ORDER
Y. Venkatachalam, J.
1. Invoking Article 226 of the Constitution of India, the petitioner herein has filed the present writ petition seeking for a Writ of Certiorarified Mandamus to call for the order of assessment dated 11.03.1992, made on the Bill of Entry Rotation No. 36/92 and to direct the third respondent to re-assess the price of the goods adopting the official rate instead of the Customs Exchange rate.
2. In support of the writ petition, the petitioner has filed an affidavit wherein he has narrated all the facts and circumstances that forced them to file the present writ petition and requested this Court to allow the writ petition as prayed for. Per contra, though no counter affidavit has been filed, the learned counsel appearing for the respondents vehemently contested the matter and pleaded that the writ petition has to be dismissed for want of merits.
3. Heard the arguments advanced by the learned counsel appearing for the respective parties. I have gone through the contents of the affidavit and all other relevant material documents available on record in the form of typed set of papers. I have also taken into consideration the various points raised by the learned counsel appearing for the respective parties during the course of their arguments.
4. In the above facts and circumstances of the case, the only point that arises for consideration in this case is, as to whether there are any valid grounds to allow this writ petition or not.
5. The brief facts of the case of the petitioner, as seen from the affidavit are as follows : The petitioners company carries on business in importing Life Saving Equipment and they have imported “KOSAN ANGLE” BRAND FOLEY BALLOON (15,000 pcs) Catheters silicone treated sterile double pack of the GIF value Rs. 2,41,611/- equipment to U.S.$ 9000. The said Foley Balloon Catheter is a kind of suction catheter which finds place at S. No. 32 of Notification No. 208/81 as amended from time to time There was a dispute whether Foley Balloon Catheters would form part of the suction catheters. This was ultimately resolved by the judgment of the Tribunal in the case and subsequently in other cases. The Tribunal held that the Foley Balloon Catheters were suction catheters. Under the circumstances they were entitled to complete exemption of duty both basic and additional duty. However, by an explanation added to the Notification No. 208/81, by Notification No. 46/89 dated 01.03.1989, it was stated that items listed under the Heading shall not include Foley Balloon Catheters. This is a very vague explanation. It does not specify which particular Heading or which item of the Notification is the subject matter of the explanation. When Foley Balloon Catheters have been held to be Suction Catheters, the Government cannot unilaterally, arbitrarily and capriciously by an explanation seek to exclude Foley Balloon Catheters from the purview of Suction Catheters, when in fact they are Suction Catheters. Apart from being vague, arbitrary, and capricious, it will amount to hostile discrimination for it differentiates between two types of Suction Catheters without any valid reasons. The explanation is, therefore, ultra vires and not valid. In any event, it is violative of the Fundamental Rights under Article 14 and 19(l)(g) of the Constitution. They also reserve their right to challenge the explanation in appropriate proceeding after they have exhausted their representation to the Government. Therefore, according to them, it should not be construed that they are giving up their right to challenge the exclusion of Foley Balloon Catheters from the purview of Notification No. 208/81. As has been mentioned above, they had imported certain quantity of Foley Balloon catheters and filed the Bill of Entry Rotation No. 36/92 on 11.03.1992. Thereafter a dispute arose regarding the valuation for the purpose of levy of duty. Section 12 of the Customs Act provides for the levy of duty at the rates which 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. Section 14 sets out how the valuation of the goods for the purpose of assessment has to be done. From a reading of Section 14(1) and its proviso, it is clear that the relevant fact which has to be taken into consideration is the price at which such goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of International trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale. Here, there is no dispute about the price paid. The buyer and seller have no interest in the business of each other and the price is the sole consideration for the transaction.
