GANGADHAR NARSINGDAS AGARWAL versus P. S. THRIVIKRAMAN & ANR.

874

GANGADHAR NARSINGDAS AGARWAL

v.

P. S. THRIVIKRAMAN & ANR.

March 16, 1972

[S. M. S!KRI, C.J., A. N. GROVER, A. N. RAY, D. G. PALEKAR AND M. H. BEG, JJ.]

Tariff Act 1934-S. 44-Whether notification under S. 44 is appli·

cable to the facts and circum.~tances of the case.

The appellant on 26th July 1966 filed shipping bill in triplicate before the Joint Chief Controller of Imports and Exports for the purpose of ob taining export licenc~s in respect of 10,160 metric tonnes of iron ore. On 28 July 1966 export licenee was granted to the appell'111t. On 30 July 1966 the agents of the vessel made an application to the Asst!. Col lector of Customs, for the grant of entry outward to the said vessel to load i!ron ore, which was granted on the same day with pennission to ship cargo on board the soid vessel. On 1 August, the appellant presented to the Customs authority under section 50 of the customs Act, 1962, shipping bills in triplicate and the Customs authority made several en dorsements on the shipping bill on the sami~ day. On the 2 August 1966, further endorsements on the the Customs authofity indicating that the shipment was inspected, checked and payment was made in full.

shipping bill was made by

On 2 August 1966, ":l rrotification was issw~d by the Ministry of Com, .. merce imposing ;i duty at the rate of Rs. 10 per metric tonne on lumpy iron ore. and on 28 January 1967, the Customs authority issued a notice to the appellant notifying that goods actually shipped by the appellant were subject to '!xport duty and the appellant W":l.S liable to pay Rs. 98044 and the appellant was called upon to show cause as to why the amount should not be recovered from him.

The appellant contended that the shipping bill was presented to the to Customs authority and the entry outward to -the ship was given prior 2 August, 1966 when the notification came into force and so, the notifica tion under S. 4A of the Tariff Act 1934 was not applicable to the consign ment in question. The Customs authorities held that the appellant was !\able to Jl'IY the export duty. The appellant impeached the order b::fore the Judicial Commissioner who also upheld the order of the Customs authorities.

The only question •.vhich arose for d'!cision before this Court was whether the shipment and export of iron ore by the appellant became liable to the said duty introduced on 2 August 1966. The appellant con tended th1t th•" shipping bill was presented on 1 August, 1966 and the order of the Customs authorities for entry outw".lrds to the vessel was also given on 1 August 1966 and so, the export in the present case was not liable to payment of duty imposed on 2 August 1966. The Customs authoriti-es however contended that the ve~sel arrived at Marmagoa har bour on 3 August 1966 and the vessel commenced loading on 3 August, 1966, and therefore, under s. 16(i) rif the Customs Act 1962, the shipping

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G. N, AGARWAL V. P. S. RAMAN (Ray, J.)

875

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bill which had been presented before the date of entry outwards "shall be· deemed to be presented at the earliest on 3 August 1966 when the vessel in question arrived,

Allowing the appeal,

HELD : Jn the present case, the Customs authorities acted withoui jurisdiction in impo1ing duty on the expon by holding that the date of entry outwmds of the vessel was the dale when the vessel, arrived. Section 38 of the Sea Customs Act 1878 was_the Counter-part of Sec. 16 of the Customs Act, 1962. Section 38 h.ad two provisos. Under the first proviso to tbat oJd section where shipment was permitted without a. ship ping bill, the rate of duty was to be the rate in force at the time when the shipment of goods commenced. Under the second proviso, the shipping bill must be deemed that vesSel arriVed or entry outWardS was ·given which ever was later. Under the provisos of S. 38 of the old Act, the Customs authorities had power to apply the rate in force on the date o'f the arrival of the vessel. Under S. 16 ·of the 19.62 Act, it is not permissible to do so. The statute does not contain such a provision. S. 16 of the 1962 Act speaks of the fictional date only in ~e_Jatiqn to the order of date of entry outwards of the veSse1. In the-present case, the order of entry outwards of the vessel v1as made prior to 2 August, 1966. Therefore, the Customs auti)oritJes acted without juris diction in imposing the duty in question. 'f.879 G-880 CJ

to have been delivered on the date on which

CIVIL APPELLATE 1URISD!CTJON : Civil Appeal No. 2137 of

1968.

