KIRLOSKAR OIL ENGINES LTD Vs. STATE OF MAHARASTRA

JUDGEMENT

(1.) This is an appeal presented by M/s. Kirloskar Oil Engines Ltd. They claim that the addition of landing charges to the invoice value is incorrect and the c.i.f. invoice value converted at the appropriate rate of exchange itself should be accepted as assessable value. They make it quite clear that this appeal is a test case though they have not yet followed up with similar appeal on their other importations.

(2.) In their original application before the Assistant Collector, the appellants relied upon Section 2(23) of the Customs Act for their contention that landing charges ought not be included in the assessable value arrived at under Section 14. The said section 2(23) actually defines import and not "Place of importation" as indicated by the appellants. Of course what the appellants intend to convey is that since India includes territorial waters of India vide Section 2(27) and since import is complete as soon as the goods are brought into India from a place outside India the landing charges which are incurred after importation are post-importation charges and therefore ought not to be included in the assessable value. I would not say that appellants grounds are irrelevant or incorrect. However they are too simplistic. Import as defined in Section 2(23) as well as 'India' as defined in Section 2(27) are relevant only for determining the chargeability of imported goods to duty in terms of Section 12. However, the value on which such duty should be charged is entirely a matter of Section 14. For that purpose it would not be correct to go by such literal and simplistic interpretation of Section 2(23) and 2(27).

(3.) The inclusion of landing charges to arrive at the assessable value is being done by Indian Customs from almost times immemorial. It is being done to my knowledge from some time earlier than 1935 at least, which is the date of earliest manual instructions that I can remember. The landing charges are paid to such agency as may be approved by the Collector of Customs in terms of Section 45(1). In effect it always means the Port Trust, a corporate local authority established by law made by Parliament. The Port Trust issues a dock scale of rates, for all different services rendered by them to importers, exporters and ships. Being a statutory authority it, in turn, has no authority to levy any dues without due force of law. In fact Port Trust will be included in the definition of 'State' within the meaning of Article 12 of Constitution. We are always in a position to know positively what exactly is the scheme of different rates charged by the Port Trust for different dues levied on importers, exporters or ships. The Port Trust does not levy landing charges on a single flat rate per unit of weight or measurements. It is quite a complicated tariff schedule by itself though not perhaps as complicated as the Customs Tariff, Excise Tariff or Sales Tax Tariff. It would be comparable to either a Shipping Company's tariff for freight charges or a railway tariff. The fact remains that the actual landing charges as levied on different charges, if expressed as percentage of their value, vary within a very wide margin of anywhere between 0.001% to say 1%. Clearance of goods from Customs is always a matter of break-neck speed. The working of the Port Trust Organisation will be thrown in chaos if goods are not cleared with sufficient promptness. It will therefore be an impracticable thing for the Customs to levy the landing charges on the basis of either the actual charges paid or even on the basis of estimate of charges payable on each individual consignment. As it is, the Customs Appraiser has to be an expert on his own Customs Tariff and also has to be an expert on the Central Excise Tariff. He is also required to be an expert on the Import Trade Control Schedule. If on top of it we throw on him an onerous responsibility to be an expert of the Docks scale of rates it would be almost an impossible task as well as a very onerous task. At the same time fact remains that assuming the landing charges properly form part of the assessable value, the legal authority for such addition extends only to the actual landing charges and nothing else.