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CASE NO.: Appeal (civil)  706 of 2005

PETITIONER: M/s. Sneh Enterprises

RESPONDENT: Commnr. of Customs, New Delhi

DATE OF JUDGMENT: 08/09/2006

BENCH: S.B. Sinha & Dalveer Bhandari

JUDGMENT: J U D G M E N T

S.B. Sinha, J.

       Sealed maintenance free lead acid batteries manufactured in Taiwan  for being used in Uninterrupted Power Supply (UPS) were imported by the  appellant at Mumbai on 16.4.2002.  The goods were trans-shipped from  Mumbai to Delhi.  The Bill of Entry, however, was filed by the appellant  with the customs authorities at Delhi on 22.5.2002.   

Anti-dumping duty, indisputably, can be levied on issuance of a  notification by the Central Government in terms of Section 9A of the  Customs Tariff Act, 1975 (for short, ’the Act’).  The said provision reads  thus :

"9A.    Anti-dumping duty.- (1) Where any article is  exported from any country or territory (hereafter in this  section referred to as the exporting country or territory)  to India at less than its normal value, then, upon the  importation of such articles into India, the Central  Government may, by notification in the Official Gazette,  impose, -

(a)     if the articles is not otherwise chargeable with duty  under the provisions of this Act, a duty; or

(b)     if the article is otherwise so chargeable, an  additional duty, not exceeding the margin of  dumping in relation to such article;"    

The Central Government, in exercise of its power thereunder, issued a  notification on 22.5.2002 on lead acid batteries, originating in or exported,  inter alia8 from Taiwan, Singapore and Hong Kong.  The respondents,  relying on or on the basis of the said notification directed payment of anti- dumping duty on the said imported goods by the appellant.   

       The contention of the appellant, inter alia, is that the said notification  dated 22.5.2002 being not retrospective in operation the impugned order was  wholly unsustainable.  It was urged that the taxable event having occurred  on the day of importation of goods, i.e., on 16.4.2002, no anti-dumping duty,  admittedly brought in force by reason of the said notification dated  22.5.2002, was applicable.  The said contention of the appellant, however,  was rejected by the respondent, and affirmed by the Customs, Excise and  Service Tax Appellate Tribunal by reason of the impugned order, stating :

"It is thus settled law that the import is completed  only when the goods are to cross the Customs barriers

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and that is the time when the import duty has to be paid  and not on the date when goods had landed in India.   Under Section 9A of the Customs Tariff Act, anti- dumping duty is imposable upon importation of the  goods.  The import is completed only when the goods are  to cross the customs barrier.  In the present matter on the  date of crossing the customs barrier, the anti-dumping  duty was leviable in terms of Notification No.55/2002- Cus and, therefore, anti-dumping duty under Section 9A  of the Customs Tariff Act is payable by the Appellants.   The decision of the tribunal in the case of Suja Rubber  Industries is not applicable as it has been passed per  incuriam the judgment of the Supreme Court in Kiran  Spinning and Garden Silk Mills.  Thus, the ratio of the  decision in Fenner India Ltd., is also not applicable."

       Mr. P.C. Jain, learned counsel appearing on behalf of the appellant  would submit that in view of the fact that Section 9A is an enabling  provision and the notification thereunder having been issued on 22.5.2002,  the provisions of Section 15A of the Customs Act could not have been  invoked in the instant case, particularly, in view of the fact that Sub-Section  (8) of Section 9A was introduced in the year 2004 by reason of Finance  (No.2) Act, 2004.

       Mr. K.P. Pathak, learned Additional Solicitor General, however,  would submit that in view of the judgment of this Court in Kiran Spinning  Mills vs. Collector of Customs [1993 (113) ELT 753 (S.C.)], the taxable  event must be held to be the day when the goods crossed the customs barrier  and not on the day when the goods landed in India or entered its territorial  waters.                  Customs Tariff Act, 1975 was enacted to consolidate and amend the  law relating to custom duties.  Section 2 of the said Act provides for the  rates at which the custom duty should be levied under the Customs Act,  1962 as specified in the First and Second Schedules.  Imposition of anti- dumping duty, however, is not a part of the duty, which can be levied under  the Customs Act.   

Customs Duties under the Customs Act would include additional duty  under the Customs Tariff Act.  Additional duty can be levied in terms of  Section 3 of the said Act.  For computation of additional duty, in terms of  Sub-Section (6) of Section 3, the provisions of the Customs Act, 1962 and  the rules and regulations made thereunder, including those relating to  drawbacks, refunds and exemption from duties, shall so far as may be, apply  to the duty chargeable under the said section shall apply as they apply in  relation to the duties leviable under that Act.  Sub-Section (6) of Section 3 of  1975 Act, therefore, provides for incorporation by reference the provisions  of the Customs Act, 1962 and the rules and regulations made thereunder, as  applicable in relation to the additional duty framed thereunder.   

