Hind
Plastics Vs. Collector of Customs [1994] INSC 237 (13 April 1994)
Jeevan
Reddy, B.P. (J) Jeevan Reddy, B.P. (J) Hansaria B.L. (J)
CITATION:
1994 SCC (5) 167 JT 1994 (3) 258 1994 SCALE (2)575
ACT:
HEAD NOTE:
The
Judgment of the court was delivered by By B.P Jeevan Reddy, J.--- In Civil
Appeal No. of 1985 1.The appellant- firm Hind Plastics, is engaged in the
manufacture of certain plastic goods. For that purpose, it has been importing
PVC from time to time, Paying the customs duty and additional duty leviable
thereon. In the year 1983, it filed a writ petition in the Bombay High Court
being WP (C) No. 906 of 1983 stating that it had been paying the duty on
packages ( in which the PVC was imported ), being aware of the Notification No.
No. 184 CUS dated 2-8-1967 providing for their exemption from
their exemption from duty/additional duty. It complained that though the
respondents were aware of the notification and ought to have given the benefit
there under to the appellant, they did not do so. It prayed for refund of the
amount of customs duty and additional duty relatable to packages, besides
asking for a direction restraining the customs authorities from levying the
duty/additional duty on PVC which may be imported by it thereafter. It appears,
a large number of writ petitions raising similar contentions were filed in the
Bombay High Court, all of which have been heard and dismissed by a Division
Bench. The Division Bench held that the notification does not provide for
deduction of the value of packages from the invoice value of imported PVC and
that the notification merely saves the duty/additional duty leviable separately
on the said packages, which too are deemed in law to have been imported. The
correctness of the said view is questioned in this appeal.
2.
Notification No. 184 dated 2-8-1976 has
been issued by the Central Government under Section 25 of the Customs Act.
It is
necessary to read the notification in full:
"184176-Cus
dt. 2-8-1976 G.S.R. 553(E) In exercise of the powers conferred by sub- section
(1) of Section 25 of the Customs Act, 1962 (52 of 1962), the Central
Government, being satisfied that it is necessary in the public interest so to
do, hereby directs that where any goods are imported into, or exported from,
India, in packages or containers or the like, such packages or containers or
the like shall be exempt- 170 (i)from the whole of the duty of customs leviable
thereon under the First or the Second Schedule to the Customs Tariff Act, 1975
(51 of 1975), as the case may be, and (ii)from the whole of the additional duty
leviable thereon under Section 3 of the Customs Tariff Act, 1975 (51 of 1975),
in the case of imports:
Provided
that- (a)the value of the packages or containers or the like in which the goods
are packed is included in the value for which the goods contained therein have
been invoiced;
(b)the
goods are not packed in packages or containers or the like which are of a
permanent character and accordingly strong enough to be suitable for repeated
use; and (c)the packages or containers or the like in which the goods are
packed are such as are normally used in the trade for packing such goods."
3.
This notification is preceded by similar notifications, which are found
referred to in the judgment of Pendse, J. in Writ Petition No. 1099 of 1978 (Kirloskar
Cummins v. Union of India1) delivered on 14/15-10-1981. The first notification
is No. 114 dated 25-11-1967. The notification provided that
where the goods are imported into India packed in any material, the material in
which the goods are so packed would be exempt from the whole of the duty of
customs including countervailing duty provided that the goods are packed in
materials normally used in trade for packing such goods and the packing is not
suitable for repeated use. In other words, the conditions prescribed in
Notification No.
114
broadly corresponded to clauses (b) and (c) of the proviso in Notification No.
184 of 1976 concerned herein.
On 10-6-1972, a notification was issued in supersession of
Notification No. 114, dated 25-11-1967
wherein an additional condition was provided to the effect that the value of
the packing material should have been included in the invoice value of the
goods imported. It is evident that the additional condition imposed by this
notification corresponded to clause (a) of the proviso in Notification No. 184.
Then came the Notification No. 184 of 1976 with the aforesaid three conditions.
