COLLECTOR OF CUSTOMS MADRAS Vs. TUNGABHADRA FIBRES LIMITED

JUDGEMENT

(1.) THESE appeals have been preferred by the Collector of Customs and two others and M/s. Thungabhadra Fibres Ltd., Bangalore (hereinafter referred to as 'the company'), against the order in WP No. 10035 of 1983, in relation to that part of the order adverse to the appellants in these appeals. In W.P. No. 10035 of 1983, filed by the company, it prayed for the issue of a writ ofmandamusdirecting the appellants in W.A.No. 1470 of 1991, to allow the company to clear the goods covered by the Bills of Entry for warehousing Nos. 1506 and 1507 dated 15-6-1981, on payment of forty per cent as the duty leviable without enhancement of twenty per cent as provided in the Finance Act of 1983 (earlier Finance Bill of 1983) and without any claim for interest.

(2.) SHORTLY stated, the circumstances leading to the filing of the writ petition by the company, as could be gathered from the affidavit and counter affidavit filed in the writ petition, are as under. The company; pursuant to import licences granted to it on 1-9-1979 and 3-9-1979, imported two consignments of Spinnerettes and the consignments so imported and valued at Indian currency at Rs. 41, 91, 408 and Rs. 41, 35, 629 respectively, were airlifted and received on 27-5-1981.On the landing of the said consignments, the clearing agents of the company filed two Bills of Entry, Nos. 1506 and 1507 dated 15-6-1981 for warehousing the consignments under Sec. 60 of the Customs Act (hereinafter referred to as 'the Act'). The Bills of Entry so filed were assessed to duty under chapter Heading 84.66 of the Customs Tariff Act, 1975, at the standard rate of 40% basic duty plus 5% auxiliary duty under the Finance Act, 1981, which were the rates prevailing on the date and the assessment was done at Rs. 18, 86, 133.80 and Rs. 18, 61, 055.05 respectively for the purpose of determining the amount of duty for execution of warehouse Bond as per Sec. 59 of the Act. On the execution of the Bonds (Nos. 4467 and 4468 of 1981, dated 14-9-1991) by the company, the goods imported were bonded in the warehouse on 14-9-1991, without payment of duty and the imported goods were allowed to remain in the warehouse on 14-9-1981 to 13-9-1982. On 4-9-1982, the Customs House agent of the company sought an extension of time for the consignments to remain in the warehouse for a further period of six months from the date of expiry of the two bonds from 13-9-1982 and by letter dated 22-10-1982, time was extended by a further period of six months, i.e., upto 13-3-1983. Thereafter, a notice was sent to the company informing that if the goods were not cleared before 13-3-1983, recourse to Sec. 72 of the Act will be had without further reference to the company. By a telegram dated 16-3-1983 and letter dated 17-3-1983, the clearing agent of the company asked for further extension of time by three months and on 21-3-1983, the Collector of Customs directed the company to clear on payment of duty, the goods involving a duty of Rs. 15/- lakhs stating that the remaining goods will be allowed to be bonded for three months, and this was also communicated to the company by letter dated 23-3-1983. On 8-4-1983, the clearing agent of the company filed an Ex-bond clearance Bill of Entry, No. 922/8-4-1983, for clearance of the part of the goods valued at Rs. 24, 96, 725/- for home consumption under Sec. 68 of the Act. On that, the Bill of Entry was assessed to 40% basic duty and auxiliary duty at 20% on the basis of the provisions of the Finance Act of 1983, read with Notification No. 61/83 dated 1-3-1983 and the company paid a sum of Rs. 14, 98, 000.80 towards duty on 28-4-1983, but did not clear that part of the consignment. The company on 30-3-1983, informed the Assistant Collector of Customs that though the duty towards part of the consignments had been paid, it was not able to seggregate the spares in respect of which the amount had been paid as duty and take delivery and requested that the company may be permitted to clear that and also the balance of the consignments on payment of the balance of duty, which had remained unpaid and requested for extension of Bonding period by three months. By letter dated 16-6-1983, the company was informed that it should clear the whole consignments on payment of duty and also with interest including that part of the consignments for which approximately Rs. 15/- lakhs had been paid as duty and that the balance of the goods would be allowed to remain in the warehouse; till 14-6-1983, but not the goods on which duty had been paid. Again, on 31-7-1983, the company sought extension of bonding facilities for a further period of three months from 14-6-1983 to 14-9-1983 and that was granted by the Assistant Collector by his letter dated 29-8-1983. However, the company did not choose to clear the goods before 14-9-1983 and though the company informed that on 6-10-1983 the goods will be cleared, that was not done, which led to a communication from the Assistant Collector of customs dated 9-11-1983 to the effect that action under Sec. 72 of the Act would be taken. It was at this stage, the company approached this court under Art. 226 of the Constitution praying for the relief mentioned earlier.3In the affidavit filed in support of the writ petition, the company put forward the plea that the auxiliary duty at 20% (there being no dispute regarding the basic duty of 40%) cannot be imposed, as the duty as per the value assessed at the time of the Bills of Entry for warehousing, should alone be recovered and the provisions of the Finance Act of 1983, could not be called in aid to impose 20% auxiliary duty. In addition, the company also claimed that no interest can be levied for the period prior to 14-9-1983 and interest on a sum of Rs. 14, 99, 033.80 paid by the company on 23-4-1983, could not be levied.

(3.) CONSIDERING the stand thus taken by the company and 'the customs' authorities, the learned Judge took the view that when the goods landed, a Bill of Entry for deposit in the bonded warehouse, was filed on 15-6-1981 and the duty was also fixed and the goods had been entered for home consumption by presenting the Bills of Entry, the duty as could be levied on that date alone, was payable as the import must be taken to have ended under Sec. 15(1)(a) of the Act and thereafter, there is no right or jurisdiction to claim any enhanced duty taking advantage of the enhanced rate of auxiliary duty on account of the provisions of the Finance Act, 1983. In so far as the levy of interest at 6% from 14-9-1983 to 28-11-1983 on the entire amount of duty, without decucting Rs. 14, 98, 033.80 paid by the company on 23-4-1983, is concerned, the learned judge held that the interest charged was more for purposes of the overstay of the goods in the warehouse and as the company had not removed the goods, though a part payment of the duty had been made that would not enable the company to claim that it was not liable to pay interest on the total duty payable. In that view, it was also further held that under Sec. 59 of the Act, the liability to pay interest is co-extensive with the liability to pay bond-rent with the exception that the calculation and demand of interest could only be for the period of the delay in clearance. Holding that there was no justification whatever, for the refusal of the company to pay interest the learned Judge allowed the writ petition in part, in so far as the enhanced auxiliary duty was concerned and rejected the prayer in the writ petition for regarding interest. Aggrieved by this the Collector of Customs, and two others have preferred W.A. No. 1470 of 1991, in so far as it was held that enchanced auxiliary duty cannot be levied and collected, while the company has come forward with W.A. No. 917 of 1992, in so far as its contention regarding payment of interest was not accepted.