Prakash Cotton Mills (P) Ltd. Vs. B.
Sen & Ors  INSC 19 (25 January 1979)
CITATION: 1979 AIR 675 1979 SCR (2)1147 1979
SCC (2) 174
Customs Act, 1962 (52 of 1962) Ss. 14 &
15-Scope of- Goods imported and stored in warehouse-Section amended increasing
the rate of duty-Levy of duty whether should be on the basis when goods were
warehoused or when cleared.
As a result of devaluation of Indian Currency
in June, 1966, Ss. 14 & 15 of the Customs Act were amended by the Customs
(Amendment) Ordinance, 1966-which was later replaced by an Act-with effect from
July 7, 1966. Section 15(1) provides that the rate of duty, rate of exchange
and tariff valuation applicable to any imported goods shall be the rate and
valuation in force......... (b) in the case of goods cleared from a warehouse
under s. 68, on the date on which the goods were actually removed from the
The appellant stored on December 22, 1965 in
the Customs warehouse, goods imported by him under a licence, and cleared them
on various dates between September 1, 1966 and February 20, 1967. Under
protest, they paid customs duty at the enhanced rates in accordance with the
amended provisions. Later, they claimed rebate alleging that since the
consignments had been received, stored and assessed to duty much before the
promulgation of the Ordinance, they were liable to pay duty at the rate
prevailing on the date of ware housing.
Their appeals and revision were unsuccessful.
In appeal to this Court it was contended that
the material change in s. 15 being only the substitution of the words "the
rate of duty, rate of exchange" for the words "the rate of duty"
the customs authorities were not entitled to take into account the new rate of
exchange at the appreciated value of currency in respect of the consignments
stored in the warehouse prior to the coming into force of the Ordinance.
Dismissing the appeal,
HELD: The customs authorities were right in
taking the view that the rate of duty applicable to the imported goods should
be determined according to the law prevalent on the date they were actually
removed from the warehouse. Section 15(1)(b) clearly requires that the rate of
duty, rate of exchange and tariff valuation applicable to any imported goods
shall be the rate and valuation in force on the date on which goods are
actually removed from the warehouse.
Under s. 49 an importer may apply to the
Assistant Collector of Customs for permission to store the imported goods in a
warehouse pending their clearance and he may be permitted to do so; and s. 68
provides that an importer of any warehoused goods may clear them if the import
duty leviable on them has been paid. That is why clause (b) of sub-section (1)
15 makes a reference to s. 68. [1146D,
1145H-1146C] 1143 In the instant case the goods were removed from the warehouse
after the Ordinance came into force on July 7, 1966. [1146D]
CIVIL APPELLATE JURISDICTION: Civil Appeal
Nos. 1992- 1997 and 2219 of 1969.
Appeals by Special Leave from order dated
16-1-69 and 19-3-69 of the Govt. of India, Min. of Finance Dept. of Revenue in
Orders Nos. 8637-8642/68 and 1408/69.
Y. S. Chitale, J. B. Dadachanji and D. N.
Misra for the Appellant in all appeals.
S. Markandeya and Girish Chandra for the
Respondents in all the appeals.
The Judgment of the Court was delivered by
SHINGHAL J. These appeals by special leave arise out of an order of the Central
Government dated January 16, 1969 by which six revisional applications of the
appellants were dismissed, and a similar order dated March 19, 1969, in the
remaining case. As the basic facts and the law governing them are quite
similar, it will be sufficient to deal with the common point in controversy
before us on the basis of the admitted facts, and to dispose of the appeals
The appellants obtainted licences for the
import of 102 cases of 3,000 Kgs. of nylon yarn. The yarn was shipped to Bombay
on the basis of a letter of credit in favour of the foreign suppliers. When the
shipment arrived, the appellants received the bill of lading and other
documents of title from the bankers on or about August 23, 1965, and paid for
the same. They lodged the bill of entry the same day, and it has been claimed
that the goods were assessed for duty by the customs authorities at a certain
figure. The appellants stored the goods in the warehouse on December 22, 1965.
They cleared 32 cases for "home" consumption on May 10, 1966, and
there is no controversy in regard to it. The currency was devalued on June 6,
1966, and the Customs (Amendment) Ordinance, 1966, was promulgated on July 7,
1966, by which sections 14 and 15 of the Customs Act, hereinafter referred to
as the Act, were amended. The Ordinance was replaced by the Customs (Amendment)
Act, 1966. The appellants cleared 12 cases of the aforesaid consignment on or
about September 1, 1966. Another 12 cases were cleared on October 10, 1966, and
46 cases were cleared in two lots on or about December 30, 1966 and February
20, 1967. Their grievance was that the cases were allowed to be cleared on
payment of "enchanced" duty 1144 according to the amended provisions
of the Act. They paid the duty under protest and applied for refund of the
excess payment on the ground that the amended law was not applicable as the
consignments had been received, stored and assessed to duty before the
promulgation of the Ordinance.