4. Now
what does Notification No. 184 of 1976 say? Insofar as it is relevant it says:
(1) where any goods are imported into India in packages (we are using the
expression 'packages' as short-form of the words 'packages, containers or the
like') (2) such packages shall be exempt from the whole of the customs duty as
well as the additional duty:
provided
(a) the value of the packages in which the goods are packed is included in the
invoice value of the imported goods; (b) the packages are not of a permanent
character and not strong enough to be suitable for repeated use; (c) the
packages are such as are normally used in the trade for packing such goods. It
is evident that all 1 (1982) 10 ELT 29 (Bom) 171 the aforesaid three conditions
mentioned in clauses (a), (b) and (c) of the proviso have to be satisfied to
avail of the benefit of exemption provided by the notification.
5. Now
in the case of imports made by the appellant the value of packages was included
in the invoice value of the PVC imported. The invoice did not separately
mention the value of the PVC and the value of the packages. The authorities
levied customs duty and additional duty on the total invoice value at the rate
applicable to PVC.
6. On
the above facts, the appellant's case is this: the invoice value includes the
value of packages; the packages are not of a permanent character and are not
strong enough to be suitable for repeated use; the packages are also such as
are normally used in the trade for packing PVC; the appellant thus satisfies
all the conditions prescribed in Notification No. 184 and, therefore, he is
entitled to the reliefs asked for in the writ petition. The Revenue's case on
the other hand (as set out in the common counter- affidavit filed in the Bombay
High Court) is this the CIF price of the goods imported means cost + insurance
+ freight; the word 'cost' includes and does not exclude the cost of packing;
the packing materials like any other goods are subject to ITC restrictions and
are leviable to duty at the appropriate rate; "in order to avoid separate
assessment in each and every importation, the normal trade packing cost is included
in assessable value of the goods which is charged to duty and as such no
deduction in respect of the value of packing material is admissible"; the
appellant did not claim any relief in respect of the value of the packages in
terms of the said notification in the Bills of Entry filed by him; the
authorities, therefore, had no opportunity to examine the claim now made by the
appellants long after the goods have been cleared; the packages are not
available for determining whether they satisfy the requirements of Notification
No. 184; the notification does not contemplate or permit deduction of any
portion of the invoice value of the imported goods; it merely saves the
packages from a separate levy, provided of course that they satisfy the
requirements prescribed.
7.
Before we proceed to deal with the merits of the contentions urged by the
counsel on both sides, it would be appropriate to briefly refer to the
circumstances in which the batch of writ petitions (including the writ petition
filed by the appellant) came to be referred to a Division Bench in the Bombay
High Court. On 14/15-10-1981 a learned Single Judge of the Bombay High Court, Pendse,
J. allowed Writ Petition No. 1099 of 1978 filed by Kirloskar Cummins Limited.
The learned Judge considered the notification dated 10-6-1972 and not the
Notification No. 184 of 1976.
In the
invoice relating to the imports concerned therein, the value of the goods and
the value of the packing charges were separately shown. The value of the
packages was stated to be 4 per cent of the value of the machinery packed
therein. Pendse, J. held that no duty/additional duty can be levied on the said
value of packages inasmuch as they satisfied all the three requirements
prescribed in the notification dated 10-6-1972. The learned Judge reiterated the
said view in two other subsequent writ petitions being WP No. 1641 of 172 1982
disposed of on 10-10-1983 (Finolex Pipes (P) Ltd. v. Union of India2) and WP
No. 2053 of 1982 disposed of on 16-4-1984 (Milton Plastics v. Collector of Customs). The present batch of writ
petitions (including the writ petition filed by the appellants herein),
however, came up before another learned Judge, Smt Sujata V. Manohar, J. The
learned Judge disagreed with the view taken and the interpretation placed by Pendse,
J. in the aforesaid decisions and referred the matter to a Division Bench. The
Division Bench agreed with the view expressed by Smt Sujata Manohar, J. and
dismissed the writ petitions.
8. We
have heard the learned counsel for both the parties.
While Mr
Adheru, learned counsel for the appellant, commended the view taken by Pendse,
J., Shri Vellapalli, learned counsel for the Revenue, commended for our
acceptance of the view taken by the Division Bench and Smt Sujata Manohar, J. -
which is indeed the stand taken by the Revenue in its counter-affidavit.