Section 9A was inserted in the year 1985.  It contains an enabling  provision.  The said provision envisages that the duty would be imposable if,  in the opinion of the Central Government, the value of the goods is less than  its normal value.  Normal value has been defined in Explanation (b) to  Section 9A to mean : "(b)    "normal value", in relation to an article, means \026

(i)     The comparable price in the ordinary course of  trade for the said article or like article when meant  for consumption in the exporting country or  territory as determined under sub-section (2); or

(ii)    where such comparable price cannot be ascertained  because of the particular market situation or for  any other reason, such value shall be either\026

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(A)     the highest comparable price for the said  article or like article from the exporting  country or territory to any third country in  the ordinary course of trade as determined  under sub-section (2); or (B)     the cost of production of the said article or  like article in the country of origin along  with reasonable addition for selling and any  other cost, and for profits, as determined  under sub-section (2)."

Sub-section (8) of Section 9A was introduced by Finance Act, 2004.   Prior thereto, the statute did not contemplate application of the provisions of  the Customs Act and the rules and regulations made thereunder.  By Section  76 of the Finance (No.2) Act, 2004, indisputably, Sub-Section (8) was  inserted stating the provisions of the Customs Act would be applicable  "relating to, the date for determination of rate of duty, non-levy, short levy,  refunds, interest, appeals, offences and penalties" in respect of anti-dumping  duty.   

Sub-Section (1) of Section 15 of the Customs Act, 1962 reads as  under :

"15.    Date for determination of rate of duty and tariff  valuation of imported goods.- (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;"

The anti-dumping duty, as noticed hereinbefore, does not attract the  provisions of the Customs Act.  If the provision of law is incorporated by  reference, it was obligatory on the part of the Parliament to say so.  Such a  provision was brought for the first time in the year 2004.  The doctrine of  incorporation by reference is, therefore, not attracted.   In Principles of Statutory Interpretation by Justice G.P. Singh, Tenth  Edition 2006, at pp.294-295, the law is stated in the following terms :

"When an earlier Act or certain of its provisions  are incorporated by reference into a later Act, the  provision so incorporated become part and parcel of the  later Act as if they had been "bodily transposed into it".   The effect of incorporation is admirably stated by LORD  ESHER, M.R.: "If a subsequent Act brings into itself by  reference some of the clauses of a former Act, the legal  effect of that, as has often been held, is to write those  sections into the new Act as if they had been actually  written in it with the pen, or printed in it."  The result is  to constitute the later Act along with the incorporated  provisions of the earlier Act, an independent legislation  which is not modified or repealed by a modification or  repeal of the earlier Act."

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The question was considered at some details by a Three Judge Bench  of this Court in Nagpur Improvement Trust etc. vs. Vasantrao & Ors.  [(2002) 7 SCC 657], opining :

"...... The law on the subject is well settled.  When an  earlier Act or certain of its provisions are incorporated by  reference into a later Act, the provisions so incorporated  become part and parcel of the later Act as if they had  been bodily transposed into it.  The incorporation of an  earlier Act into a later Act is a legislative device adopted  for the sake of convenience in order to avoid verbatim  reproduction of the provisions of the earlier Act into the  later.  But this must be distinguished from a referential  legislation which merely contains a reference or the  citation of the provisions of an earlier statute.  In a case  where a statute is incorporated, by reference, into a  second statute, the repeal of the first statute by a third  does not affect the second.  The later Act along with the  incorporated provisions of the earlier Act constitutes an  independent legislation which is not modified or repealed  by a modification or repeal of the earlier Act.  However,  where in a later Act there is a mere reference to an earlier  Act, the modification, repeal or amendment of the statute  that is referred, will also have an effect on the statute in  which it is referred.  It is equally well settled that the  question whether a former statute is merely referred to or  cited in a later statute, or whether it is wholly or partially  incorporated therein, is a question of construction."

The said decision has been followed in Kanak (SMT) & Anr. vs.  U.P. Avas Evam Vikas Parishad & Ors. [(2003) 7 SCC 693].   

The Tribunal unfortunately did not address itself on the said question.   It, inter alia, relied upon Kiran Spinning Mills (supra), wherein the  provisions of Sub-Section (6) of Section 3 of the Customs Tariff Act was  attracted.   

We are herein not dealing with a case of additional duty of excise.  In  Kiran Spinning Mills (supra), only because Sub-Section (6) of Section 3  was held to be attracted in that case, additional excise duty was held to be  payable on the date when the Bill of Exchange was filed.   

Section 9A of the Customs Tariff Act clearly states that imposition of  anti-dumping duty on dumped articles is required to be determined "upon  the importation of such article into India, the Central Government may, by  notification in the Official Gazette, impose an anti-dumping duty not  exceeding the margin of dumping in relation to such article".  Quantum of  additional duty, therefore, was required to be determined when the goods  have been imported and is subject for clearance.  Such is not the case here.

