INDIAN ACRYLICS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) THE question involves in this writ petition relates to charging of Customs Duty on import as well as fixing valuation of the imported articles for the purposes of imposition of customs duty. The petitioner-firm imported about 2000 M. T. acrylonitrile from M/s. B. P. Chemicals, U. S. A. The import was made under the import policy which provided payment of the price in U. S. Dollars after purchasing Exim Scrips. Persons who earlier exported goods were granted Exim Scrips, allowing them import of certain goods. Under the policy decision, the petitioner could purchase such Exim Scrips for making payment of imported material. According to the case of the petitioner when he purchased Exim-scrips, he purchased the same at the rate which was higher than otherwise prevalent. However, when the goods arrived in the Indian Port on April 29, 1992, the Customs officials wanted to fix value of the goods imported by applying different rate of exchange as determined by the Central Government under Section 14 (3) (i) of the Customs Act. Since there was difference in the exchange rate, the petitioner was made to suffer enormously. The allegation of the petitioner is that under the Import Policy, the Central Government had promised and allowed the petitioner to import goods and such promise would be fulfilled only when the petitioner received goods by applying same rate of exchange. On notice of motion having been issued, written statement has been filed by the respondents controverting the allegations of the petitioner inter alia asserting that the Central Government issued Notification No. 25/92-Cus. (NT) dated March 27,1992 fixing the conversion rates. When the goods were received at the port on April 29,1992, the aforesaid notification was prevalent and the value of the imported goods was to be determined as per such rates and the customs duty to be charged under Section 3 read with Section 14 of the Customs Act accordingly.

(2.) SHRI R. S. Mittal, Senior Advocate appearing on behalf of the petitioner has argued that different valuation for the imported goods could not be determined by the Customs Authorities for the purposes of charging customs duty. The value has to be fixed as was paid by the petitioner to the foreign sellers. In order to appreciate this argument, brief reference of the provision of the Act is necessary. Section 14 of the Customs Act reads as under :

(3.) AT the outset, it may be pointed out that provisions of Customs Act which are subject matter of interpretation in this case have nothing to do with the Import or Export Policy of the Central Government. The contention of the learned counsel for the petitioner is that the Central Government is estopped from withdrawing the concession which was in the form of a promise allowing the petitioner to purchase Exim Scrips and import goods at a particular rate of exchange. There is no question of promissory estoppel arising out of the facts of the present case. The petitioner in fact has imported the goods under the import policy by making payments in U. S. Dollars by making purchase of Exim Scrips. It is immaterial for the purpose of fixation of value of the imported goods for the purpose of charging customs duty. At what rate the petitioner purchased such Exim Scrips or otherwise made payment to the foreign sellers is not material. The value of the imported goods for the purpose of charging customs duty is to be determined under the provision of the Act. Reading of Section 14 (1) reproduced above would show that the customs is chargeable On any goods by reference to their value and the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold. Rule 3 of the [act] further makes it clear that the value of the imported goods would be the transaction value and the transaction as defined in Rule 4 is the value" of the imported goods which was actually paid or payable. Since, in the present case value has already been paid in U. S. Dollars that would be the value determined under the rules and Section 14 referred to above. The controversy is with respect to the interpretation of Section 14 (3) of the Act as reproduced above for the purpose of charging customs duty and determining the value of the imported goods what rate of exchange is to be applied. At this stage, it may further be stated that the actual value paid in U. S. Dollars is already known. Under Sub-section (3) of Section 14 the rate of exchange is to be applied. If it is so determined by the Central Government, Section 14 (3) (i) would apply and if it is not so determined then rate is to be ascertained as provided under Section 14 (3) (ii) in such manner as the Central Government may direct for the conversion of Indian currency into foreign currency or foreign currency into "indian currency". These terms are ascribed the meaning as defined under the Foreign Regulation Act. Such rate under the aforesaid Act is fixed by the Reserve Bank of India as stated. The contention of the learned Counsel for the petitioner is that the rate of exchange as fixed by the Central Government under Section 14 (3) (i) is arbitrary as the same is different from the rate of exchange as fixed by Reserve Bank of India. Taking the case of the petitioner, it is stated that by applying the rate of exchange as determined by the Central Government under Section 14 (3) (i) as per notification (Annexure P4) the value of the articles imported by the petitioner would enormously be increased with the result excessive duty would be charged. Such figure may run into lacs. There is no merit in this contention. By ascertaining the value, it cannot be said that determination of rate of exchange by Central Government under Section 14 (3) (i) per se would be arbitrary. The Central Government has to fix the rate of exchange under the provisions of the Customs Act not for one person or for particular item. Such rate of exchange is to be applicable to all and different articles imported. In the absence of any other material brought on the record, it cannot be held that the determination of rate of exchange by the Central Government under Section 14 (3) (i) is arbitrary.