Appeal from the judgment and order dated April 5, 1968 of the Judicial Commi$sioner's Court, Goa, Daman and Diu in Writ Peti tion No. 9 of 1967.

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&Ii Sorabjj, P. C. 1Iharlari, B. D. Bharucha, J. B. Dadachmrji

and Ravinder Narain, for the appellant.

1agadish Swarup, Solicitor-General of india, Govind Das and

B. D. Sharma, for the respondents.

The Judgment of the Court was delivered by

Raj, J. This is an appeal by certiiicatie from the judgment dated 5 April, 1968 of the Court of the Judicial Commissioner, Goa, Daman and Diu· at Panaji.

The appellant challenged the leV)' of export duty of Rs. 98044 on .9804-40 mertic tonnes of iron ore &hiPI?ed on S:S. 'Ardenode' QI! 3 August, 1966 at the rate of Rs. 10 per metric tonne.

The appellant on 26 July, 1966 filed .shipping bill in triplicate before the Joint Chief Controller of Imports and Exports PanaJi, Goa for the 11urpose of obtaining 'eXport licence in respect of 10,160 metric tonnes of iron ore. On 28 July, 1966 export licence was granted to the appellant. on. 30 July, 1966 M/s.

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876

SUPREME COURT REPORTS

[1972] 3 S.C.R.

Hiralal & Co. agents of the vessel S. S. ·~rdenode' made an appli cation ·to the Assistant Collector of .customs, Marmagoa for the grant of entry outwards to the said vessel to load iron ore. On 30 July, 1966 the Assistant Collector of Customs, Marmagoa made an order granting entry outwards to the said vessel S.S. Ardenode and also gave permission to ship cargo on board the said vessel.

the Customs On 1 August, 1966 the appellant presented to authorities under section 50 of the Customs Act, 1962, (hereill after called the Act), shipping buts in triplicate, dated 26 July, 1966. The appellant ill accordance with the provisions of section 50 of the Act at the foot of the shipping but subscribed to a decla ration as to the truth of the contents of the shipping buts. On 1 August, 1966 the Customs authorities made these entries on the shipping bill 'rotation No. 730 Sd/ 1 August, 1966' 'Let export after (7amination if necessary Sd/ ~ 1 August, 1966' and 'E.F. No. 3/1/8/1966'. The abbreviation 'E.F.' means Export Fee. On 2 August, 1966 the Customs authorities made further endorse ments on the shipping bill. These endorsements were 'PI as usual and checked. des'; 'lnspec,ted the lot-2-barges-checked des'; and 'Pd in full'.

On 2 August, 1.966 there was a notification

the Ministry of Commerce in exercise of powers conferred by section 4-A of the Indian Tariff Act, 1934 amending ,the second schedule to the Tariff Act. The relevant item in the said schedule intro duced by way of amendment is 28 and the name of the article is lumpy iron ore ·and the rate of duty is Rs. 10 per tonne.

issued by

The S.S. Ardenode arrived at Marmagoa at 23.20 hours on 2 August, 1966. The vessel arrived at Marmagoa Inner Harbour on 3 August, 1966 at 07.50 hours. ·The vessel commenced load ing the cargo on 3 August, 1966.

The Customs.authorities on 28 January. 1967 _iss11ed a notice to the appella!lt. notifying that the goOds actually shipped by \he appellant were subject to export .duty at the rate of Rs, . 10 per metric tonne and the custom duty amounting to Rs.· 98044 which the was not Je\'.ied in .respect ·of tjle consignment was due from appeUant and \lie appellant was called· upon in accordance with section.28, of the Act. as to why the runoWlt should not be;,recover ed from the appellant .

