IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated: 21/03/2005
Coram
The Hon'ble Mrs.JUSTICE PRABHA SRIDEVAN
W.P.No.6634 of 2005
M/s.Texon (India) Pvt.Ltd.
Rep., by its Director R.Kesavan
11A (29 III), Sarathy Nagar
Velachery
Chennai 600 042 .. Petitioner
-Vs-
1.Govt. Of India, rep., by its Secretary
Ministry of Finance
Department of Revenue, Udyog Bhavan
New Delhi 100 001
2.Chief Commissioner ofCustoms
Customs House
No.33 Rajaji Salai
Chennai 600 001
3.Commissioenr of Customs (Import)
Cstoms House
No.33 Rajaji Salai
Chennai 600 001
4.Additional Commissioner of Customs
Customs House
No.33 Rajaji Salai
Chennai 600 001 .. Respondents
Writ Petition filed under Article 226 of the Constitution of India
seeking to issue a writ of mandamus, as stated therein.
For Petitioner : Mr.S.Murugappan
For Respondents : Mr.V.T.Gopalan,
Addl.Solicitor General,
Assisted by
Mr.T.S.Sivagnanam,
S.C.G.S.C.
:ORDER
This writ petition is filed seeking to issue a writ of mandamus,
directing the respondents to make appropriate changes in the Electronic Data
Interchange System to enable filing of the documents in accordance with the
actual transaction value as per the provisions of Customs Act, 1962.
2. When the matter came up for hearing, by consent, the main writ
petition itself is taken up for final disposal.
3. It is admitted by both the parties that the Customs Department is
introducing complete computerisation. According to the petitioner, the
respondents should make appropriate changes in the Electronic Data Interchange
System (EDI System in short), to process the documents in accordance with
actual transaction value, as per the provisions of the Customs Act, 1962.
4. Learned Additional Solicitor General, appearing for the
respondents submitted that the actual transaction value, as per Section 14 of
the Customs Act, 1962, can be entered in the documents prepared as per the EDI
System. The system, it appears, was originally introduced in 1999 and
thereafter updated in 2003 and again in 2004.
5. In the counter filed by the respondents, it is stated that some of
the importers had indulged in systematic suppression of the actual transaction
value in the manual system and they had declared the value at which they had
sold the imported goods to the local buyers before the goods are taken out
from the bonded warehouse for home consumption. Therefore, the respondents
have attempted to eliminate the possibilities of such suppression.
6. According to the learned Additional Solicitor General appearing
for the respondents, the present EDI System of the Customs Department contains
all the details necessary regarding the transaction value. According to him,
the relief actually sought for has already been granted and the petitioner
cannot ask for inclusion of other details which are not warranted.
7. Rule 4 of the Customs Valuation (Determination of Price of
Imported Goods) Rules, 1988, read as follows :-
“4. Transaction Value : (1) The transaction value of imported goods shall be
the price actually paid or payable for the goods when sold for export to
India, adjusted in accordance with the provisions of Rule 9 of these rules.
(2) The transaction value of imported goods under sub-rule (1) above shall be
accepted :
Provided that –
(a) the sale is in the ordinary course of trade under fully competitive
conditions;
(b) the sale does not involve any abnormal discount or reduction from the
ordinary competitive price;
(c) the sale does not involve special discounts limited to exclusive agents;
(d) objective and quantifiable data exist with regard to the adjustments
required to be made, under the provisions of rule 9, to the transaction value;
(e) there are no restrictions as to the disposition or use of the goods by the
buyer other than restrictions which –
(i) are imposed or required by law or by the public authorities in India; or
(ii)limit the geographical area in which the goods may be resold; or
(iii) do not substantially affect the value of the goods;
(f) the sale or price is not subject to same condition or consideration for
which a value cannot be determined in respect of the goods being valued;
(g) no part of the proceeds of any subsequent resale, disposal or use of the
goods by the buyer will accrued directly or indirectly to the seller, unless
an appropriate adjustment can be made in accordance with the provisions of
Rule 9 of these rules; and
(h) the buyer and seller are not related, or where the buyer and seller are
related, that transaction value is
acceptable for customs purposes under the provisions sub-rule (3)below;
(3) (a) Where the buyer and seller are related, the transaction value shall be
accepted provided that the examination of the circumstances of the sale of the
imported goods indicate that the relationship did not influence the price.
(b) in a sale between related persons, the transaction value shall be
accepted, whenever the importer demonstrates that the declared value of the
goods being valued, closely approximates to one of the following values
ascertained at or about the same time –
(i) the transaction value of identical goods or similar goods;
(ii) the deductive value for identical goods or similar goods;
(iii) the computed value for identical goods or similar goods.
Provided that in applying the values used for comparison, due account
shall be taken of demonstrated difference in commercial levels, quantity
levels, adjustments in accordance with the provisions of Rule 9 of these rules
and cost incurred by the seller in sales in which he and the buyer are not
related;
(c) substitute values shall not be established under the provisions of clause (b) of this sub-rule."
