GOVIND RAM AGGARWAL Vs. COLLECTOR OF CUSTOMS

JUDGEMENT

(1.) Govind Ram Agarwalla, the writ petitioner on 18th December, 1982 placed an order for import of 1000 mt. tonnes of Cold Gormed Sections from sheets which was confirmed by the foreign seller. The petitioner opened a letter of credit in with the Bank of Baroda in respect of the said order. The foreign supplier despatched 760.830 mt. tonnes of Cold Formed Sections from sheets as per vessel S.S. Daryalok on 14th of April, 1983. The foreign supplier issued invoices in respect of the said goods on 14th April, 1983. When the said contract was entered into and the shipments were made the duty was leviable on import of Cold Formed Section from sheets galvanized corrugated was 15% per cent ad valorem under the heading 73.13 of the First Schedule to the Tariff Act read with the notifications. Since the goods whereof were of Spanish origin. The Auxiliary duty on the said imports at the time of entering into the contract and at the time of shipment of the goods was at the rate of 20% per cent ad valorem under the provisions of Section 44 of the Finance Act. In addition thereto countervailing duty was leviable under Section 3 of the Tariff Act read with item 26AA of the First Schedule to the Excise Act. By a notification dated 1st of March 1983 the auxiliary duty in respect of Cold Formed Section from sheets galvanized was enhanced by 5% per cent i.e. from 20% per cent to 25% per cent. By another notification dated 19th May, 1983 the basic duty in respect of galvanized corrugated sheets was enhanced from 30% per cent to 60% per cent. It was the petitioner's case that on 18th of December, 1982 the Central Government made representation to the entire trade industry that the import of the said materials would be entitled to exemption from Auxiliary duty in excess of 20% per cent and countervailing duty in excess of Rs. 850/- plus 10% per cent in metric tonnes. The petitioner Govind Ram Aggarwal acted on the basis of such representation and/or promise of the Govt. of India and entered into the said contract for import of the said materials. By acting on the basis of such representation and/or promises under a bona fide belief and impression that the petitioner would be allowed to clear the goods upon payment of the customs Duty at 15% per cent ad valorem auxiliary duty at 20% per cent ad valorem and countervailing duty at the rate of Rs. 850/- plus 10% per cent per metric tonnes, the petitioner thereby altered its position to its prejudice. The petitioner relying on such representation contracted for importation of the total quantity of 1000 mt. tonnes of Cold Formed Section from sheets galvanized corrugated sheets under the contract dated 18th of December, 1982. But much to his surprise, the Customs Authorities insisted that in respect of the said import covered by the contract dated 18th December, 1982 duties will have to be paid by the petitioner at the increased rates as per the notification dated 1st of March, 1982*, 19th of May, 1983. The Customs Authorities commenced their assessment proceeding on the bills of entry filed by levying the duties at the increased rates. The petitioner contended that the main consideration of levy and collection of customs duty should be the date of importation had started and not the arrival of the goods at the Indian Port and the Customs Authorities are under a bounden duty to make exception of application of enhanced duties and goods when the importers had already entered into firm contracts prior to the issuance of the notification. The petitioners further contended that the duty of clearance of the goods for home consumption or the date of grant of entry to inward vessels could not be the determining factor for the purpose of imposition of customs duties. Apart from that, the petitioner was further aggrieved because lending charges and the charges paid to the Steredors at Ports as also the payments made to the port authorities for the purpose of use of their cranes and winches and other apparatus for the purpose of moving the goods from the wharf are to be paid by the Shipping Company directly to the Port Authorities as that is included in the freight to be charged from the party under C & F contracts. But inspite of that the Customs Authorities insisted on adding a percentage of the value of the goods which ranged around 1% per cent of the value of the goods as loading charges in addition to the C & F value for the purpose of determining assessable value and levying duties of custom. In addition thereto not only the petitioner was required to pay the duty to the customs and lending purpose but to pay the same twice over. The petitioner contended that no customs duty could be levied save and except the valuation at the time of importation. The freight cannot be included as a price of the goods, hence the inclusion of freight element for the purpose of assessment to the value of the goods imported in arbitrary, illegal and not permissible to be added for the purpose of assessment of the valuation of the goods. The petitioner paid insurance charges amounting to Rs. 9,750 to ensure safe arrival of the goods and for security reasons. Such payment towards insurance should not be treated as part of the price for the purpose of determination of the assessable value. Such insurance charges are independent of the price of the goods. Hence inclusion of the said charges towards valuation of the goods was improper. The inclusion of Rs. 62,000/- towards packing charges according to the petitioner was also erroneous inasmuch as the goods were packed in waste sheet wrappers which were normally used in the trade for packing such goods and those were not strong enough or suitable for any further use. The petitioner contended that he imported goods named Cold Formed Section from sheets felt under Chapter 21 of the Import & Export Policy for the year 1982-83. In Appendix D such goods had been specified and/or permitted and/or imported under the Open General Licence. The petitioner contended that Cold Formed Section from sheets is one of the items which could be imported under Open General Licence. But the Customs Authorities contended that the goods imported by the petitioner cannot be imported under the Open General Licence inasmuch as the goods imported by the petitioner was covered under Item 60 of Appendix VIII inasmuch as the Cold Formed Section were corrugated in form and shape. The import of goods by sea did not commence when the ship carrying the goods entered the territorial waters of India. In paragraph 41 of the petition it was stated that the said vessel 'Daryalok' was expected to arrive on 10th June, 1983, hence even before the vessel could arrive at the Port of Calcutta, the petitioner moved this application and obtained an interim order directing the Customs Authorities to allow the clearance of the goods imported by the petitioner upon payment of the rates as indicated in the prayers of the petition.