The appellant contended before die Gtistoms autfu!irities that the shipping bill was presented to the Customs authcirltic!s- ·and the -entry outwards to. the sh_!p S.S. Ardenode .was given .prior to 2 August, 1966 .when Ill? duty was payable m respectof. the export of the goods m question. The appellant, therefore, .cont~ed

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G. N. AGARWAL v. P, S. RAMAN (Ray, J.)

877

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that the notification Wider section 4-A of the Tariff Act 1934 was not applicaNe to the consignment and no duty was payable in res pect of the export of the goods having regard to the Qrovisions ot r.ection 16 of the Customs Act. the appellant impeached the vires of the notificatiQn.

It may also be stated that

The Customs authorities on 19 April, 1967 held that by vir tue of the provisions of section 16 ( 1 ) of the Act the shipping bill the earliest on 3 shall be doe,med to have been presented at August, 1966 when the vessel in question arrived. The export ·duty was levied with effect from 2 August, 1966. The Customs authoritic~ therefore held that the appellant was liable to pay the

C 11xport duty.

The appellant impeached the order of the Customs authorities under Article 226 of the Constitution in the Court of the Judicial Commissioner, Goa, Daman and Diu, Panaji. The Judicial Com missioner upheld the order of the Customs authorities.

The entire controversy in the present appeal is whether ship O ment and export of iron ore by the appellant became liable to the

said duty introduced on 2 August, 1966.

The relevant provisions for the purpose of the present appeal are to be found in section 16 which deals with date for determi nation of ra!e of duty and tariff valuation of export goods and sections 39, 50 and 51 which deal with loading of export goods on vessel and clearance of goods for exportation.

Section 16 is as follows : -

if "16( l). The rate of duty and tariff valuation, any, applicable to any export goods, shall be the rate and valuation in force-

(a) in the case of goods entered for export under section 50, on the date on which a shipping bill or a bill of export in respect of such goods is presented under that section;

(b) in the case of any other goods, on the date of

payment of duty;

Provided that 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 \o have been presented on the date of such entry outwards.

(2) The provisions of this seclivn shall not apply

to baggaee and aoods exported by post." ·

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878

SUPREME COURT REPORTS

[1972] 3 S.C.R.

The appellant contended that the shipping bill was presented A

on 1 August, 1966 and the order of the Customs authorities for entry outwards to the vessel was also given on 1 August, 1966, and, therefore, the export in the present case was not to payment of duty imp<ised on 2 August, 1966. The Customs authorities on the other hand contended that the vessel arrived at Marmagoa on 3 August, 1966 and the vessel commenced loading B on 3 August, 1966, and, therefore, the shipping bill which had been presented before the date of entry outwards 'shall be deemed to be presented at the earliest on 3 August, 1966 when !li:e vessel in question arrived'.

liable

The shipping bill under the Customs Act means a shipping bill referred to in section. 50 of the Act. Section 50 is as follows :-'- C

"50 (1). The exporter of any goods shall make entry thereof by presenting to the proper officer in the case of goods to be exported in a vessel or aircraft, a shipping bill, and in the case of goods to be exported by land, a bill of export in the prescribed form.

( 2) The exporter of any goods, while presenting a shipping bill or bill of export, shall at the foot thereof make and subscribe to a declaration as to the truth of its contents".

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In the present case, it is common case that the shipping bill was E presented to the Customs authorities on 1 August, 1966 and the Customs authorities made several endorsements on the shipping · bill. on the same day. These endorsements permitted export after examjnation, if necessary. The_ further endorsements on the shipping bill on 2 August, 1966 indicated that the shipment was inspected, checked and payment in full was made.

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Section 51 of the Act is as follows :-

"Where the proper officer is satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance and loading of goods for exportation".

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In the present case, the Customs authorities made endorsement on the shipping bill on 1 August, 1966 permitting export after examination, if necessary. The shipping bill described the goods as 'free goods'. Export licence was also granted on that shipping :u bill. Sections 50 and 51 of the Act deal with entry of goods for exportation and clearance of goods for expOrtation. · The word

G •. N. AGARWAL v. P. S. RAMAN (Ray, J.)

