M/S. Sneh
Enterprises Vs. Commnr. of Customs, New Delhi [2006] Insc 572 (8
September 2006)
S.B.
Sinha & Dalveer Bhandari S.B. Sinha, J.
Sealed
maintenance free lead acid batteries manufactured in Taiwan for being used in Uninterrupted
Power Supply (UPS) were imported by the appellant at Mumbai on 16.4.2002. The
goods were trans-shipped from Mumbai to Delhi. The Bill of Entry, however, was filed by the appellant with the
customs authorities at Delhi on 22.5.2002.
Anti-dumping
duty, indisputably, can be levied on issuance of a notification by the Central
Government in terms of Section 9A of the Customs Tariff Act, 1975 (for short,
'the Act'). The said provision reads thus :
9.A
"Anti-dumping duty.-
-
Where any
article is exported from any country or territory (hereafter in this section
referred to as the exporting country or territory) to India at less than its
normal value, then, upon the importation of such articles into India, the
Central Government may, by notification in the Official Gazette, impose, -
-
if the articles
is not otherwise chargeable with duty under the provisions of this Act, a duty;
or
-
if the article
is otherwise so chargeable, an additional duty, not exceeding the margin of
dumping in relation to such article;"
The
Central Government, in exercise of its power thereunder, issued a notification
on 22.5.2002 on lead acid batteries, originating in or exported, inter alia8
from Taiwan, Singapore and Hong
Kong. The respondents,
relying on or on the basis of the said notification directed payment of anti-
dumping duty on the said imported goods by the appellant.
The
contention of the appellant, inter alia, is that the said notification dated
22.5.2002 being not retrospective in operation the impugned order was wholly
unsustainable. It was urged that the taxable event having occurred on the day
of importation of goods, i.e., on 16.4.2002, no anti-dumping duty, admittedly
brought in force by reason of the said notification dated 22.5.2002, was
applicable. The said contention of the appellant, however, was rejected by the
respondent, and affirmed by the Customs, Excise and Service Tax Appellate
Tribunal by reason of the impugned order, stating :
"It
is thus settled law that the import is completed only when the goods are to
cross the Customs barriers and that is the time when the import duty has to be
paid and not on the date when goods had landed in India.
Under
Section 9A of the Customs Tariff Act, anti- dumping duty is imposable upon
importation of the goods. The import is completed only when the goods are to
cross the customs barrier. In the present matter on the date of crossing the
customs barrier, the anti-dumping duty was leviable in terms of Notification
No.55/2002- Cus and, therefore, anti-dumping duty under Section 9A of the
Customs Tariff Act is payable by the Appellants.
The
decision of the tribunal in the case of Suja Rubber Industries is not
applicable as it has been passed per incuriam the judgment of the Supreme Court
in Kiran Spinning and Garden Silk Mills. Thus, the ratio of the decision in Fenner
India Ltd., is also not applicable." Mr. P.C. Jain, learned counsel
appearing on behalf of the appellant would submit that in view of the fact that
Section 9A is an enabling provision and the notification thereunder having been
issued on 22.5.2002, the provisions of Section 15A of the Customs Act could not
have been invoked in the instant case, particularly, in view of the fact that
Sub-Section (8) of Section 9A was introduced in the year 2004 by reason of
Finance (No.2) Act, 2004.
Mr.
K.P. Pathak, learned Additional Solicitor General, however, would submit that
in view of the judgment of this Court in Kiran Spinning Mills vs. Collector of
Customs [1993 (113) ELT 753 (S.C.)], the taxable event must be held to be the
day when the goods crossed the customs barrier and not on the day when the
goods landed in India or entered its territorial waters.
Customs
Tariff Act, 1975 was enacted to consolidate and amend the law relating to
custom duties. Section 2 of the said Act provides for the rates at which the
custom duty should be levied under the Customs Act, 1962 as specified in the
First and Second Schedules. Imposition of anti- dumping duty, however, is not a
part of the duty, which can be levied under the Customs Act.
Customs
Duties under the Customs Act would include additional duty under the Customs
Tariff Act. Additional duty can be levied in terms of Section 3 of the said
Act. For computation of additional duty, in terms of Sub-Section (6) of Section
3, the provisions of the Customs Act, 1962 and the rules and regulations made thereunder,
including those relating to drawbacks, refunds and exemption from duties, shall
so far as may be, apply to the duty chargeable under the said section shall
apply as they apply in relation to the duties leviable under that Act.
Sub-Section (6) of Section 3 of 1975 Act, therefore, provides for incorporation
by reference the provisions of the Customs Act, 1962 and the rules and
regulations made thereunder, as applicable in relation to the additional duty
framed thereunder.
Section
9A was inserted in the year 1985. It contains an enabling provision. The said
provision envisages that the duty would be imposable if, in the opinion of the
Central Government, the value of the goods is less than its normal value.