9. The
expression 'value' is defined by clause (41) in Section 2 of the Customs Act in
the following words: " 'value' in relation to any goods, means the value
thereof determined in accordance with the provisions of sub-section (1) of
Section 14." Section 14 prescribes the manner in which the value of the
imported goods is to be determined.
It
reads:
"14.
(1) For the purposes of the Customs Tariff Act, 1975, or any other law for the
time being in force whereunder a duty of customs is chargeable on any goods by
reference to their value, the value of such goods shall be deemed to be- (a)the
price at which such or like goods are ordinarily sold, or offered for sale, for
delivery at the time and place of importation or exportation, as the case may
be, in the course of international trade, where the seller and the buyer have
no interest in the business of each other and the price is the sole
consideration for the sale or offer for sale:
Provided
that such price shall be calculated with reference to the rate of exchange as
in force on the date on which a bill of entry is presented under Section 46, or
a shipping bill or bill of export, as the case may be, is presented under
Section 50;
(b)where
such price is not ascertainable, the nearest ascertainable equivalent thereof
determined in accordance with the rules made in this behalf.
(2)Notwithstanding
anything contained in sub-section (1), if the Central Government is satisfied
that it is necessary or expedient so to do, it may, by notification in the
Official Gazette, fix tariff values for any class of imported goods or export
goods, having regard to the trend of value of such or like goods, and where any
such tariff values are fixed, the duty shall be chargeable with reference to
such tariff value." 2 (1990) 47 ELT 316 (Bom) 173 [Sub-section (3) omitted
as unnecessary.] [Clause (b) in sub-section (1) has been omitted by Act 27 of
1988 with effect from 16-8-1988. We are, however, concerned with
the position obtaining prior to the said omission.] 10.Sub-section (1) of
Section 14 prescribed two bases for determining the value, viz., (a) the price
at which such or like goods are ordinarily sold or offered for sale, for
delivery at the time and place of importation in the course of international
trade, provided the seller and buyer have no interest in the business of each
other and the price is the sole consideration for the sale/offer for sale; and
(b) where the price cannot be ascertained under clause (a), the nearest
ascertainable equivalent thereof determined in accordance with the rules made
in that behalf. Sub-section (2) empowers the Central Government to notify, if
it is satisfied that it is necessary or expedient so to do, the tariff values
for any class of imported goods having regard to relevant circumstances. In
such a case the duty has to be charged with reference to such tariff value.
This power under sub-section (2) is dehors the provision in sub-section (1).
Sub-section (4) of Section 46 requires that the importer while presenting a
Bill of Entry shall also produce the invoice, if any, relating to the imported
goods before the proper officer in proof of the truth of the contents of Bill
of Entry. Section 25 empowers the Central Government to "exempt generally
either absolutely or subject to such conditions (to be fulfilled before or
after clearance), as may be specified in the notification goods of any
specified description from the whole or any part of duty of customs leviable
thereon", if it is satisfied that it is necessary in the public interest
so to do. The nature and scope of the power under Section 25 has been dealt
with by this Court in Union of India v. Jalyan Udyog3 and need not be set out
in detail over again here, inasmuch as the question at issue herein is not with
respect to the scope of the power under Section 25 but one relating to the
proper interpretation of Notification No. 184 dated 2-8-1976.
11.Clauses
(b) and (c) of the proviso in the said notification do not present any difficulty.
They are really questions of fact with respect to which proper officer must be
satisfied at the relevant time. In the present case, no doubt, even these
requirements cannot be said to have been satisfied. The appellant did not raise
the question of applicability of the notification at the time of import of the
goods but long after the event. The respondent authorities have rightly taken
the objection that inasmuch as the packages are not now available, it cannot
now be said whether they did indeed satisfy the requirements of clauses (b) and
(c) of the proviso or not. For the moment, however, we shall keep these two
clauses aside and proceed to deal with the main issue which turns on the
meaning and purport of clause (a) of the proviso.
