ORDER
Gowri Shankar, Member (T)
1. M/s. Garware Plastics & Polyester Ltd., the appellant imported a consignment of polyester at the port of Bombay After importation, the goods were warehoused in the bonded warehouse of the appellant, at Aurangabad without payment of duty. Subsequently, the appellant filed a bill of entry for clearance of the goods for home-consumption with the benefit of Notifications 36/83 and 121/83 for basic and auxiliary Customs Duty. This bill of entry was presented to the officers at Aurangabad. The Superintendent of Customs, by his letter of 27-8-1993 informed the appellant that the total assessable value was not correct as landing charges have not been included. Further, he said, the rate of basic and auxiliary duty shown in the bill of entry as 140% and 35% was not correct and should be 20% and 50%. He, therefore, returned the bill of entry and asked the appellant to present correct bill of entry. The appellant thereupon went in writ petition to the Bombay High Court. The Court by its order dated 31-8-1983 ordered clearance of the goods as claimed by the appellant in the bill of entry without presenting a fresh bill of entry with the condition that it should furnish a bank guarantee to the extent of the differential amount. The goods were accordingly cleared. By its order dated 14-1-1986, the Court ordered that the balance amount payable by the appellant should be paid in four monthly instalments. By its Order dated 11-9-1990, the High Court ordered Superintendent of Central Exise to take decision according to law on the points raised in the writ petition and discharged the rule. Thereafter, the Superintendent issued them a show cause notice on 22-12-1990. The notice observed that when the goods were being cleared; the appellant had calculated the Additional Duty of Customs (or countervailing duty as otherwise known) on the assessable value whereas they should have calculated it on the total of assessable value plus Customs Duty. He, therefore, proposed recovery of this differential duty. The appellant again went to the High Court against this Order requesting that the issue of the Additional Duty and landing charges be separated. The High Court extended the time limit for adjudication of the matter but did not otherwise interfere. The Superintendent, in his Order, confirmed differential duty and his Order was upheld by the Collector (Appeals), Pune. The appellant has now come in appeal before us.
2. It is the argument of Shri R.G. Sheth, Advocate for the appellant that the initial objection of the Department was only with regard to rates of basic and auxiliary duty and inclusion of landing charges and calculation of Additional Duty was not one of the issues. He says, therefore, that the notice issued in 1990 is barred by limitation. He disputes the Collector’s findings that the show cause notice is not barred by limitation in view of the Explantation to Section 28 of the Act.
3. Shri Sharad Bhansali, SDR says that the letter dated 27-8-1983 was only in the nature of communication. The bill of entry, in question, had not been completed and interim stay of the Court was not vacated. The assessement, therefore, must be deemed to be provisional. Therefore, the demand is not barred by limitation.
4. It does not appear to us of any significance as to whether the letter of 27-8-1983 was only a communication or not. By the orders of the Court, the officers were directed not to insist on fresh bill of entry and the goods were cleared on the basis of that document. We do not find any basis for holding that the assessment was provisional. It is seen from the bill of entry that the duty has been paid on 7-9-1983 and the bill of entry completed. Section 18 of the Act provides provisional assessment only for three reasons – (i) inability to produce documents or furnish information necessary for assessment; (ii) pending of chemical or other tests; and (iii) making further enquiries. Pendency of proceedings in the High Court would not cover any of these situations. In any event, the matter before the Court was not one of Additional Duty. Further neither the Collector (Appeals) nor the Superintendent have said that the assessment was provisional. The Collector’s emphasis upon the fact that the officers at Aurangabad were inexperienced may help as their defence but it is hardly the basis for ignoring the provisions of law. The officers had sufficient time in which to issue a demand for the additional duty short-paid. The Collector’s finding that such a demand was stayed by the Orders of the Court is clearly erroneous. The Court, in fact, did not even go into this aspect, as it was not before it. The reading of any of the Orders of the Court will not support this conclusion. Further, the interim stay granted by the Court was vacated by its Order dated 14-1-1986, as has been observed by the Bench while disposing of the stay application. Subsequently, the appellants.paid, using the words of the Court “Whatever is the balance payable by the petitioner”. The demand is time-barred even taking this into account. The demand is, therefore, barred by limitation.
5. In the circumstances, we allow the appeal with the consequential relief to the appellant.
Sd/- Sd/-
(S.L. Peeran) (Gowri Shankar)
Member (T) Member (T)
26-7-1995
S.K. Bhatnagar, Vice President
6. With due respects to my colleagues my views in the matter are as follows :-
I observe that the appellants had filed a Bill of Entry for home consup-tion claiming benefit of Notification Nos. 36/83 and 121/83 for basic and auxiliary duty but the same had been returned by the proper officer to present the correct Bill of Entry as in his opinion the assessable value and rates had been shown incorrectly. However, the appellants instead of complying approached the Bombay High Court and the Hon’ble High Court passed an intejim order, according to which the goods were allowed to be removed without presenting a fresh Bill of Entry subject to certain conditions. The Hon’ble High Court subsequently allowed the authorities to proceed in accordance with law and adjudicate the matter.
7. It is well-known that constitutional authorities like High Courts and the Supreme Court excercise much wider and higher jurisdication in terms of powers entrusted to them by the Constitution (whereas the departmental authorities have to function within the ambit of the Customs law.) The interim orders of the High Court in the present case were passed, not under the Customs Act, but by virtue of exercise of such constitutional authority. Hence, the permission to remove the goods subject to certain conditions allowed by the High Court (in exercise of court jurisdiction) does not amount to ‘clearance’ by the proper (Customs) officer under the Customs Act. In fact, no such orders were passed by the proper officer and the case was adjudicated at a stage when the entire issue of assessment was still open. It is, therefore, neither a case of provisional assessment at the time of removal of goods under the High Court’s orders (although that action was certainly tentative in character) nor could it bind the Customs authorities or affect the decision in any way once the High Court itself was good enough to allow them liberty to proceed in accordance with Customs law.
8. In the circumstances it cannot be said to be a case of recovery of ‘differential duty’ because the amount initially paid under High Court’s orders did not amount to ‘duty’ assessed by the customs officer under the Customs Act (but merely an unassessed sum allowed to be deposited on ad hoc basis pending decision).
9. Since the entire issue of assessment remained open and could be resorted to and completed only when the liberty was given by the High Court, therefore, there was no question of short levy at this stage and what was being assessed and demanded now was in the nature of an original assessment and initial demand as a result of completion of assessment. Hence, at this time the officers were free to take into account all aspects relevant, for completing the assessment and finalising the Bill of Entry, and therefore, the assessed amount could very well include countervailing duty, auxiliary duty or any other charges such as landing charges which were legally includible for the purpose of assessment.
10. Once this was the case Section 28 itself did not apply. Hence, there was no question of time bar.
11. As it is really an assessment under Section 17 of the Customs Act which has been so done the appellants were bound to pay the amount found to be legally due including full duty and the charges payable (allowing of course adjustment towards amount already deposited).
I, therefore, reject the appeal.
Sd/-
(S.K. Bhatnagar)
Vice President
26-7-1995
12. In view of the majority decision the appeal is allowed, with consequential relief to the appellants.
