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PETITIONER: BHARAT SURFACTANTS (PVT) LTD & ANR.

       Vs.

RESPONDENT: UNION OF INDIA & ANR.

DATE OF JUDGMENT17/05/1989

BENCH: PATHAK, R.S. (CJ) BENCH: PATHAK, R.S. (CJ) RANGNATHAN, S. MUKHARJI, SABYASACHI (J) NATRAJAN, S. (J) VENKATACHALLIAH, M.N. (J)

CITATION:  1989 AIR 2054            1989 SCR  (3) 367  1989 SCC  (4)  21        JT 1989  Supl.    239  1989 SCALE  (2)190  CITATOR INFO :  RF         1991 SC 583  (29,37)  R          1991 SC1931  (4)

ACT:     Customs  Act, 1962--Sections 15, 16, 46 and 56--Rate  of duty and Tariff valuation--Determination of--Date of presen- tation  of  Bill  of Entry---Relevance  or--’Date  of  entry inwards of vessel’--Date recorded in Customs register.

HEADNOTE:     By way of writ petition under Article 32 of the  Consti- tution 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 contract entered  into  by the  petitioners  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 Bombay and made its "prior entry" on 4 July, 1981. It  actu- ally  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 for berth. On August 4, 1981 she was allowed to berth in Princess Docks ’C’ shed and the Customs authori- ties made the "final entry" on that date.     Customs  authorities are stated to have imposed duty  on the import of edible oil 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 was that  the rate  of duty leviable on the imports should be that  ruling on  11  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% 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

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vessel entered the port of Bombay. The Court rejecting the claim of petitioners, 368     HELD:  The rate of duty and tariff valuation has  to  be determined  in accordance with S. 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 u/s 46. According to the 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. [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 determining the rate of duty  and  tariff valuation.  Where the Bill of Entry is presented before  the date  of Entry Inwards of the Vessel, the Bill of  Entry  is deemed  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 that "the date of entry inwards of the  ves- sel"  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 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 will be that ruling on  July  11, 1981 cannot be sustained and is rejected. [375G]     (1)Shawney v. M/s. Sylvania & Laxman Ltd., 77 Bom.  L.R. 380; (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 of 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.

JUDGMENT: ORIGINAL JURISDICTION: Writ Petition No. 3130 of 1981. (Under Article 32 of the Constitution of India).     Soli  J.  Sorabjee, Harish N. Salve, K.K.  Patel,  Ujwal Rana, Rajiv Dutta and K.K. Mohan for the Petitioners. 369     K.  Parasaran,  Attorney General, B.  Datta,  Additional Solicitor General, Kuldip Singh, Additional Solicitor Gener- al, Ms. A. Subhashini, C.V. Subba Rao, Mrs. Sushma Suri,  A. Subba  Rao, A.K. Srivastava and P.P. Singh for the  Respond- ents. The Judgment of the Court was delivered by     PATHAK,  CJ. By this writ petition under Art. 32 of  the Constitution the petitioners seek relief against the imposi- tion  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 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

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that  the Port authorities at Bombay were unable to allot  a berth  to  the vessel, and as she was under  heavy  pressure from  the  parties  whose goods she was  carrying  she  left Bombay  for Karachi for unloading 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 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.     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, 198 1, when the vessel actually arrived and registered in  the  Port of 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 have left  that  Port  and proceeded to Karachi to return to Bombay towards the end  of July,  1981. Alternatively, the case of the  petitioners  is that if it be found that the rate of customs duty  attracted by  the import effected by the petitioners is 150  per  cent the levy is unconstitutional 370 and  void  as  a violation of Art. 14  of  the  Constitution inasmuch  as customs duty at 5 per cent only was  levied  on the  State Trading Corporation 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  deter- mined.     To resolve the issue between the parties it is necessary to  ascertain  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,  applicable to any imported goods,  shall               be the rate and valuation in force ,--                       (a)  in the case of goods entered  for               home consumption under section 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 section 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:                         Provided that if a bill of entry has               been  presented before the date of  entry  in-               wards  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."     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

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is  the date on which the Bill of Entry in respect  of  such goods  is presented under that section. S. 46 provides  that the  importer of any goods shall make entry thereof by  pre- senting  to  the  proper officer a Bill of  Entry  for  home consumption  in the prescribed form, and it is further  pro- vided  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  delivery of such Manifest if the vessel by which the goods have been 371 shipped  for  importation into India is expected  to  arrive within a week from the date of such presentation. Section 47 empowers  the  proper officer, on being satisfied  that  the goods entered for home consumption 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 consump- tion.       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- fore unconstitutional because it provides no definite stand- ard  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  peti- tioners 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  territo- rial  waters  of 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 expres- sion ’India’, they urge, is defined by s. 2(27) as including the  ’territorial  waters  of India’. In  other  words,  the petitioners contend that when the vessel entered the  terri- torial  waters on 11 July, 1981 the rate of customs duty  at 12.5  per  cent ruling on that date was the rate  which  was attracted  to  the  import. In any  event,  the  petitioners contend,  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  enters the  territorial  waters of India. Learned counsel  for  the petitioners says that if this interpretation cannot reasona- bly  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 to s. 15(1).        Considerable  reliance has been placed by  the  peti- tioner on Shawney v. M/s. Sylvania and Laxman Ltd., 77  Bom. L.R. 380 in support of the submission that-the taxable event occurs  when  the vessel 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, 372 we  think,  to appreciate what was said in  that  case.  The Bombay  High  Court held there that the date  on  which  the vessel  enters the territorial 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  on  that