12.The
appellants' Contention looks appealing at the first sight and we were indeed
attracted by it. The submission is this: Where the goods are 3 (1994) 1 SCC 318
174 imported in a package, the value of the imported goods does include the
value of the package as well, whatever may be the value. It is immaterial
whether the value of the package is separately mentioned in the invoice or not
since it cannot be denied that every package has some or other value. In other
words, clause (a) of the proviso is satisfied in every case where the goods are
imported in packages. The only verification to be done by the proper officer in
such a case is to ascertain whether clauses (b) and (c) of the proviso are
satisfied. If they are satisfied, no duty/additional duty can be levied on the
value of the packages. The value of the packages, whatever that may be, must
have to be deducted from the invoice value and duty/additional duty levied only
upon the value of the contents proper in this case on the net value of the PVC
(excluding the value of packages).
13.It
would immediately be seen that this interpretation has the effect of rendering
clause (a) of the proviso otiose and superfluous, since it would merely be
stating the obvious. That the value of packages would be included in the
invoice, value is an obvious fact, whether it is separately shown or not. If
so, why was it made a condition the first condition to be satisfied for
availing the benefit of exemption. It may be recalled that this condition was
not there in the first notification dated 25- 11-1967. It was introduced for the first
time in the notification dated 10-6-1972 and
reiterated in Notification No. 184 issued in the year 1976. The said fact
militates against an interpretation which renders it superfluous and of no significance.
It cannot be presumed that the Central Government introduced the said clause
without any meaning, significance or purpose. The invoice value of all imported
goods which are imported in packages, necessarily includes the value of
packages whether it is shown separately as such or not. This is an
incontrovertible and universal fact. If so, the question arises, what does the
said clause mean and what does it signify? The answer according to the Revenue
is this: When Section 14(1) speaks of "the price at which such or like
goods are ordinarily sold, or offered for sale, for delivery at the time and
place of importation in the course of international trade", it means the
goods as they are ordinarily sold; PVC cannot be sold except in packages; delivery
of PVC at the place of importation means delivery in packages. The invoice
value of the imported PVC includes several factors including the cost of
packages; it includes freight, it includes the labour charges for packing and
transporting and many other items; the duty/additional duty is levied upon such
invoice value (which inter alia includes the cost of packaging), at the rate
prescribed for PVC;
while
levying or calculating the duty/additional duty, the invoice value is not split
up into two components, viz., value of PVC proper and value of packages as such
and the duty/additional duty is not separately calculated applying the rates
applicable to PVC and packages separately; levy of duty/additional duty is on
the entire invoice value at the rate applicable to the, PVC; for the purpose of
valuation and rate, it is one goods and not two; but in law there is also an
import of packages upon which the State is entitled to levy duty/additional
duty under the appropriate entry and at the appropriate rate; it is this levy
which is exempted by the 175 exemption notification; the notification does not
contemplate or provide either expressly or by necessary intendment for the
value of the packages being deducted from out of the invoice value and
exempting them from duty/additional duty; there are no such words in the
notification; if that were really the intention, it would have said so
expressly more particularly when such an interpretation has the effect of
modifying the value of imported goods determined under and in accordance with
Section 14. This interpretation of Revenue has been accepted and affirmed by
the Division Bench of the Bombay High Court.
14.According
to the assessee, however, the difficulty with the above reasoning is that it is
premised upon the assumption that the law provides for double impost of
duty/additional duty on packages one as part of PVC at the rate applicable to
PVC and the other as packages independently at the rate applicable to packages
and then bring in the notification to exempt the second levy, i.e., the
independent levy on the value of packages at the rate applicable to packages.
Let us take another situation to test the correctness of the Revenue's theory,
says the assessee: Take a case where PVC is imported in steel containers,
permanent in character and suitable for repeated use. In such a case,
duty/additional duty will first be charged on the invoice value of the PVC
(which includes the value of the steel containers) at the rate applicable to
PVC and again another levy of duty/additional duty on the value of steel
containers at the rate applicable to steel containers, inasmuch the containers
do not satisfy clauses (b) and (c) of the proviso in the notification. This
could never have been contemplated by law, says the assessees' counsel. Of
course, the counsel for the Revenue says that there is nothing abhorrent or
unusual in the above situation and that it is as it ought to be. The learned
counsel refers to the case of oil being imported in stainless steel containers,
where the value of the containers is several times the value of the oil
contained therein. Such a situation can be met only if the Revenue's
interpretation is accepted, says the learned counsel for the Revenue.