6. It is stated by the petitioner that Sec. 14(1A) states that subject to the provisions of Sub-section (1) the price referred to in that sub-section in respect of imported goods shall be determined in accordance with the rules made in this behalf. In exercise of the power conferred by Section 156 of the Customs Act, the Central Government enacted the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. Under Rule 3, the value of the imported goods shall be the transaction value. Under Rule 4, the transaction value of the imported goods shall be the price actually paid which means the invoice value. Under the proviso to Section 14, the price shall be calculated with reference to the rate of exchange as in force on the date on which a Bill of Entry is presented under Section 46. Thereafter, in the budget on 29.02.92 several radical changes were made with regard to making the rupee partially convertible. Certain changes were announced in the rate of the foreign exchange which has to be paid for the import of goods and the rate of foreign exchange which could be realized against exports. On the basis of the budget proposals, the Reserve Bank of India also issued a circular dated 29.02.1992 which is called the Liberalised Exchange Rate Management System hereinafter referred to LERMS. Clause 2 of that circular referred to Exchange rate and surrender requirement. Section 2(v) states that in respect of licences for import of Life Saving Drugs and Equipment, foreign exchange will be levied at the official rate for the full value of the import. Under the Import Control Policy, Foley Balloon Catheters are classified under Appendix 6 List 2 (Item No. 51). Appendix 6 deals with items which could be imported under Open General Licence and List 2 deals with Life Saving Equipment allowed for import under Open General Licence. The Director General of Health Services and the Import Control Authority nave all accepted the fact the Foley Balloon Catheters fall within the categories of Life Saving Equipments. On the basis of this, the petitioners were allowed to import goods paying official rate for the foreign exchange needed. The Letter of Credit was opened by the Bank for 9000 U.S. $ equivalent to Rs. 2,41,611 /- at the official rate. The bank paid only the official rate for the imports made. The official rate on the date of import was Rs. 26.84 p. per dollar and the official rate continued to be more or less same on the date of filing the Bill of Entry also. When the Bill of Entry was filed, the Customs Department calculated the price at the rate of Rs. 29.28 per U.S. $ and claimed that that was the Customs Exchange Rate for the foreign exchange on the presentation of the Bill of Entry. This was based on the market rate of the dollar. According to the petitioner, due to the difference between the valuation of the Customs Exchange Rate of foreign exchange calculated by the Customs Department and the official rate as calculated by the importers works out to Rs. 24,840/-. The duty is payable at the rate of 11 $ approximately and hence, the difference in duty on tie basis of the enhanced valuation by the Customs Department works out to Rs. 29,0407- approximately. It is the case of the petitioner that the Department has no jurisdiction to adopt the Customs Exchange Rate for the dollar in respect of Life Saving Drugs and Equipments and that the Reserve Bank of India’s circular, namely, LERMS clearly specified that the foreign exchange will be available at the official rate in respect of Imports for the Life Saving Drugs and Equipments. When that is the case, they cannot have another rate for arriving at the price. The Act does not say that the exchange rate should be the market rate for all imports. This would be an arbitrary and capricious exercise of power. According to the petitioner, when the Government has decided that the foreign exchange should be made available at the official rate for the import of Life Saving Drugs and Equipments, it would be arbitrary and capricious on the part of the Customs Authorities to state that while calculating the value, they could adopt some other rate for conversion of the Dollar, when that is not the rate at which the price was paid. The assessment that has been made on the Bill of Entry in so far as it relates to the increase of the valuation from Rs. 26.84 to Rs. 29.28 per U.S Dollar adopting the Customs Exchange Rate is void and of no effect and great hardship and loss would be caused if the petitioners are forced to pay the duty. Further, according to them, these are the Life Saving Equipments and the very purpose of the import would be defeated if the petitioners are asked to pay extra duty and clear the goods. Moreover, if the duty is paid now, no refund will be allowed under Section 27 of the Act. The Customs will claim that Sec. 27 is a total bar of claiming any refund of duty. Hence great hardship and loss will be caused even if the petitioner ultimately win the case. They will not be able to realize the amounts paid. Moreover, it is a violation of the petitioner’s fundamental rights, under the Constitution of India. As has been stated above, the claim itself is without jurisdiction and hence this writ petition.
