Holding

The rate of duty is determined on the date of entry inward after delivery of the import manifest (2 March 1989), and Sec. 15(1) of the Customs Act is constitutionally valid.

Summary

The petitioners imported ball bearings that arrived at Madras port on 20 February 1989 but could not be unloaded due to a strike. They presented a bill of entry on 27 February, which was received on 28 February, and entry inward was granted on 2 March 1989. The rate of excise duty was increased on 1 March 1989, leading the petitioners to argue that duty should be levied at the earlier rate. The Supreme Court held that under Section 15(1)(a) of the Customs Act, the relevant date for fixing the duty rate is the date of entry inward after delivery of the import manifest, i.e., 2 March 1989, and therefore the higher duty applies. The Court also affirmed the validity of Section 15(1) and rejected the claim that it is ultra vires of constitutional provisions. Interim court directions cannot substitute the statutory operation of the Act. Consequently, the writ petitions were dismissed without costs.

Issues considered

The appropriate date for fixing the rate of customs duty under Sec. 15(1)(a) of the Customs Act when entry inward is granted after a delay.
Whether Sec. 15(1) of the Customs Act is ultra vires of Articles 14, 19(1)(g), 21, 26 and 300A of the Constitution.
Whether interim judicial directions can replace the statutory mechanism for determining duty rates.
Whether a bill of entry presented before entry inward is deemed presented on the entry inward date.

Legislation cited

Customs Act, 1962s. 15(1), s. 31, s. 46, s. 58, s. 68

Subjects

Customs dutyRate of dutyEntry inwardBill of entrySection 15(1)Constitutional validityStrikeImport manifestRevenueInterim directions

Judgment

,.
A DHIRAJ LAL H. VOHRA ETC. ETC.
v.
UMON OF INDIA AND ORS.

DECEMBER 9, 1992

B [KULDIP SINGH, Y. RAMASWAMI AND K. RAMASWAMY, JJ.]

Customs Act, 1962: Sections 15(1), 31, 46, 68-Goods imported-Ship
arriving and delivering Import Manifest-Goods could not be handled due to
strike-Bill of Entry for clearance of goods-Presenting of-Subsequent grant
C of Inward Entry and arrival of ship into the port-Increase in rates of duty in
the meantime-Fixing of rate of duty-R.elevant date-What is.

. The petitioners placed an order with the Indian Agent of a foreign
supplier for supply of ball bearings, and opened letters of credit. The
foreign supplier shipped the goods. The ship arrived on February 20, 1989
D at Madras port and was ready to discharge the cargo, but due to con-
tinuous strike the cargo could not be handled. On February 27, 1989 the
petitioner presented the bill of entry for clearance of goods for home
consumption and it was received in the appraising section on February 28,
1989. The ship arrived into the port and was berthed on March 2, 1989
E and on the same day entry inward was granted.

From March 1, 1989 the rate of excise duty was increased and the
difference in tariff levy came to Rs.1,80,46,092.64.

The petitioners preferred the present writ petition seeking ap-
F propriate directions that the components/parts of ball bearings imported
from the foreign supplier were liable to excise duty prevalent as on
February 20, 1989 and to release the goods on payment thereof or in the
alternative to declare s~ lS(l)(a) of the Customs Act, 1962 ultra vires of
Articles 14, 19(1)(g), 21,265 and 300A of the Constitution.
G It was contended that since the ship had entered into the Indian
waters on February 20, 1989 and was ready to discharge the cargo, waiting
clearance into the port and due to reasons beyond the control of the
petitioners the goods could not be cleared tiU March 2, 1989 by which date
the rate of levy was materially changed, the duty as on February 20, 1989
H shall be the proper duty. It was also contended that the bill of entry for
494
DHIRAJ LAL v. U.0.I. 495

clearance of the goods was presented on Feb. 21, 1989 which was received A
in the appraising Section on Feb. 28, 1989 and that would be atleast the
pa·oper date for determination of the rate of levy.

Dismissing the writ petitions, this Court

HELD : 1. Granting entry inward on delivery of import manifest and B
the date of arrival of the vessel into port were admittedly on March 2, 1989
and the Master of the vessel made a declaration that be would discharge
the cargo on March 2, 1989. Therefore, the relevant date under section
lS(l)(a) of the Customs Act, 1962 is the date on which entry inward after
delivery of import manifest was granted to discharge the cargo for the C
purpose of the levy of customs duty and rate of tariff. The ship entering
Indian territorial waters on February 20, 1989 and was ready to discharg~
the cargo are not relevant for the purpose of Sec.15(1) read with Secs.46
and 31 of the Act. The prior entries regarding presentation of the bill of
entry for clearance of the goods on February 27, 1989 and their receipt in D
the appraising section on February 28, 1989 also are irrelevant. The
relevant date to fix the rate of customs duty, therefore, is March 2, 1989,
The rate prevailed as on that date would be the duty to which the goods
imported are liable to the impost and the goods would be cleared on its
payment in accordance with the rate of levy of customs duty prevailing as
on March 2, 1989. [499-H, 500-A-C] E