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date,  the learned Judges said, the provisions of s.  15  of the  Act will not 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 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 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  releasedfor  home               c               o               n               s               u               m               p               t               i               o               n               .               .               .               .               .               .               .               .               .               .               .               .               .               .               .               .               .               .               .               .               .               .               .               .               .               .               .               .               .               .               .               .                    ............................................... ..Only               if the               goods  were chargeable to some  basic  customs

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             duty under 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 or at the time  when  the               goods  are sought to be cleared for home  con-               sumption,  as  the case may be, would  be  ap-               plicable  and the basic duty would be  quanti-               fied 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  terri- torial waters of India, the taxable event was not  postponed to  the date when the goods were cleared for human  consump- tion.     In  the  present case. there is no dispute that  on  the date when the vessel first entered the territorial waters of India  by July, 198 1 the rate of customs duty was 12.5%  on the import of the goods in question and thereafter when  the vessel returned from Karachi and entered the 373 territorial waters of India the rate of duty was 42.5%.     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  deter- mined in accordance with s. 15(1) of the Customs Act.  Under s.  15(1)(a), the rate and valuation is the rate and  valua- tion  in  force on the date on which the Bill  of  Entry  is presented under s. 46. According to the proviso, however, if the  Bill of Entry has been presented before the  entry  in- wards  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 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  counteraffidavit of Shri R.S. Siddhu, then under Secretary to the  Government of India.     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  presenta- tion  of the Import General Manifest. In this  Manifest  the Master  intimates the details with regard to the cargo  car- ried  by  the vessel. In the instant case the  Manifest  was conveyed by the Steamer Agent on 6 July, 1981 by his  letter No. IM/394/81/1116. Admittedly this intimation or  presenta- tion of the Manifest on 6 July, 1981 was prior to the arriv- al  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 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  applica- tion  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  receipt  of  the Manifest  a "prior entry" is made in the Register, which  is called the Register of Inward/Outward Entry of vessels. Upon

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the  recording  of the "prior entry" a  rotation  number  is given  and conveyed to the Shipping Agent or the  Master  of the  vessel. In the instant case the "prior entry" or  rota- tion  number  allotted was 743/PE. The  Customs  authorities display daily, on receipt of the Import General 374 Manifests, the details of the vessels on a notice board  for the  information  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  im- porter. 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  available,  for the  discharge of the cargo. In the instant case,  since  no berth  was  available, the vessel left for Karachi  to  dis- charge 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/  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 had made a  decla- ration 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 goods 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 to proceed to Karachi to discharge  the cargo  pertaining to that Port, and but for  the  non-avail- ability  of  the berth she would not  have  undertaken  that voyage but would have continued in Bombay and discharged 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 of  the  petitioners and a reasonable construction  must  be given to s. 15 taking 375 into  account the particular circumstances of the  case,  so that  the  vessel  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 Entry Inwards of the vessel, the Bill  of Entry  is deemed to have been presented on the date of  such

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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 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 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 the submissions of learned counsel for the petition- ers  rounded, inter alia, on the provisions of the Sea  Cus- toms Act and the amendment made in s. 16 of the Customs  Act and we are of opinion that the view taken by the Madras High Court in M/s. Omega Insulated Cable Co. Ltd., (supra) repre- sents  the correct view. The amendment made in s. 16 of  the Act  appears to have been made by way of clarification  and, in  our opinion, does not detract from the  conclusion  that "the  date of entry inwards of the vessel" is the  date  re- corded as such in the Customs register. In the present case, "the date of inwards entry" is mentioned as 31 July, 1981.1n 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 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 376 customs authorities in the matter of determining the date of inward  entry,  it  seems to us that having  regard  to  the procedure  detailed above there is no scope for the  submis- sion  that  the provision is invalid. An  entire  series  of consecutive acts makes up the procedure, and it is  reasona- ble 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 must fail. It is true that  an  amendment has  been made in s. 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  appar- ent  that no such amendment has been made in the  provisions of s. 15. The omission, it seems to us, is of no consequence when the procedure outlined above is being followed regular- ly and consistently. There is nothing before us to show that in  following  the  procedure the  Customs  authorities  act arbitrarily.     Accordingly,  we are of opinion that the claim  made  by the 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 imports by the  State Trading  Corporation  is  5 per cent only.  This  point  has

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already  been considered by us, and the contention has  been rejected,  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. R.N.J.                                              Petition dismissed. 377