Bombay High Court
V.M. Salgaocar And Brother Pvt. Ltd., ... vs Union Of India And Another on 18 March, 1987
Equivalent citations: 1987(2)BOMCR210, 1988(18)ECC310, 1987(30)ELT251(BOM)
JUDGMENT Dr. Couto, J.
1. Whether export duty is payable on exported goods when they cross the territorial limits of India, or whether such duty is payable on the date of the filing of the Shipping Bill, or the date on which the Customs Authorities grant entry outwards, is the short and simple question that falls for our determination in this Writ Petition.
2. Petitioners are a company incorporated under the Companies Act, 1956 and doing, inter alia, the business of exporting iron ore from Goa. On 8th March, 1985, petitioners presented to the Marmagoa Customs, the Shipping Bill No. 33, in respect of 1 lakh tonnes of iron ore export to be exported by them through "M. V. Pioneer maru" Petitioners deposited a sum of Rs. 3,00,000/- towards duty of Customs as well as a sum of Rs. 50,000/- towards cess. The Customs Authorities granted entry outwards to the said ship on 11th March, 1985 and on the same day, an Order directing clearance and loading of iron ore for exportation through the said ship was made under Section 51 of the Customs Act. The loading of the said ship began only on 19th March, 1985, in the evening. In the afternoon of the same day, the petitioners by their letter dated 19th March, 1985, informed the first respondent that the loading of the said ship had not commenced till the afternoon of the same day, but it was excepted to start sometimes later in the evening. They also brought to the notice of the Customs Authorities that they were entitled to the exemption of duty of virtue of the Notification No. 87-Customs, dated 17th March, 1985. The loading of the vessel began in the evening of 19th March, 1985 and was completed on 22nd March, 1985 at the mechanical ore handling plant at berth No. 9. Thereafter, the additional quantity of iron ore was loaded in the same vessel by the trans-shipper 'Gosalia Prospect' between 22nd and 25th March, 1985. After loading, the aforesaid vessel 'M. V. Pioneer Maru' sailed for Japan, at about 5.50 p.m. on 25th March, 1985.
3. Export of iron are was subject to duty of Customs in accordance with the Second Schedule to the Customs Tariff Act, 1975 read with Notifications 331-Customs and 332-Customs, both dated 2nd August, 1986. However, by Notification No. 87-Customs, dated 17th March, 1985, which came into force on the midnight of 16/17th March, 1985, iron ore was exempted from the whole duty of Customs leviable thereon under the said Second Schedule when exported out of India. In view of the above exemption and the circumstances that the export of the iron ore took place only on 28th March, 1985, by their letter dated 11th April, 1985, the petitioners claimed a refund of the amount of Rs. 3,00,000/- deposited by them towards export duty, under the Shipping Bill No. 33, dated 8th March, 1985. Petitioners also submitted their refund application in the prescribed form. By order dated 7th February, 1986, the first respondent rejected the petitioner's claim for refund on the sole ground that, the crucial date to determine the rate of duty applicable is the date on which is Shipping Bill is presented or the date on which the entry outwards is granted in respect of the Shipping Bill presented prior to the entry outwards. Hence, this Writ Petition.
4. Petitioners challenge the said Order dated 7th February, 1986, mainly, on the ground that the duty is payable on the exported goods and not on export goods. According to them, the iron ore in question was exempted from export duty as it was exported only on 25th March, 1985, when the vessel 'M.V. Pioneer Maru' crossed the territorial limits of India. Elaborating, Mr. S. K. Kakodkar, the learned counsel appearing for the petitioners, began to invite our attention to Sections 12, 15 and 16 of the Customs Act, 1962. He submitted that Section 12 deals with dutiable goods and it becomes clear from the said provisions of law, that duty is payable either on imported or exported goods. Then, Section 15 deals with the determination of the rate of duty and Tariff valuation of imported goods and Section 16 with the date for determination of the rate of duty and tariff valuation on export goods. Now, according to the learned counsel, there is a vast difference between the export goods and exported goods, for export goods are merely goods intended or meant to be taken outside India, whereas exported goods are goods in respect of which the process of export was already completed and therefore, had already left the territorial limits of India. The learned counsel, therefore, submitted that only the goods which are already exported are liable to pay duty, if such duty has been imposed by law. Section 16 does not speak of any levy of duty, but deals only with the calculation of the rate of duty and the tariff valuation on export goods. Therefore, for the purposes of levying duty, Section 16 is not attracted. The learned counsel also brought to our notice the difference of the wording in Sections 15 and 16 inasmuch as in Section 15 a reference is made to imported goods, whereas, in Section 16 the reference is only to export goods and not to exported goods. This clearly shows that the scope of Section 16 is merely to fix a rate of duty or tariff valuation, in case duty is payable. If no duty is payable, then, according to the learned counsel, the question of fixing the rate of such duty does not arise. Reliance was placed by the learned counsel in 'B. K. Wadeyar. Sales-tax Officer IV Division Licence Circle, Bombay v. M/s. Daulatram Rameshwarlal and Others' , 'Yusuf Abdulla Patel v. R. N. Shukla' [1970 BLR 575], and 'Lucas T. V. S. Padi, Madras v. Assistant Collector of Customs, Madras and Others' [1980 ELT 465 (Madras)], in support of his contention that there is a difference between export goods and exported goods and that export is complete only when the territorial waters of India are crossed. He further urged that there is a difference between the chargeability of duty and the assessment or quantification of the amount payable by way of Customs duty. He submitted that the chargeability of duty is dealt with in Section 12 of the Customs Act, whereas Sections 15 and 16 are attracted for the purpose of assessment or quantification of the amount payable by way observed in 'M. S. Shawhney v. M/s. Sylvania and Laxman Ltd.' [1975 BLR 380].