2. The rate of duty and tariff valuation on the imported goods
covered under sec. 15(1)(a) is the date on which the bill of entry is
presented under sec. 46 read with sec. 31 while the rate of duty and tariff
valuation in respect of the goods covered under sec. 15(1)(b) is the date F
on which the goods are actually removed from the warehouse under sec.
68. The manifest intention would, therefore, be clear that there should be
a declaration in the prescribed form by the importer of his intention to
clear the goods either for home consumption or keep the goods in public
warehouse. (500-H, 501-A]
G
3. The l"alidity of S. 15(1) of the Act has already been upheld by this
Court and is no longer res integra. However, as per this Court's direction
dated August 11, 1992 the Respondents may consider the case sympatheti-
cally. It is open to the Government to consider the same and pass an
appropriate order. (501-H, 502-A] H
496 SUPREME COURT REPORTS [1992) SUPP. 3 S.C.R.

A M. Jahangi,r Bhatusha etc. etc. v. Union of India & Ors. etc. etc.,
[1989] 3 SCR 356, followed.

4. If the interim directions of the court are taken to be substitute forthe
statutory operation of the relevant provisions, the interest of the revenue
would be prejudicially affected and the fraudulent conduct and acts done in
H · Jurtherance thereof would get legitimacy to avoid payment of duty and tariff
prevailing as on either of the dates on which the bill of entrywas presented or
·the goods are actually removed from the warehouse. It would be easy for an
importer to have the goods imported, get an order from the court to k;eep
them in private were-housing till either the rate of tariff is reduced or the
price .ofthe goods are substantially increased by cr~iing artificial scarcity in
C the market which would jeopardise the e.conomy of the country. Accordingly
the .i~porter cannot be permitted to circumvent the law through judicial
process which is otherwise impermissible under the Act. {501-E,G]

ORIGINAL JURISDICTION : Writ Petition (Civil) No. 392 of 1989.
D (Under Article 32 of the Constitution of India.)

WITH

IA. No. 3, W.P. (C) Nos. 469-70/89.

E Harish N. Salve and N.D. Garg for the Petitioners.

A. Subba Rao and P. Parmeswaran for the Respondents.

The Judgment of the Court was delivered by ,..
I

F . K RAMASWAMY, J. These Writ Petitions under Art. 32 raise
common question of law arising from same set of facts between the same
parties though for different consignments. Hence they are disposed of by
common judgme9t; The petitioner seeks writ of mandamus or any ap- .
propriate directions that the component/parts of ball bearings imported
from foreign supplier M/s. Impex Matel Lucka, Sars:t.awa (Poland) are ·
G liable to excise duty prevalent as on February 20, 1989 and to release· the
goods on'payment thereof or in the alternative to decJare Sec. 15(1)(a) ultra
vires of Arts.14, 19(1)(g), 21, 265 and 30oA of the Constitution. The facts
are that the petitioner pla<;:ed in January-February, 1988 an order with the
Indian agent ~f the foreign supplier M/s. Impex Matel Lucka, Sars:Zawa, to
H supl)ly ball bearings and irrevocable letters of credit were opened on July

I-
I
DHIRAJ LAL v.. U.O.I. [RAMASWAMY, J.) 497

13, 1988 for Rs. 13,07,830. The foreign supplier shipped the goods in M/s A
Stefan Czarniecki under bill of landing No. 9 and invoice No. 96/222171154
dated December 31, 1988. The ship arrived on February 20, 1989 at Madras
port and was ready to discharge the cargo. It delivered the import manifest
under No. 116 on the even date but due to continued strike the cargo could
not be handled. On February 27, 1989 the petitioner presented the bill of B
entry ''for clearance of goods for home consumption" and it was entered at
No. 012036 which was received in the appraising section of the group oq
February 28, 1989. The ship arrived into the port and was berthed on
March 2, 1989. The entry inward was granted on March 2, 1989. From
March 1, 1989 the rate of excise duty was altered. It was increased at 150%'
ad valorem plus Rs. 300 per piece for certain sizes and for other sizes duty C
was raised to 150% ad valorem plus weight based duty. The result was that
pre-tariff duty was Rs. 15,73,611.05 while as per the new tariff levy effective
from March 1, 1989, the difference came to Rs. 1,80,46,092.64.

