RAMCHANDRA ART SILK YARN Vs. UNION OF INDIA

JUDGEMENT

(1.) .In these Writ Petitions, a common challenge is made to the constitutional validity of Sec. 151A of the Customs Act, 1962 (for short 'the Act') and three Circulars described as Standing Orders issued thereunder by the Chief Commissioner of Customs, Mumbai, directing the method to be followed for valuation of plastic items, non-ferrous metal scrap, polyester chips, P.O.Y., P.F.Y., P.S.F., acrylic fibre, viscose staple fibre and silk, for the purpose of assessment of customs duty.

(2.) Special Civil Application Nos. 13383, 13384 both of 2000 and Special Civil Application Nos. 149, 151, 234 all of 2001 are concerning valuation of Customs Duty on plastic items. Special Civil Application Nos. 13385, 13386 both of 2000 and Special Civil Application Nos. 98 and 1189 both of 2001 are in relation to assessment of value of non-ferrous metal scrap and Special Civil Application No. 12687 of 2000 is concerning polyester chips, P.O.Y., P.F.Y., P.S.F., acrylic fibre etc. A common judgment and order is being passed on these Applications, as this Court is concerned only with the challenge made to the constitutional validity of the provisions of Sec. 151A and the power of the Chief Commissioner of Customs to issue the impugned Standing Orders to its subordinate assessing authorities on the question of assessment of value of various items for imposing Customs duty. The impugned Circulars styled as Standing Orders in respect of plastic items are No. 7493 of 1999 dated 3-12-1999, in case of non-ferrous metal scrap No. 7495 of 1999 dated 13-12-1999 and in case of items like polyester chips, P.O.Y., P.F.Y., P.S.F., acrylic fibre etc. No. 7514 of 2000.

(3.) . By the impugned Standing Order No. 7493 of 1999 with regard to valuation of plastic items, the direction issued by the Chief Commissioner of Customs is that the assessing Officer should apply what is described as PLATT rate, which is explained as rates or prices maintained in the internationally reputed finance Journals, like LME Bulletin, PLATT's Weekly Report etc. The Standing Order on plastic items gives detailed guidelines and directions how the valuation of the plastic items are to be made with regard to international prices contained in the Foreign Finance Journals and keeping in view the method and manner in which the goods are imported. With regard to the non-ferrous metal scrap, the impugned Standing Order No. 7495 dated 13-12-1999 issues direction that "the assessment of virgin as well as all metal scraps appearing in Metal Bulletin shall be done on the basis of average (mean) prices quoted in Metal Bulletin (a journal published from London, U.K.). As Metal Bulletin reflects the F.O.B. prices, element of freight and insurance at appropriate rate shall be added to Metal Bulletin prices to arrive at C.I.F., prices for levy of Customs duty. The other details of the Standing Order which provide detailed guidelines for assessment need be discussed in detail. The Standing Order directs the assessing authorities that for assessment of value of metal scrap prices which are found quoted in Metal Bulletin, i.e., an international journal published from London (U.K.), should be applied and other scraps are to be valued in accordance with another Standing Instruction/Circular dated 9-12-1999. The third impugned Circular on items like polyester chips, acrylic fibres and others also directs the Customs Authorities to take into account the international rates of such items as the basis for assessment of value for Customs duty. In the said Standing Order No. 7514 of 2000 detailed guidelines have been provided for valuation of various items like polyester chips, P.O.Y., P.F.Y., P.C.F., acrylic fibre etc. The principal submission advanced by Mr. Dave and Mr. Munshi, learned Counsel for the petitioners is that the valuation of the goods for the purpose of Customs duty has to be made strictly on the basis of the 'transaction value' disclosed by the importer in accordance with Sec. 14 read with Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (for short 'the Rules'). It is submitted that Rule 3 of the Rules provides method of valuation on the 'transaction value', i.e., price actually paid or payable for the goods. It is contended that the Customs authorities, while assessing the value of the goods for the purpose of Customs duty, discharge quasi-judicial functions and their discretion and power, to assess the value for levy of Customs duty, cannot be regulated, restricted or directed in a particular way, by issuance of Standing Orders by the higher authorities. By issuing the Standing Orders, the Chief Commissioner of Customs, has in fact, encroached upon the power and quasijudicial functions of the assessing Authorities. Such Standing Orders, in the nature of mandates, are outside the powers conferred on the Chief Commissioner of Customs under Sec. 151 A of the Act. It is also submitted that such Standing Orders issued are clearly in contravention of Sec. 14 of the Act and the Rules which elaborately lay down the method of valuation of goods for assessment of Customs duty. Alternatively, on behalf of the petitioners, it is contended that if power to issue such Standing Orders or directions are held to be authorised by provisions of Sec. 151 A of the Act, then the said Section is ultra vires the Constitution, being violative of Art. 14 of the Constitution of India. The valuation of imported goods of the same type and variety are required to be assessed on the basis of the nature of the transaction involved and the price paid or payable on the imported goods. Such assessment has to be strictly made in accordance with Sec. 14 read with the Rules. The impugned Standing Orders are not in accordance with law, as a uniform method of valuation of particular types of goods based only on the international prices declared in international journals could not be prescribed and insisted upon. Goods imported in various freight conditions cannot be subjected to same rate of Customs duty. Strong reliance is placed on the decision of the Supreme Court in the case of B. Rajagopala Naidu v. State Transport Appellate Tribunal, Madras. AIR 1964 SC 1573, Orient Paper Mills Ltd. v. Union of India, AIR 1969 SC 48, Orient Paper Mills v. Union of India, AIR 1970 SC 1498 and Eicher Tractors Limited v. Commissioner of Customs, Mumbai, 2000 (122) ELT 321 (SC).