15.After
giving anxious consideration to the rival points of view, we are inclined to
agree with the view taken by the Division Bench of the Bombay High Court. It
may, however, be that taxing of packing material twice, once at the rate
applicable to the contents and then at the rate applicable to container, which
would be the result if levy of duty on packing material were not to be
exempted, may appear harsh, but it cannot be said to be illegal. What should be
taxed is a matter not to be decided by the courts, but by appropriate
instrumentalities or functionaries. The opposite viewpoint adopted by Pendse,
J. (in his orders aforementioned) has the effect of deducting the value of
packages from the value of the imported goods, i.e., PVC in this case, which is
not provided either by the Act or by the notification. Such an approach
presupposes that while levying duty, proper officer will separate the values of
the contents and the packages and levy the duty separately at the rates
applicable thereto. The Act however does not contemplate such a course and that
does not also appear to be the practice.
176
There appears another difficulty in the way of accepting the assessee's
contention: As stated above, duty/additional duty is charged on the entire
invoice value of PVC (imported goods) at the rate applicable to PVC; now if the
assessee's contention is accepted, it means that the proper officer should
separate the value of packages, calculate the duty/additional duty leviable
thereon at the rate applicable to packages separately and give deduction
(exemption) of such amount from the total amount; this 'two-rates' theory is
inconsistent with the rule of valuation in Section 14(1).
As a
matter of fact, in the case of imports of PVC concerned herein, the value of
the packages was not separately shown.
Duty/additional
duty was levied upon the total invoice value at the rate applicable to PVC. In
sum, we must say while there is force in both the viewpoints, we are inclined,
on a balance of several factors, to accept the interpretation placed by the
Revenue. The notification is designed to exempt levy of duty/additional duty on
the packages separately, since in law there is also an import of packages and
such import too is subject to ITC restrictions.
16.For
the same reasons, the decision of Andhra Pradesh High Court in Barium Chemicals
Ltd. v. Union of India4 has to be held to be wrongly decided insofar as it goes
against the decision herein.
17.In
this connection, it is well to remind ourselves that every instrument,
statutory or otherwise, has to be so interpreted as to accord with the
intention of its maker having regard to the language used. True, one cannot
ignore the actual words used and go after the supposed intention of the maker
as pointed out in Hansraj Gordhandas v. H.H. Dave, Assistant Collector of
Central Excise and Customs5 since that would amount to entering the arena of
speculation but all the same the principle is unexceptionable that whether it
is statute, statutory instrument or an ordinary instrument, the interpretation
placed has to accord with the intention of the maker as evidenced by the
words/language used. The decision in Hansraj Gordhandas5 does not lay down any
contrary proposition.
18.We
are, therefore, of the opinion that the interpretation placed by the Division
Bench of the Bombay High Court on Notification No. 184 is the correct one and
warrants no interference at our hands. The appeal is accordingly dismissed. No
costs.
In
Writ Petition (Civil) Nos. 227, 312, 229, 228, 220, 215 and 219 of 1988
19.These writ petitions are filed under Article 32 and the point raised is the
same as the one raised in the Civil Appeal No. 2589 of 1985 (see above). Since
we have dismissed the civil appeal, these writ petitions must also fail. We are
also of the opinion that the writ petitions filed under Article 32 are
misconceived and are not maintainable in law. The controversy is about the
interpretation of a notification issued under Rule 8 of the Central Excise
Rules. In such a case it cannot be said that the petitioners are seeking to
enforce any of the fundamental rights guaranteed to them by Part III of the 4
(1988) 37 ELT 327 (A.P.) 5 (1969) 2 SCR 253: AIR 1970 SC 755 177 Constitution. (Ujjam
Bai v. State of Up.6). The mere fact that the Bombay High Court has taken the
view contrary to the petitioners' contention is no ground for skipping that
Court or for approaching this Court directly under Article
32. It
may also be noticed that these writ petitions were filed long after the event,
i.e., after the import. Today, the authorities do not have any means to verify
whether the packages concerned in each writ petition and each consignment
satisfy the requirements of the proviso in the notification. The writ petitions
are accordingly dismissed with costs. The costs of respondents are assessed as Rs
2000 in each writ petition.
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