8. learned counsel for the petitioner referred to the decisions in
Garden Silk Mills Ltd. v. Union of India, 1999 (113) E.L.T. 358 (S.C.) and
Hyderabad Industries Ltd. v. Union of India, 2000 (115) E.L.T. 5 93 (S.C.)
and submitted that the transaction value should include the value at which the
importer had sold the goods to the buyer before they are exbonded. According
to the learned counsel, the Act recognises sales, before completion of
importation or in bond before Customs clearance and so, the EDI System should
provide for inclusion of these details.
9. The decision in 2000 (115) E.L.T. 593 (S.C.) cited supra, relates
to high seas sales transaction and therefore, the Supreme Court referred to
the inclusion of services charges in the sale consideration. The petitioner
is unable to show how and why a high seas sales transaction is similar to sale
of goods in bond. The definition of ” transaction value” refers to the price
actually paid when sold for export and not to the price at which the importer
sold the goods before exbonding.
10. In 1999 (113) E.L.T. 358 (S.C.) cited supra, the question that
came up for consideration related to import duty and the Supreme Court held
that the taxable event is reached when the goods reach the Customs barrier and
the Bill of Entry for home consumption is filed. In that context, the Supreme
Court observed that the value for the purpose of assessing import duty would
be determined with relation to “the time when physical delivery to the
importer can take place, which can be only after the bill of entry, inter
alia, for home consumption is filed. The Supreme Court also held that it is
not possible to agree with the submission that the moment the goods entered
the territorial waters, the import is complete. Hence the Supreme Court held
that the import of goods into India would commence when the goods cross into
the territorial waters but continues and would be completed when the goods has
become part of the mass of the goods and taxable being reached at the time
when the goods reach the customs barriers. I do not see how this decision can
help the petitioner to support their case that the EDI System should include
details of the buyers to whom the goods are sold before they are exbonded and
that value should be taken into account while declaring the transaction value.
11. More recently, in Commissioner of Customs, Mumbai vs. M/s.
Bureau Veritas, 2005 A.I.R. S.C.W. 993, the Supreme Court observed thus :-
“The ambit and method of Rule 4 was elaborately dealt with by this
Court in Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai, 2000 (122)
E.L.T. 321.
It is true that the Rules are framed under Section 14(1-A) and are
subject to the conditions in Section 14(1). Rule 4 is in fact directly
relatable to Section 14(1). Both Section 14(1) and Rule 4 provide that the
price paid by an importer to the vendor in the ordinary course of commerce
shall be taken to be the value in the absence of any of the special
circumstances indicated in Section 14(1) and particularised in Rule 4(2).
Rule 4(1) speaks of the transaction value. Utilisation of the
definite article indicates that what should be accepted as the value for the
purpose of assessment to customs duty is the price actually paid for the
particular transaction, unless of course the price is unacceptable for the
reasons set out in Rule 4(2). “Payable’ in the context of the language of
Rule 4(1) must, therefore, be read as referring to ‘the particular
transaction’ and payability in respect of the transaction envisages a
situation where payment of price may be deferred.”
12. According to the respondents, the particulars required for
determining the transaction value are calculated under the EDI System and
nothing further needs to be included in Rule 4 of the said Rules.
13. Therefore, it is clear that the transaction value as per Rule
4 is the price paid by the importer to the vendor. Learned counsel for the
petitioner would submit that if the name of the purchaser from the petitioner
is not reflected in the documents submitted as per the EDI System, then the
purchaser will face hardship. I do not see how we are concerned with that so
long as the EDI System takes into it all the particulars necessary for
assessing the transaction value as per Rule 4 and Section 14.
14. Learned counsel for the petitioner further submitted that as
long as the manual system was in operation, he could introduce the name of his
purchaser and it is only after the EDI System has been introduced that it is
not possible to feed the name into the computer. It is again repeated that so
long as the EDI System provides for all the details required to be recorded
for the purpose of declaration of the transaction value, for recording any
additional detail as per the petitioner’s wish, a mandamus cannot be issued.
In these circumstances, I am unable to accept the petitioner’s case for
issuance of a mandamus.
15. Learned counsel for the petitioner produced a xerox copy of the
public notice issued by the Customs Department regarding changes effected in
the EDI System procedures. The petitioner has also given several
representations, including one dated 30.9.2004, expressing the difficulties of
the petitioner. The respondents are directed to consider the said
representation dated 30.9.2004 and pass orders within two weeks from the date
of receipt of copy of this order and dispose of the same in accordance with
law.
16. Learned counsel for the petitioner submitted that at least
until their representation his considered, they must be permitted to file the
documents according to the manual system. This direction also cannot be
issued in view of the fact that since the main prayer is not granted, no such
direction can be given in favour of the petitioner.
17. With the above observations, this writ petition is disposed of.
No costs. W.P.M.P.No.7287/2005 is closed.
sks
To
1.The Secretary
Department of Revenue
Govt. Of India
Udyog Bhavan
Ministry of Finance
New Delhi 100 001
2.Chief Commissioner of Customs
Customs House
No.33 Rajaji Salai
Chennai 600 001
3.Commissioenr of Customs (Import)
Cstoms House
No.33 Rajaji Salai
Chennai 600 001
4.Additional Commissioner of Customs
Customs House
No.33 Rajaji Salai
Chennai 600 001