WIPRO INFORMATION TECHNOLOGY LIMITED MYSORE Vs. COLLECTOR OF CUSTOMS KARNATAKA CUSTOMS COLLECTORATE BANGALORE

JUDGEMENT

(1.) VALIDITY of notice issued under Section 28 (1) of the Customs Act, 1962, dated 21-12-1990 is assailed in this writ petition in respect of collection of duty on loading, unloading and handling charges. It is submitted that the provisions of Rule 9 (2) (b) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988, as amended by notification dated 5th july, 1990, is violative of Article 265 of the Constitution of India and the respondents have no jurisdiction to realise the duties in excess of the actuals.

(2.) PETITIONER is enganged in manufacturing and marketing of computer systems and peripherals for which large quantities of components are intported and the duty is paid on ad valorem basis. Provisions of Rule 9 were not in existence prior to 1988 and it was by Customs Valuation (Determination of Price of Imported Goods) Rules, 1988, the rules came into force on 16th august, 1988. Prior to framing of these rules, there was lot of litigation and it appears that in order to rationalise the procedure in the manner of determination of duty, the rules were framed. Rule 9 (2) as added by rules of 1988 is as under.

(3.) CUSTOMS Valuation Rules, 1963 provided that it the value of the imported goods cannot be determined under the Customs Valuation Rules, the proper officer shall after taking into consideration all the relevant material which he has gathered, determine the value to the best of his judgment. This position continued till the above rules and amendments were made and thus the petitioner and the like were required to pay customs duty in respect of loading, unloading and handling and on the basis of actuals. The Amendment Rules of 1990 provided for payment of actuals in respect of cost of transport as well as the insurance charges, but for loading, unloading and handling charges it was fixed at 1% of the free on board value of the goods. Since the position prevailed prior to 5th of July, 1990, to determine value at actuals for loading, unloading and handling charges, the petitioner is aggrieved with such an amended provision as beyond competence of Section 14 of the Customs Act. The question of handling charges whether includable in assessable valuation of the goods under Section 14 of the Customs Act, 1962 was interpreted by Gujarat High Court in the case of Prabhat Cotton and Silk Mills Limited v Union of India, wherein it was held that in making computation of the assessable value of yarn for the purpose of payment of customs duty 3/4% of the CIF value was included in the computation in connection with the landing charges paid to the Port Authorities and in that context the action of the respondents was held justified. This Court in B. S. Kamath and Company and Others v Union of India and Others, also upheld the levy. The submission of Mr. Nataraj, learned Senior Counsel for the petitioner, is that the provisions of Section 14 (1-A) are subject to Section 14 (1) and under section 14 the price which is the consideration for sale has to be taken into consideration. The provision of Section 14 (1) have contemplated fiction for determining the value and the delegated authority has no jurisdiction to create further fiction in the matter. It is stated that the facts of the present case depict that the actual extent in respect of handling charges for two imports were Rs. 261/- and Rs. 26/- whereas by this notional computation the figure has been taken at Rs. 33,295/and rs. 16,125/- (Annexure-C ). The levy is unreasonable and beyond the competence of the rule making power. The fiction which has been introduced by the amending rules is irrespective of the actual handling charges and notional handling charges have to take place of actuals. It is submitted that the Cargo handling services are rendered by Madras Port Trust, International airports Authority of India or Mysore Sales International Limited for imports made at the madras Port, Madras Air Cargo Complex and Bangalore Air Cargo Complex, respectively. The charges are nominal i. e. , less than 0. 2% and inclusion of 1% of handling charges has resulted in excess liability of duty on the petitioner. The handling charges on the basis of actuals have already been paid and it is the validity on the basis of the notional figure which is sought to be challenged, as illegal and without jurisdiction and void and contrary to the provisions of Articles 14 and 19 (1) (g) of the Constitution. The rules are alleged to be highly discriminatory and in violation of the principles laid down under Article 265 of the Constitution. Even the provisions of Article 300-A of the Constitution has not been taken into consideration which provide that no person shall be deprived of his property without authority of law. The provisions of Section 14 of the Customs Act have not contemplated notional determination of the charges and they could only be contemplated when the actuals are not known. The power of determining on a notional basis or on a formula basis could not have been effected. Entry 83 of List I of the Constitution which authorises the levy of customs duty cannot contemplate notional charges.