Sri Salve, learned senior counsel for the petitioner contended that
since the ship had entered into the Indian waters on February 20, 1989 and D
was ready to discharge the cargo, waiting clearance into the por~ and due
to reasons beyond the control of the ship or the petitioner the goods could
not be cleared until March 2, 1989 by which date the rate of levy was ·
materially changed. As the cargo was ready for discharge from the ship
from the Indian territorial waters from February 20, 1989 the duty prevail- E
ing as on that date shall be the proper duty. Since the petitioner presented
the bill of entry for clearance of the goods for home consumption on
February 27, 1989 which was received by the appraising section on·
February 28 1989, that would be at least the proper date for determination
of the rate of levy. We find no force in the contention. Sec. 15 of the
Customs Act of 1%2 for short 'the Act' prescribes the rate of duty and F
tariff valuation on imported goods thus:

"15 (1) The rate of duty and tariff valuation, if any, ap-
plicable to any imported goods, shall be the rate and
valuation in force,- G
(a) in the case of goods entered for home consumption
under Sec. 46, on the date on which a bill of entry in respect
of such goods is presented under that section;

(b) in the case of goods cleared from a warehouse under H
498 SUPREME COURT REPORTS [1992] SUPP. 3 S.C.R.

A Sec. 68, on· the date on which the goods are actually
removed from the warehouse;

(c) in the case of any other goods, on the date of payment
of-duty:

B Provided that if a bill of entry has been presented before
the date of 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. Sec. 15(2) is not
relevant for the purpose of the case hence omitted.

c "Sec. 31. Imported goods not to be unloaded from vessel
until entry inwards granted. -

(1) The master of a vessel shall not permit the unloading
of any imported goods until an order has been given by the
proper officer granting entry inwards to such vessel.
D
(2) No order under sub-section (1) shall be given until an
import manifest has been delivered or the proper officer is
satisfied that there was sufficient cause for non delivering
it.
E
(3) Nothing in this section shall apply to the unloading of
baggage accompanying a passenger or a member of the
crew, mail bags, animfa.s, perishable goods and hazardous i
goods."

F "Sec. 46. Entry of goods on importation. -

(1) The importer of any goods, other than goods intended
for transit or transshipment, shall make entry thereof by
presenting to the proper officer a bill of entry for home
consumption or warehousing in the prescribed form:
G
Provided that if the importer makes and subscribes to a
declaration before the proper officer, to the effect that he
is unable for want of full information to furnish all the
particulars of the goods required under this sub-section,
H the_ proper officer may, pending the production of such
DHIRAJ LAL v. U.0.1. [RAMASWAMY, J.] 499

information, permit him, previous to the entry thereof: A
(a) to examine the goods. in the presence of an officer of
customs, or (b) to deposit the goods in a public warehouse
appointed under Sec. 57 without warehousing the same.

(3)A bill of entry under sub-section (1) may be presented at B
any time after the delivery of the import manifest or import
report as the case -,ay be.

(5) If the proper officer is satisfied that the interests of
revenue are not prejudicially affected and that there was
no fraudulent intention, he may permit substitution of a bill c
of entry for home consumption for a bill of entry for
waerhousing or vice versa."

Sub-sections (2) and (4) are omitted as being irrelevant.
D
It is clear from bare reading of these relevant provisions that the due
date to calculate the rate of duty applicable to any imported goo~ shall
be the rate and valuation in force, in the case of the goods entered for
home consumption under sec. 46, is the date on which the bill of entry in
respect of such goods is presented under that section and in the case of
goods cleared from a warehouse under sec. 68, the date on which the goods E
are actually removed from the warehouse. By operation of the proviso if a
bill of entry has been· presented before the date of entry inwards the bill
of entry shall be deemed to have been presented "on the date of such entry
inwards" but would be subject to the operation of Secs. 46 and 31(1) of the
Act. Sec. 46(1) provides that the importer of any goods, other than goods F
intended for transit or transhipment, shall make entry thereof by presenting
to the proper officer a bill of entry for home consumption or warehousing
in the prescribed form and it may be presented under sub-s. (3) the,reof at
any time after delivery of the import manifest. Sec. 31(1) provides that the
master of the vessel shall not permit the unloading of any imported goods
until an order has been given by the proper officer "granting entry inwards" G
to such vessel and no order under sub-s. (1) shall be given until an import
manifest has been delivered or the proper officer is satisfied that there was
sufficient cause for not delivering it. Granting entry inward on delivery of
import manifest and the date of arrival of the vessel into port admittedly
are on March 2, 1989 and the Master of the vessel made a declaration in H
500 SUPREME COURT REPORTS (1992] SUPP. 3 S.C.R.

