berth she would not have under-
taken that voyage but would have continued in Bombay and c)is-
charged the edible oil consignment there. The customs duty which
could have been levied then would have been 12.5 per cent. It is
pointed out that the vessel was unable to do so for no fault ot the
H petitioners and a reasonable construction must be given to s. 15 taking
BHARAT SURFACTANTS v. U.O.l. [PATHAK, CJ.] 375
into account the particular circumstances of the case, so that the vessel
A
must be deemed to have made the "Entry Inwards" on 11 July, 1981.
We do not find it possible to accept this submission. The provisions of
s. 15 are clear in themselves. The date on which a Bill of Entry is
presented under s. 46 is, in the case of goods entered for home con-
sumption, the date relevant for determining the rate of duty and tariff
valuation. Where the Bill of Entry is presented before the date of B
Entry Inwards of the vessel, the Bill of Entry is deemed to have been
presented on the date of such Entry Inwards.
In M/s. Omega Insulated Cable Co., (India) Limited v. The
Collector of Customs, Madras, Writ Appeal No. 537 of 1969 decided
by the Hon'ble Kailasam and Paul, JJ. on 9 July, 1975 the Madras
High Court addressed itself to the question whether the words in
c
s. 15(1)(a) of the Act, viz. "date of entry inwards of the vessel by
which the goods are imported" mean "the actual entry of the vessel
inwards or the date of entry in the register kept by the department
permitting the entry inwards of the vessel." The learned Judges
examined the corresponding provisions of the earlier statute and after D
comparing the provisions of s. 15 with those of s. 16 of the Customs
Act, 1962, and the amendments made from time to time, held that the
date of entry inward for the purpose of s. 15(1)(a) and the proviso
thereto is the date when the entry is made in the Customs register.
We have considered the matter carefully and given due heed to E
the submissions of learned counsel for the petitioners founded, inter
alia, on the provisions of the Sea Customs Act and the amendment
• made in s. 16 of the Customs Act and we are of opinion that the view
ta~en by the Madras High Court in Mis. Omega Insulated Cable Co.
Ltd., (supra) represents the correct view. The amendment made in
s. 16 of the Act appears to have been made by way of clarification and, F
in our opinion, does not detract from the conclusion that "the date of
entry inwards of the vessel" is the date recorded as such in the
Customs register. In the present case, "the .date of inwards entry" is
mentioned as 31 July, 1981. In the absence of anything else, we may
take it that the entry was recorded on the date itself. Accordingly, the
rate of import duty and the tariff valuation shall be that in force on 31 G
July, 1981. The contention of the petitioners that the rate of import
duty and tariff valuation will be that ruling on 11 July, 1981 cannot be
sustained and is rejected.
As to the question whether s. 15 of the Customs Act is ultra vires
on the ground that arbitrary discretion has been conferred on the H
376 SUPREME COURT REPORTS [1989] 3 S.C.R.
A customs authorities in the matter of determining the date of inward
)--
entry, it seems to us that having regard to the procedure detailed I
above there is no scope for the submission that the provision is invalid.
An entire series of consecutive acts makes up the procedure, am:! it is
reasonable to presume that each step in the series is completed on
time. In that view of the matter, the challenge to the validity of s. 15
B
must fail. It is true that an amendment has been made ins. 16 in the
case of the export of goods, and the rate of duty and tariff valuation
applicable to export goods are now specifically referable to "the date
on which the proper officer makes an order permitting clearance and
loading of the goods for exportation", and it is apparent that no such
amendment has been made in the provisions of s. 15. The omission, it
c seems -to us, is of no consequence when the procedure outlined above
is being followed regularly and consistently. There is nothing before us
to show that in following the procedure the Custdms authorities act
arbitrarily.
Accordingly, we are of opinion that the claim made by the
D
petitioners must be rejected.
Finally, there remains the contention of the petitioners that the
differential treatment meted out to the petitioners by the imposition of
a rate of 150 per cent constitutes a violation of Article 14 of the
Constitution on the ground that the rate applied to corresponding
E
imports by the State Trading Corporation is 5 per cent only. This point
has already been considered by us, and the contention has been re-
jected, in our judgment in M. Jhangir Bhatusha etc. v. Union of India
& Ors. etc., [ 1989] 3 SCR 356 pronounced today.
The Writ Petition is dismissed with costs.
F
R.N.J. Petition dismissed.
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