5. It was however, contended by Mr. Bhobe, learned Central Government Standing Counsel, that the relevant date for levying the export duty is the date of the filing of the Shipping Bill or the date of making the entry outwards. In this case, admittedly, the Shipping Bill was filed on 8th March, 1985 and the entry outwards was made on 11th March, 1985. On these dates, export levy was payable on iron ore, the exemption under the Notification No. 87-Customs, dated 17th March, 1985 having come into force only at midnight on 16/17th March, 1985. Therefore, according to the learned counsel, the exemption under the said Notification was not available to the petitioners. Reliance was placed in support of this submission on the decision of the Supreme Court in 'Gangadhar Narsinghdas Agarwal v. P. S. Thrivikraman and Another' [AIR 1973 S.C. 351]. That apart, he further contended that no remedy can be granted to the petitioners in this Writ Petition because they approached this Court under Article 226 of the Constitution without availing themselves of the statutory remedy of appeal.
6. Before addressing ourselves to the merits of this petition, it is expedient to deal with the submission of Mr. Bhobe that petitioners are not entitled to any relief as they had not availed themselves of the statutory remedy of appeal. It is not denied that a remedy by way of appeal was available to the petitioners, but in our view, that circumstance does not bar this Court from granting the relief sought. In the first instance, this Writ Petition was duly admitted and heard on merits and in the circumstances where, manifestly, the impugned Order is not sustainable, justice should not be denied to the petitioners only because they rushed to this Court instead of proceeding in appeal. Secondly, if at the present we dismiss this petition on that technical ground, in all probabilities, the petitioners will not be able to file the appeal as such remedy must be barred by the law of limitation. In the circumstances, therefore, we do not think that we should abstain from going into the merits of this petition only on the ground that the petitioners had not availed themselves of the statutory remedy of appeal.
7. Coming now to the merits of the petition, it will be pertinent to mention here that the first respondent has rejected the claim for refund on the ground that Section 16 of the Customs Act is clear in that the crucial date to determine the rate of duty applicable is the date on which the Shipping Bill is presented or the date on which the entry outwards is granted in respect of the Shipping Bill presented prior to entry outwards. Section 16 of the Customs Act deals with the date for determination of rate of duty and tariff valuation of export goods. Sub-section (1) provides that the rate of duty and tariff valuation, if any, applicable to any export goods shall be the rate and valuation in force as laid down in its Clauses (a) and (b), provided the if the Shipping Bill has been presented before the date of entry outwards of the vessel, by which the goods are to be exported, the Shipping Bill shall be deemed to have been presented on the date of such entry outwards. It is clear from the wording of the said section and even from its marginal note that the Section does not provide for the levy of duty but only deals with the determination of the rate of duty and tariff valuation. Secondly, it is also clear that the said rate of duty is in respect of export goods and not in respect of exported goods. In its turn, Section 12 deals with dutiable goods and in sub-section (1) provides that except as otherwise provided in the Act or any other law for the time being in force, duties of Customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 or any other law for the time being in force on goods imported into or exported from India. Sub-section (2) lays down that provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they may apply in respect of goods not belonging to the Government. It is clear, as rightly pointed out by Mr. Kakodkar, that unlike Section 16, Section 12 deals with duty payable on imported or exported goods and not on export goods. Now, Section 2(18) defines "export" as meaning "taking out of India to a place outside India". "Export goods" are defined in Section 2(19) as meaning "any goods which are to be taken out of India to a place outside India", and "India" is defined in Section 2(27) as including "the territorial waters of India". A careful examination of the aforesaid definitions leads to the necessary conclusion that export of goods taken place only when such goods are taken out of India, i.e. taken out from the territorial limits of India of a place outside India. Export goods are merely goods which are meant to be exported, i.e. to be taken out of India to a place outside India. Therefore, it necessarily follows that export of goods is complete only when such export goods cross the territorial boundaries of India on their way to a place outside India. We are supported in this view by the decisions of the Supreme Court in Wadeyar v. Daulatram (above), of this Court in Yusuf Abdulla Patel v. R. N. Shukla (above), and of the Madras High Court in Lucas Padi v. Assistant Collector of Customs, Madras (above). In fact, in Wadeyar's case, Their Lordships of the Supreme Court while dealing with the Import and Export (control) Act, 1947, observed that "export" has been defined in the said Act as taking out of India by sea, land or air and that in the Exports (Control) Order, 1954, the word must be taken to have the same meaning as in the said Act. Then, it was observed that on that definition, the time of the export is the time when the goods go out of the territorial limits of India. These limits would include the territorial waters of India and consequently, the time of export is when the ship with the goods goes beyond the territorial limits. Similarly, in Yusuf Abdulla Patel's case, it has been observed that there can be no doubt having regard to the decision of the Supreme Court in Wadeyar's case, as well as to Section 2(18) of the Customs Act, 1962, that the term "export" connotes the actual taking out of the goods beyond the territorial limits of India. This view has also been accepted in Lucas Padi's case.