Normal value has been defined in Explanation (b) to Section 9A to mean :
-
"normal
value", in relation to an article, means
-
The comparable
price in the ordinary course of trade for the said article or like article when
meant for consumption in the exporting country or territory as determined under
sub-section (2); or
-
where such
comparable price cannot be ascertained because of the particular market
situation or for any other reason, such value shall be either
-
the highest
comparable price for the said article or like article from the exporting
country or territory to any third country in the ordinary course of trade as
determined under sub-section (2); or
-
the cost of
production of the said article or like article in the country of origin along
with reasonable addition for selling and any other cost, and for profits, as
determined under sub-section (2)." Sub-section (8) of Section 9A was
introduced by Finance Act, 2004.
Prior
thereto, the statute did not contemplate application of the provisions of the
Customs Act and the rules and regulations made thereunder. By Section 76 of the
Finance (No.2) Act, 2004, indisputably, Sub-Section (8) was inserted stating
the provisions of the Customs Act would be applicable "relating to, the
date for determination of rate of duty, non-levy, short levy, refunds,
interest, appeals, offences and penalties" in respect of anti-dumping
duty.
Sub-Section
(1) of Section 15 of the Customs Act, 1962 reads as under :
-
"Date for
determination of rate of duty and tariff valuation of imported goods.-
-
The rate of
duty, and tariff valuation, if any, applicable to any imported goods, shall be
the rate and valuation in force,-
-
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;
-
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;
-
in the case of
any other goods, on the date of payment of duty;"
The
anti-dumping duty, as noticed hereinbefore, does not attract the provisions of
the Customs Act. If the provision of law is incorporated by reference, it was
obligatory on the part of the Parliament to say so. Such a provision was
brought for the first time in the year 2004. The doctrine of incorporation by
reference is, therefore, not attracted.
In
Principles of Statutory Interpretation by Justice G.P. Singh, Tenth Edition
2006, at pp.294-295, the law is stated in the following terms :
"When
an earlier Act or certain of its provisions are incorporated by reference into
a later Act, the provision so incorporated become part and parcel of the later
Act as if they had been "bodily transposed into it".
The
effect of incorporation is admirably stated by LORD ESHER, M.R.: "If a
subsequent Act brings into itself by reference some of the clauses of a former
Act, the legal effect of that, as has often been held, is to write those
sections into the new Act as if they had been actually written in it with the
pen, or printed in it." The result is to constitute the later Act along
with the incorporated provisions of the earlier Act, an independent legislation
which is not modified or repealed by a modification or repeal of the earlier
Act." The question was considered at some details by a Three Judge Bench
of this Court in Nagpur Improvement Trust etc. vs. Vasantrao & Ors. [(2002)
7 SCC 657], opining :
"......
The law on the subject is well settled. When an earlier Act or certain of its
provisions are incorporated by reference into a later Act, the provisions so
incorporated become part and parcel of the later Act as if they had been bodily
transposed into it. The incorporation of an earlier Act into a later Act is a
legislative device adopted for the sake of convenience in order to avoid
verbatim reproduction of the provisions of the earlier Act into the later. But
this must be distinguished from a referential legislation which merely contains
a reference or the citation of the provisions of an earlier statute. In a case where
a statute is incorporated, by reference, into a second statute, the repeal of
the first statute by a third does not affect the second. The later Act along
with the incorporated provisions of the earlier Act constitutes an independent
legislation which is not modified or repealed by a modification or repeal of
the earlier Act. However, where in a later Act there is a mere reference to an
earlier Act, the modification, repeal or amendment of the statute that is
referred, will also have an effect on the statute in which it is referred. It
is equally well settled that the question whether a former statute is merely
referred to or cited in a later statute, or whether it is wholly or partially
incorporated therein, is a question of construction." The said decision
has been followed in Kanak (SMT) & Anr. vs. U.P. Avas Evam Vikas Parishad
& Ors. [(2003) 7 SCC 693].
The
Tribunal unfortunately did not address itself on the said question.
It,
inter alia, relied upon Kiran Spinning Mills (supra), wherein the provisions of
Sub-Section (6) of Section 3 of the Customs Tariff Act was attracted.
We are
herein not dealing with a case of additional duty of excise. In Kiran Spinning
Mills (supra), only because Sub-Section (6) of Section 3 was held to be
attracted in that case, additional excise duty was held to be payable on the
date when the Bill of Exchange was filed.
Section
9A of the Customs Tariff Act clearly states that imposition of anti-dumping
duty on dumped articles is required to be determined "upon the importation
of such article into India, the Central Government may, by notification in the
Official Gazette, impose an anti-dumping duty not exceeding the margin of
dumping in relation to such article". Quantum of additional duty,
therefore, was required to be determined when the goods have been imported and
is subject for clearance. Such is not the case here.