The applications of the appellants for refund
were rejected by the customs authorities, and their appeals were dismissed by
the Appellate Collector of Customs on the ground that the amended sections 14
and 15 of the Act were applicable to the consignments in question. The appellants
filed revision applications before the Central Government, but they were
dismissed by the aforesaid common impugned order dated January 16, 1969. They
have therefore approached this Court for a redress of their grievance.
The facts relating to Civil Appeal No. 2219
of 1969, are quite similar, except that the consignment in that case was of 63
cases of nylon yarn, which were stored in the warehouse on December 14, 1965,
and were cleared on May 25, 1967. In that case also the appellants paid the duty
under the provisions of the amended sections under protest, and unsuccessfully
applied for refund of the socalled excess duty. They failed in their appeals to
the Appellate Collector of Customs and their application for revision was
rejected by the Central Government on March 19, 1969.
It will thus appear that the controversy in
these two sets of cases relates to the short question whether the customs
authorities were justified in applying the rate of duty (to the imported goods
in question) according to the rate prevalent on the date of their actual
removal from the warehouse.
It will be recalled that the Customs
(Amendment) Ordinance, 1966, was promulgated and came into force on July 7,
1966, and was replaced by the Customs (Amendment) Act, 1966. The amendments in
question were by way of substitution of sections 14 and 15 of the Act by the
new sections. It has been argued by Mr. Chitale for the appellants that the
material change was that made in subsection (1) of section 15 of the Act by
substituting the words "The rate of duty, rate of exchange" for the
words "The rate of duty". He has therefore argued that the customs
authorities were not entitled to take the new "rate of exchange", at
the depreciated value of the currency, into consideration in respect of the
consignments in question as they had been shipped to Bombay and stored in the
warehouse before the amended section 15 came into force. The learned counsel
tried to argue that the orders of assessment of the customs duty were also made
before the amendment Ordinance 1145 was promulgated on July 7, 1966, but he did
not pursue that line of argument because he was not in a position to produce
the so-called assessment orders. But, as we shall show, even if it were assumed
that any such order or orders had been made before July 7, 1966, that could not
possibly affect the correct rate of duty applicable to the imported goods.
A reference to sections 14 and 15 of the Act
will show that while section 14 deals with the valuation of goods for purposes
of assessment, it is section 15 which specify the date for determination of the
rate of duty and tariff valuation of imported goods. The amended section reads
as follows,- "15(1) The rate of duty, rate of exchange and tariff
valuation, if any, applicable to any imported goods, shall be the rate and
valuation in force,- (a) in the case of goods entered for home consumption
under section 46, on the date on which a bill of entry in respect of such goods
is presented under that section;
(b) in the case of goods cleared from a
warehouse under section 68, on the date on which the goods are actually removed
from the warehouse;
(c) in the case of any other goods, on the
date of payment of duty:
Provided that if a bill of entry has been
presented before the date of entry inwards of the vessel by which the goods are
imported, the bill of entry shall be deemed to have been presented on the date
of such entry inwards.
(2) The provisions of this section shall not
apply to baggage and goods imported by post.
(3) For the purposes of section 14 and this
section- (a) "rate of exchange" means the rate of exchange determined
by the Central Government for the conversion of Indian currency into foreign
currency or foreign currency into Indian currency;
(b) "foreign currency" and
"Indian currency" have the meanings respectively assigned to them in
the Foreign Exchange Regulation Act, 1947." It is thus the clear
requirement of clause (b) of sub- section (1) of section 15 of the Act that the
rate of duty, rate of exchange and tariff 1146 valuation applicable to any
imported goods shall be the rate and valuation in force on the date on which
the warehoused goods are actually removed from the warehouse. A cross-
reference to section 49 of the Act shows that an importer may apply to the
Assistant Collector of Customs for permission to store the imported goods in a
warehouse pending their clearance, and he may be permitted to do so.
The other relevant provision is that
contained in section 68 of the Act which provides that the importer of any
warehoused goods may clear them for "home consumption" if, inter
alia, the import duty leviable on them has been paid.
That is why clause (b) of sub-section (1) of
section 15 of the Act makes a reference to section 68. It is therefore quite
clear that the rate of duty, rate of exchange and tariff valuation shall be
those in force on the date of actual removal of the warehoused goods from the
As it is not in dispute before us that the
goods, which are the subject matter of the appeals before us, were removed from
the warehouse after the amending Ordinance had come into force on July 7, 1966,
the customs authorities and the Central Government were quite right in taking
the view that the rate of duty applicable to the imported goods had to be
determined according to the law which was prevalent on the date they were
actually removed from the warehouse, namely, the amended sections 14 and 15 of
the Act. There is therefore no force in the argument that the requirement of
the amended section 15 should have been ignored simply because the goods were
imported before it came into force, or that their bills of lading or bills of
entry were lodged before that date.
As we find no force in these appeals, they
are dismissed with costs.
N.V.K. Appeals dismissed.