7. The prayer in this writ petition asked for by the petitioner is to direct the third respondent to re-assess the price of the goods adopting the official rate instead of Customs Exchange Rate. It is the case of the petitioner herein that the petitioner herein were allowed to import goods paying official rate for the foreign exchange needed, that the Letter of Credit was opened by the Bank for 9000 U.S. $ equivalent to Rs. 2,21,611/- at the official rate, that the Bank paid only the official rate for the imports made and that the official rate on the date of the import was Rs. 26.84 per dollar and the official rate continued to be more or less same on the date of filing the Bill of Entry also whereas when the Bill of Entry was filed the Customs Department calculated the price at the rate of Rs. 29.28 per U.S. $ and claimed that that was the Customs Exchange Rate for the foreign exchange on the date of presentation of the Bill of Entry and this was based on the market rate of the dollar and that due to the difference between the valuation at the Customs Exchange Rate of foreign exchange calculated by the Customs Department and the official rate as calculated by the Importers works out to Rs. 24,840/-. It is contended by the petitioners that when the Government has decided that the foreign exchange should be made available at the official rate for the import of Life Saving Drugs and Equipments, it would be arbitrary and capricious on the part of the Customs Authorities to state that while calculating the value, they could adopt some other rate for conversion of the Dollar, when that is not the rate at which the price was paid, and that therefore the assessment that has been made on the Bill of entry in so far as it relates to the increase of the valuation from Rs. 26.84 to Rs. 29.28 per U.S. Dollar adopting the Customs Exchange Rate is void. It is vehemently argued by the learned counsel appearing for the petitioner that the action of the Customs Authorities is without jurisdiction, as the price at which the goods were, imported should be the criterion for the levy of duty, that the price should be calculated at the rate of exchange which has been actually paid by the Importer and not on the market rate on which the Customs Exchange Rate was presumably based, and that there cannot be one price for imports and another price for calculation of duty. Inter alia it is also contended by the petitioners that the Customs Authorities have misconstrued the true scope of Section 14(1), the proviso and Section 14(1A) of the Customs Act. They also contended that they have also misconceived the scope of the Customs Valuation Rules, 1988 and according to them the duty is leviable on the price paid, and that they cannot adopt an artificial price for the levy of duty. According to them the section and the rules are very clear and that therefore, the transaction value in this case is the price which has been paid at the official rate. Therefore, it is their category contention that it will be a violation of the Act and the Rules to state that a different method should be adopted for arriving at the price and this would be defeating the very concept of the transaction value itself and that therefore, even on the basis of the section and the Rules the Customs Authorities have no statutory authority to levy on the basis of the market rate.
8.. Therefore, in the above facts and circumstances of the case, to come to a conclusion in this case, a perusal of the relevant section i.e., Section 14(1) would be of great help and that therefore the above section can be usefully extracted as. follows :-
“Section 14(1) : Valuation of Goods for Purposes of Assessment. – For the purposes of the Customs Tariff Act, 1975 (Act 51 of 1975) or any other law for the time being in force whereunder a duty of customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale :
Provided that such price shall be calculated with reference to the rate of exchange as in force on the date on which bill of entry is presented under Section 46, or a shipping bill or bill of export as the case may be is presented under Section 50.”
It is significant to note that from the above proviso to the section it is crystal clear that:
“SUCH PRICE SHALL BE CALCULATED WITH REFERENCE TO THE RATE OF EXCHANGE AS IN FORCE ON THE DATE ON WHICH A BILL OF ENTRY IS PRESENTED under Section 46.”
In this case it is demitted by the petitioner herein in the following manner :
“When the Bill of Entry was filed the Customs Department calculated the price at the rate of Rs. 29.28 per U.S.$ and claimed that, that was the Customs Exchange Rate for the foreign exchange on the date of presentation of the Bill of Entry.”
Therefore from the above it is very clear that the above action of the respondent in calculation of the price is strictly in accordance with the relevant section and there is no deviation at all as alleged and contended by the petitioner herein.
9. However, in support of their contention the learned counsel for the petitioner relies on the decision reported in E.L.T. Vol. 112 Part 3 (A156) wherein it has been stated as follows :
“The Supreme Court on 20.08.1999 ruled that the Customs Authorities, for the purpose of valuation of imported goods, could not notify a different exchange rate for foreign currency, that varies with the Reserve Bank of India rates, without giving adequate reasons.”
The above decision is not helpful to the petitioner herein. Because, they want the official rate on the date of import should be taken into consideration and not the Exchange rate (market rate on the date of the filing of Bill of Entry. The above decision never says that the exchange rate prevailed on the date of filing Bill of Entry should not be taken into consideration for fixing the price. Therefore the above decision is not in any way helpful the case of the petitioner.
10. Therefore for all the aforesaid reasons and in the facts and circumstances of the case and also in view of my above discussions with regard to the various aspects of this case, I am of the clear view that the petitioner herein has failed to make out any case in his favour and that therefore there is no need for any interference with the order impugned in this writ petition since (sic) is strictly in accordance with the relevant section and proviso thereon. Thus the writ petition fails and the same is liable to be dismissed for want of merits.
11. In the result, the writ petition is dismissed. No costs. Consequently WMP Nos. 7273 and 8666 of 1992 are also dismissed.