A this behalf that they would discharge the cargo on March 2, 1989 therefore,
the relevant date under section 15(1)(a) is the date on which entry inwards
after delivery of import manifest was granted to discharge the cargo for
the pu.rpose of the.levy of the customs duty and rate of tariff. The conten-
tion, therefore that the ship entered Indian territorial waters on February
20, 1989 and was ready to discharge the cargo is not relevant for the
B purpose of Sec. 15.(1) read with Sec.c;. 46 and 31 of the Act. The prior
entries regarding presentation Qf the bill of entry for clearance of the goods
on February 27, 1989 and their receipt in the appraising section on
February 28, 1989 also are irrelevant. The relevant date to fix the rate of
customs duty, therefore, is March 2, 1989. The rate which prevailed as on
c that date would be the duty to which the goods imported are liable to the
impost and the goods -.yould be cleared on its payment in accordance with
the rate of levy of customs prevailing as on March 2, 1989.

It is next contended by Sri Salve that this court by order dated April
D 11, 1989 directed to release the goods subject to certain conditions and
directed the petitioner to keep them in the petitioner's godown and by
further order dated September 12, 1989 this court directed the customs
authorities to put lock and key to the godown of the petitioner in which
the goods were stored. This court by further order dated May 11, 1992
directed the respondents to release the goods on certain. conditions i~e. _the
E petitioner's paying an amount equal to twice the invoice value of the goods
or to furnish bank guarantee for the same. This court by further order
dated August 11, 1992 directed the government to consider sympathetically
the facts and circumstances of the. case and if possible to scale down the
duty to a figure bearing a reasonable correlation to the value of the goods
F imported and that the representation is still pending consideration. Based
on these subsequent events a further contention has been raised that by
operation of sub-sec. ·(5) of Sec. 46 this court could give a proper direction
to slash down the rate of duty or may direct to levy the duty prevailing as
on the date of the release treating the goods under sec. 15(1)(b) of the Act
read with Sec. 68 of the Act. We have given our due consideration but find
G it difficult to accede to the contention. It would be clear that the rate of
duty and tariff valuation on the imported goods covered under sec.15(1)(a)
is the date on which the bill of entry is presented under sec. 46 read with
sec. 31 while the rate of duty and tariff valuation in respect of the goods
covered under sec. 15(1)(b) is the date on which the goods are actually
H . removed from the warehouse under sec. 68. The manifest intention would,

.1 '
DHIRAT LAL v. U.O.I. [RAMASWAMY, J.] 501

therefore, be clear that there should be a declaration in the prescribed A
form by the importer of his intention to clear the goods either for home
consumption or keep the goods in public warehouse. The purpose of
grantiµg interim directions was to relieve the petitioner from payment of
needless demurrage which would not be converted as a substitute to
statutory compliance of the operation of sec. 15(1)(a) read with sec. 4P or B
sec. 15(1)(b) read with Sec. 68 of the Act, as the case may be. Once
statutory declaration required either under Sec. 15(1)(a) or 15(1)(b) has
been made, it is determinative and the due date is the relevant date
mentioned in the relevant provision for imposition of customs duty and rate
of tariff. In this behalf a contention has been raised by Sri Salve that under
Sec. 58 of the Act it is permissible to the Customs Collector to grant licence C
to a private warehouse wherein the dutiable goods imported by or on
behalf of the licensee or any other imported goods in respect of which
facilities for deposit in a public warehousing are not av&ilable may be
deposited without payment of duty. The directions of this court may be
treated to be under Sec. 58. The arrangement undeF sec. 58(1) appears to D
be to meet certain eventualities. To grant licence to private warehouse is
an exception wherein dutiable goods or other imported goods may be kept
in deposit. The normal rule is that they shall be kept in public warehouse.
If the interim directions of the court are taken to be substitute for the
statutory operation of the relevant provisions, the interest of the revenue
would be prejudicially effected and the fraudulent conduct and acts done E
in furtherance thereof would get ligitimacy to avoid payment of duty and
tariff prevailing as on either dates on which the bill of entry was presented
or the goods are actually removed from the warehouse. It would be· easy
for an importer to have the goods imported, get an order from the court
to keep them in private warehouse till either the rate of tariff is reduced F
or the price of the goods are substantially increased by creating artifitial
scaractiy in the market which would jeopardise the economy of the country.
Accordingly we are of the considered opinion that the importer cannot be
permitted to circumvent the law through judicial process which is otherwise
impermissible under the Act.
G
Accordingly we find no force in the contention and is rejected. The
contention of the petitioner that Sec. 15(1) of the Act is ultr_a vires of the
provisions of the constitution is no longer res integra. A Constitution Bench
of this Court in M. Jahangir Bhatusha etc. etc. v. Union of India & Ors. etc.
etc., [1989] 3 SCR 356, upheld the validity of Sec. 15(1) and we do not find H
502 SUPREME COURT REPORTS (1992) SUPP. 3 S.C.R.

A it necessary to o~ce again traverse the contention de novo. This court, as
seen, by order dated August 11, 1992 directed that the respondent may
consider the case sympathetically. It is open to the government to consider
the same and pass an appropriate order. Subject to the above observations
the writ petitions are dismissed but, however, without costs.

G.N. Petitions dismissed.

}
I

I