879

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'entry' is defined in section 2 ( 16) of the Act in relation to good~ exported in a vessel to mean an entry made in a shipping bill.

Entry outwards of a vessel is dealt with in section 39 of

Act. Section 39 is as follows : -

the

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"The master of a vessel shall not pennit the loading of apy export goods, other than baggage and mail bags, until an order has been given by the proper officer granting entry-Outwards to such vessel".

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in Proper officer mentioned in section 3 9 of the Act is defined section 2 ( 34) of the Act in .relation to any functions to be per- is formed under this Act to mean the officer of customs who assigned those functions by the Board or the Collector of Customs. Section 39 contemplates an order by the proper officer granting In the present case, the agents of entry outwards to such vessel. the ship made an application 30 July, 1966 for entry outwards of the vessel. The Assistant 'Collector of Customs, Marmagoa granted permission on 30 July, 1966 to ship cargo on board the D vessel. Under section 39 of the Act loading of goOds is not per the In the present case, the Customs authorities on 30 July,

missible until an order is made granting entry outwards vessel. 1966 made an order granting entry outwards to the vessel.

to

Under section 16 of the Act the date of presentation of a shipping bill is the relevant date for detennination of rate of duty · and tariff valuation applicable to export goods. Under the pro viso to section 16 of the Act however there is a fictional date for determination of such duty. The fiction is introduced by provid ing for the date of entry outwards of the vessel to be relevant date in case where the shipping bill has been presented before the date of entry outwards. of the vessel. The date of entry outwards of the vessel is the order made under section 39 of the Act.

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Section 38 of the Sea Customs Act 1878 was the counter-part of section 16 of. the Customs Act, 1962. Section 61 of the Sea Customs Act, 1878 was the counter-part of section 39 of the Customs Act, 1962. Under section 38 of the 1878 Act the rate G of duty was the rate in force when the shipping bill was delivered under section 137 of the 1878 Act. Section 137 of the 1878 Act provided for clearance of goods for shipment by delivery of shipping bill, payment of duties and the passing of the shipping bill by the Customs authorities. Section 38 of the 1878 Act had two provisos. Under the first proviso to that old section where ll the shipment was permitted without a shipping bill, or in antici pation of the delivery of a shipping bill, the rate of duty was to be the rate in force at the time when the shipment of goods commenc the 1878 Act ed. Under the second proviso to section 38 of

880

SUPR!iMB COURT REPORTS

[1972] 3 s.c.R.

·where the shipping bill was m anticipation of the arrival of aay A. vessel or before an order was given for entry outwards of the vessel the shipping bill must be deemed to have been delivered on the date on which that vessel arrived or entry outwards was given whichever was later. Under the provisions of section 38 of the 1878 Act the Customs authorities had power to apply the rate in force on the date of the arrival of the vessel. Under section 16 B of the 1962 Act it is not permissible to do so. The statute does not contain such a provision. Section 16 of the 1962 Act speaks of the fictional date only in relation to the order of date of entry In the pre.sent case, the order of entry outwards· of the vessel. outwards of the vessel was made prior to 2 August, 1966. There fore, the Customs authorities in the impugned order acted without C jurisdiction in imposing duty on the export by holding the ·date of entry outwards of the vessel was the date "when the vessel arrived".

that

For the foregoing reasons the appellant is entitlt<d to an order cancelling the notice dated 28 January, 1967 by which the Cus toms authorities demanded duty from the appellant. The order D· of the Judicial Commissioner is 5et aside. There will be a writ setting aside the _notice dated 28 January, 1967 and an order for bearing the respondents from taking any steps or proceedings pursuant to the notice dated 28 January, 1967. There will also be an order quashing the order of the Assistant Collector of Customs dated 19 April, 1967 which gave effect to the notice and E. held the appellant liable to pay the export duty. The appeal allowed.

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In the facts and circumstances of the case each party will pay

and bear their own costs. s.c.

Appeal allowed.