In Surana
Steels Pvt. Ltd. etc. vs. Dy. Commissioner of Income Tax & Ors. etc.
[(1999) 4 SCC 306], it is stated :
"Section
115-J explanation clause (iv), is a piece of legislation by incorporation.
Dealing with the subject, Justice G.P. Singh states in Principles of Statutory
Interpretation (7th Edn., 1999)
"Incorporation
of an earlier Act into a later Act is a legislative device adopted for the sake
of convenience in order to avoid verbatim reproduction of the provisions of the
earlier Act into the later. When an earlier Act or certain of its provisions
are incorporated by reference into a later Act, the provisions so incorporated
become part and parcel of the later Act as if they had been 'bodily transposed
into it'. The effect of incorporation is admirably stated by LORD ESHER, M.R.:
'If a subsequent Act brings into itself by reference some of the clauses of a
former Act, the legal effect of that, as has often been held, is to write those
sections into the new Act as if they had been actually written in it with the
pen, or printed in it.' (p.233) Even though only particular sections of an
earlier Act are incorporated into later, in construing the incorporated
sections it may be at times necessary and permissible to refer to other parts
of the earlier statute which are not incorporated. As was stated by LORD BLACKBURN
: 'When a single section of an Act of Parliament is introduced into another
Act, I think it must be read in the sense it bore in the original Act from
which it was taken, and that consequently it is perfectly legitimate to refer
to all the rest of that Act in order to ascertain what the section meant,
though those other sections are not incorporated in the new Act.'"
(p.244)" Anti-dumping duty would be payable in respect of the goods which
have already entered Indian
Territory and are
warehoused.
In
this case, goods were cleared by the Customs Authorities without imposing any
anti-dumping duty. It was at a later date the duties were sought to be imposed,
wherefor a show cause notice was issued.
A
Judgment, as is well known, is the authority for the proposition which it
decides and not what can logically be deduced from. Kiran Spinning Mills (supra)
does not militate against a contention of the appellant. It, in fact, supports
its contention. The question as to when import of goods is complete would
depend upon contract between the parties and/or statute governing the field. It
is not a part of common law that the import of the goods would be deemed to
have been completed only when it passes the customs barrier. Such a provision
had been made for achieving definite purposes, i.e., for the purpose of
calculating customs duty.
In
absence of a statute, the contract between the parties would not be superceded.
Sub-Section 6 of Section 3 or Sub-Section 8 of Section 9A of Customs Tariff Act
was enacted to achieve a specific purpose. Its operation is limited from the
date it came into force. It cannot be applied with retrospective effect. Unless
there exists a statutory interdict, common law principle would apply which
would mean that import would be complete when the goods enter the territories
of the country. Taxable event in terms of the notification issued under Section
9A of the Act is on importation of the good and not when the same passes the
customs barrier. The goods in question landed at Mumbai. They were
trans-shipped to Delhi. They were, however, cleared at Delhi. The goods might have passed the
customs barrier on the day on which the Bill of Entry was filed by the
appellant for the purpose of Customs Act. But such importation of goods, in
terms of the provisions of the Customs Act, was meant only for computation of
duty thereunder and not for any other purpose. In other words, a situation
contemplated under one statute cannot, in absence of any express or clear
intendment, be made to apply or be given effect to while applying the
provisions of another statute.
It is
a trite law that while interpreting the statute, the courts not only may take
into consideration the purpose for which the same had been enacted, but also
the mischief it seeks to suppress. Evidently, with a view to suppress the
mischief, if any, Section 26 of the Finance Act, 2004, was brought into the
statute book. It cannot, therefore, by no stretch of imagination be held that
the Parliament intended to apply the provisions of Section 15 of the Customs
Act in Section 9A of the Customs Tariff Act, prior to 2004.
While
dealing with a taxing provision, the principle of 'Strict Interpretation'
should be applied. The Court shall not interpret the statutory provision in
such a manner which would create an additional fiscal burden on a person. It
would never be done by invoking the provisions of another Act, which are not
attracted. It is also trite that while two interpretations are possible, the
Court ordinarily would interpret the provisions in favour of a tax-payer and
against the Revenue.
The
notification dated 22.5.2002, on its face value, is prospective in operation
and not retrospective. It, in no uncertain terms, states that Central
Government thereby may impose duty only, inter alia, on lead acid batteries
originated from the countries specified therein and imported into India. The proviso appended to the
notification provides for a clue in the sense that by reason thereof no duty
was to be imposed on industrial lead acid batteries manufactured by the
manufacturers named therein. The anti-dumping duty imposed thereby was to
remain effective only for a limited period, i.e., upto 21st November, 2002.
For
the aforementioned reasons, the impugned judgment cannot be sustained, which is
accordingly set aside. The appeal is allowed. No costs.
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