(2.) Govind Ram Aggarwal sought for redress in this application on three grounds. First of all it was urged that on the principle of Promissory Estoppel the Customs Authorities should be restrained from realising the enhenced rate. Secondly, the dispute was raised by the petitioner with regard to the classification-made in respect of the goods so imported. Lastly, the petitioner was aggrieved inasmuch as while assessing the valuation of the goods, the Customs Authorities sought to include loading, unloading and/or handling charges as also the insurance and other expenses incurred by the importer. The petitioner contended that the assessment of duties should be made on the valuation of the goods given under the agreement by and between the importers and foreign seller. These godds were agreed to be imported on C.I.F. basis. Under the circumstances, inclusion of the other incidental expenses for the purpose of assessment of the valuation is wrongful.

(3.) The petitioner, it was contended by the respondents, had attempted to take advantage of the maximum relief granted under the Import & Export Policy. The goods imported by the petitioner were canalised items, hence could not be cleared under the Open General Licence inasmuch as the said goods fell under Serial No. 60 of Appendix VIII of Import & Export Policy of Govt. of India 1982 to 1983. Galvanized Iron Steel Sheets/Stripes/Coiles plain or corrugated were covered under that item. These goods could only be imported not under the Open General Licence but under specific import Licence. The petitioner was not entitled to import those canalised goods under the Open General Licence. It was only through Steel Authority of India, the Canalising Agency through which such goods could be imported. Any importation of such goods under Open General Licence would amount to un-authorised importation and liable for confiscation under the Customs Act. As per the certificate of origin the goods had been described as prime Galvanized Corrugated Sheets which could only be imported through Steel Authority of India. But in the bills of lading issued by the Scindia Steam Navigation Co. Ltd. goods had been described as prime Galvanized Corrugated Sheets. But the Supplier's invoice wrongly described them as "Prime Cold Formed Section of Sheet Galvanized Corrugated". Hence, there was a discrepancy between what had been stated by the supplier and the goods actually imported. Such certificate had been given to bring the goods under item Appendix to avail the opportunities and facilities of Open General Licence. The Customs Authorities contended that there had been manipulation done to the documents in collusion and connivance between the supplier and the importer. There was no item called Prime Cold Formed Section of Sheet Galvanized Corrugated inasmuch as it combined two irreconciable words "Sheets & Section" under the same heading. Item 73.13 concerned sheets and plates of iron and steel hot rolled or cold rolled. Hence that item applied to sheets. The petitioner has sought for exemption to the extent of 50% per cent on the basis that the goods fell within the exemption Item No. 13. It is curious that the petitioner had described the goods for the purpose of getting exemption under the Customs Act as Galvanized Corrugated Iron & Steel Sheets, but for the purpose of clearance of the goods under the" Open General Licence of the import policy without the necessity of any specific import licence he had described the goods as Cold Formed Sections with an ulterior motive and thereby tried to get the benefit of both the provisions which the petitioner was not entitled to do Corrugated Sheets cannnot be termed as sections. It was the case of the Customs Authorities that the goods so imported fell under Item 60 of Appendix VIII and that being a canalised item except Steel Authority of India no other party could import such goods. The duties leviable in respect of the goods before 8th December, 1982 was different. Subsequently, the rate of duty leviable was changed hence the petitioner could not contend that the goods were liable to be assessed to duty at the rates prevailing at the time of contract with the foreign suppliers inasmuch as Section 15 Sub-section (1) of the Customs Act, 1962 clearly provides under Sub-clause (5) that in case of goods entered for home consumption under Section 46 duty is payable on the date on which the bill of entry in respect of such goods is presented.