8. It is thus clear that there is a definite difference between export goods and exported goods. Section 12 of the Act deals with the leviable duty on imported or exported goods, while Section 16 deals only with the rate of duty and tariff valuation on export goods. In other words, Section 16 indicates the way of quantifying the duty which is payable. Section 12 deals, therefore, with the chargeability, whereas Section 16 deals with the quantification of the amount payable by way of Customs duty. As held by the Division Bench of this Court in Shawhney's case (above), it is well-settled that a clear difference exists between the concepts of chargeability and the concept of assessment or qualification of the amount payable by way of Customs duty. The Division Bench, after quoting the observations of the Privy Council in 'Wallace Brothers and Company Limited v. Commissioner of Income Tax' [1948 (16) ITR 240], held that the quoted observations of the Privy council fully justify the clear distinction that exists, inter alia, between chargeability in respect of a tax or duty and the quantification of the amount payable in respect thereof. The Division Bench further observed that the only charging Section in respect of levy of Customs duty is Section 12(1) and that chargeability in respect of levy of Customs ought not to be confused with quantification of the amount or assessment thereof as provided under the scheme of the Act. The Division Bench proceeded to analyse the provisions of Section 15 which deal with the determination of rate of duty and tariff valuation on imported goods. These observations of the Division Bench, although made in connection with imported goods, are entirely applicable to export goods and to the determination of rate of duty of tariff valuation on export goods. The reason is that the distinction between chargeability and the quantification of the amount payable exists both in respect of imported goods and export goods.
9. We already mentioned that the chargeable section is only Section 12(1) of the Act and that the export takes place only when the goods have crossed the territorial limits of India. If this is so, duty on exported goods is payable only when the export is complete and not before such time. In this respect, we are supported by the decision of the Division Bench of the Allahabad High Court in 'Union of India v. Bhagwan Industries Limited' . In that case, dealing with the provisions of the Sea Customs Act, the Division Bench observed that there can be no levy of duty on goods which are not exported or which could not be exported. In other words, only when the goods are exported, i.e. when the export is complete, the duty can be levied.
10. It is an admitted position that the petitioners had filed the Shipping Bill on 8th March, 1985 and that the entry outwards had been granted on 11th March, 1985. It is also common ground that while filing the Shipping Bill, the petitioners had deposited towards the export duty, which was payable at that time, the amount of Rs. 3,00,000/-. The Notification exempting the export of iron ore from such duty came into force only on the midnight of 16/17th March, 1985. Further, it is common ground that the vessel 'M. V. Pioneer Maru' had left the territorial limits of India on 25th March, 1985, i.e. much after the exemption of duty came into force. Therefore, it is clear that at the time the iron ore loaded in the said vessel was actually exported, the export of iron ore was already exempted from payment of duty. This being so, there is no authority of law for the first respondent retaining the amount of Rs. 3,00,000/- which had been deposited by the petitioners towards the payment of duty. In fact, no duty was payable and therefore, there is no question of retaining such amount of money.
11. The result, therefore, is that this petition succeeds and consequently, the rule is made absolute in terms of prayers (a) and (b). The refund to be made by the first respondent within six weeks from today. In case the refund is not made within the specified period of time, the amount of Rs. 3,00,000/- will accrue interest at the rate of 12% per annum from today. There will be no order as to costs, in the circumstances of the case.