In Surana Steels Pvt. Ltd. etc. vs. Dy. Commissioner of Income  Tax & Ors. etc. [(1999) 4 SCC 306], it is stated :

"Section 115-J explanation clause (iv), is a piece of  legislation by incorporation.  Dealing with the subject,  Justice G.P. Singh states in Principles of Statutory  Interpretation (7th Edn., 1999) \026  

"Incorporation of an earlier Act into a later  Act is a legislative device adopted for the sake of  convenience in order to avoid verbatim  reproduction of the provisions of the earlier Act  into the later.  When an earlier Act or certain of its

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provisions are incorporated by reference into a  later Act, the provisions so incorporated become  part and parcel of the later Act as if they had been  ’bodily transposed into it’.  The effect of  incorporation is admirably stated by LORD  ESHER, M.R.: ’If a subsequent Act brings into  itself by reference some of the clauses of a former  Act, the legal effect of that, as has often been held,  is to write those sections into the new Act as if  they had been actually written in it with the pen, or  printed in it.’ (p.233) Even though only particular sections of an  earlier Act are incorporated into later, in  construing the incorporated sections it may be at  times necessary and permissible to refer to other  parts of the earlier statute which are not  incorporated.  As was stated by LORD  BLACKBURN : ’When a single section of an Act  of Parliament is introduced into another Act, I  think it must be read in the sense it bore in the  original Act from which it was taken, and that  consequently it is perfectly legitimate to refer to all  the rest of that Act in order to ascertain what the  section meant, though those other sections are not  incorporated in the new Act.’" (p.244)"

Anti-dumping duty would be payable in respect of the goods which  have already entered Indian Territory and are warehoused.

In this case, goods were cleared by the Customs Authorities without  imposing any anti-dumping duty.  It was at a later date the duties were  sought to be imposed, wherefor a show cause notice was issued.   A Judgment, as is well known, is the authority for the proposition  which it decides and not what can logically be deduced from.  Kiran  Spinning Mills (supra) does not militate against a contention of the  appellant.  It, in fact, supports its contention.  The question as to when  import of goods is complete would depend upon contract between the parties  and/or statute governing the field.  It is not a part of common law that the  import of the goods would be deemed to have been completed only when it  passes the customs barrier.  Such a provision had been made for achieving  definite purposes, i.e., for the purpose of calculating customs duty.   

In absence of a statute, the contract between the parties would not be  superceded.   Sub-Section 6 of Section 3 or Sub-Section 8 of Section 9A of  Customs Tariff Act was enacted to achieve a specific purpose.  Its operation  is limited from the date it came into force.  It cannot be applied with  retrospective effect.  Unless there exists a statutory interdict, common law  principle would apply which would mean that import would be complete  when the goods enter the territories of the country.  Taxable event in terms  of the notification issued under Section 9A of the Act is on importation of  the good and not when the same passes the customs barrier.  The goods in  question landed at Mumbai.  They were trans-shipped to Delhi.  They were,  however, cleared at Delhi.  The goods might have passed the customs barrier  on the day on which the Bill of Entry was filed by the appellant for the  purpose of Customs Act.  But such importation of goods, in terms of the  provisions of the Customs Act, was meant only for computation of duty  thereunder and not for any other purpose.  In other words, a situation  contemplated under one statute cannot, in absence of any express or clear  intendment, be made to apply or be given effect to while applying the  provisions of another statute.

       It is a trite law that while interpreting the statute, the courts not only  may take into consideration the purpose for which the same had been  enacted, but also the mischief it seeks to suppress.  Evidently, with a view to

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suppress the mischief, if any, Section 26 of the Finance Act, 2004, was  brought into the statute book.  It cannot, therefore, by no stretch of  imagination be held that the Parliament intended to apply the provisions of  Section 15 of the Customs Act in Section 9A of the Customs Tariff Act,  prior to 2004.   

While dealing with a taxing provision, the principle of ’Strict  Interpretation’ should be applied.  The Court shall not interpret the statutory  provision in such a manner which would create an additional fiscal burden  on a person.  It would never be done by invoking the provisions of another  Act, which are not attracted.  It is also trite that while two interpretations are  possible, the Court ordinarily would interpret the provisions in favour of a  tax-payer and against the Revenue.                    

   The notification dated 22.5.2002, on its face value, is prospective in  operation and not retrospective.  It, in no uncertain terms, states that Central  Government thereby may impose duty only, inter alia, on lead acid batteries  originated from the countries specified therein and imported into India.  The  proviso appended to the notification provides for a clue in the sense that by  reason thereof no duty was to be imposed on industrial lead acid batteries  manufactured by the manufacturers named therein.  The anti-dumping duty  imposed thereby was to remain effective only for a limited period, i.e., upto  21st November, 2002.

 For the aforementioned reasons, the impugned judgment cannot be  sustained, which is accordingly set aside.  The appeal is allowed.  No costs.