- Bookmark
- Share
- CaseIQ
D.C.M And Another v. Union Of India And Another
Factual and Procedural Background
The petitioner imported goods by sea; the vessel arrived on 23-02-1982. A “bill of entry for warehousing” was filed on 24-02-1982, and the goods were placed in a bonded warehouse. The petitioner subsequently cleared the goods for home consumption between 03-03-1982 and 15-04-1982. Customs authorities levied duty at the rates prevailing on each date of clearance, relying on Section 15(1)(b) of the Customs Act, 1962. Contending that this provision violates Article 14 of the Constitution, the petitioner invoked the Supreme Court’s jurisdiction under Article 32 to challenge its constitutional validity.
Legal Issues Presented
- Whether Section 15(1)(b) of the Customs Act, 1962—which fixes the applicable rate of duty as the rate in force on the date goods are removed from a warehouse—violates Article 14 of the Constitution by discriminating against importers who warehouse goods.
Arguments of the Parties
Petitioner's Arguments
- Under Section 12 of the Customs Act, duty is leviable on goods “imported into India,” implying that the relevant date for determining duty should be the date of import (i.e., when the goods land in India).
- Once goods are landed and warehoused, import is complete; therefore, tying duty to a later event—the date of clearance from the warehouse—is arbitrary and irrelevant to the taxable event.
- Because duty rates may increase between the date of import and the date of clearance, Section 15(1)(b) can impose a heavier financial burden on warehousing importers, rendering the provision discriminatory and violative of Article 14.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Court first noted that Section 12 begins with the phrase “except as otherwise provided in this Act,” expressly making it subject to Section 15. Section 12 merely stipulates that customs duties are levied at the rates specified in the Customs Tariff Act; it does not fix the date for determining those rates. That task is performed by Section 15.
Under Sections 15, 46, and 68, an importer has a clear statutory choice:
- File a bill of entry for home consumption under Section 46 and pay duty at the rate prevailing on that date; or
- File a bill of entry for warehousing, store the goods, and later file a fresh bill of entry for home consumption under Section 68, in which case the rate prevailing on the date of clearance applies.
This regime applies a uniform principle: in both scenarios, the rate is linked to the date on which the bill of entry for home consumption is filed. Because the importer voluntarily chooses between immediate clearance and warehousing, any differential impact stems from that choice, not from discrimination by the statute. Moreover, duty rates can decrease as well as increase; there is no presumption of inevitable detriment. Accordingly, Section 15(1)(b) is not arbitrary or discriminatory.
Holding and Implications
The writ petition was dismissed.
The Court upheld the constitutional validity of Section 15(1)(b) of the Customs Act, 1962. The immediate effect is that importers who warehouse goods must continue to pay duty at the rate applicable on the date of clearance from the warehouse. The decision turns on statutory interpretation and does not create a new legal precedent beyond reaffirming the validity of the existing scheme.
Order
1. This writ petition under Article 32 of the Constitution questions the constitutional validity of Section 15(1)(b) of the Customs Act, 1962. Section 15(1) reads as follows:
“15. Date for determination of rate of duty and tariff valuation of imported goods.— (1) The rate of duty and tariff valuation, if any, applicable to any imported goods, shall be the rate and valuation in force,—
(a) in the case of goods entered for home consumption under Section 46, on the date on which a bill of entry in respect of such goods is presented under that section;
(b) in the case of goods cleared from a warehouse under Section 68, on the date on which the goods are actually removed from the warehouse;
(c) in the case of any other goods, on the date of payment of duty:
Provided that if a bill of entry has been presented before the date of entry inwards of the vessel by which the goods are imported, the bill of entry shall be deemed to have been presented on the date of such entry inwards.”
2. The petitioner imported certain goods by sea. The ship arrived on 23-2-1982. On 24-2-1984, “Bill of entry for warehousing” was filed on behalf of the petitioner. Accordingly, the imported goods were warehoused. The petitioner got the said goods cleared from the warehouse between 3-3-1982 and 15-4-1982. Applying Section 15(1)(b), the custom duty in force on the respective dates of clearance from the warehouse was levied. It is the said circumstance that has occasioned the attack upon the constitutional validity of the said provision.
3. Section 15 prescribes the date for determination of rate of duty on imported goods. Sub-section (1) contains three clauses. According to clause (a), where the goods are entered for home consumption under Section 46, the rate in force on the date of filing of the bill of entry is the relevant date. Clause (b) says that where the goods are cleared from a warehouse under Section 68, the rate of duty shall be the one in force on the date of actual removal from the warehouse, while clause (c) says that in case of goods not covered by clauses (a) and (b), the rate payable shall be the rate in force on the date of payment of duty. In this case, we are concerned with clause (b).
4. Section 46 of the Customs Act provides that a bill of entry may be filed either for home consumption or for warehousing, for which separate forms are prescribed under the Act. Section 47 provides that where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid appropriate import duty, if any, assessed thereon and charges, if any, payable under the Act, he may permit clearance of the goods for home consumption.
5. Section 68 provides for clearance of warehoused goods for home consumption by the importer. It says that where an importer warehouses the imported goods, he can clear them for home consumption by filing a bill of entry for home consumption in respect of such goods in the prescribed form and on payment of the import duty and other charges thereon. In other words, where the initial bill of entry is filed for warehousing and the imported goods are warehoused, a separate bill of entry for home consumption has to be filed when the importer wishes to clear the goods from warehouse for home consumption. It is the date of such clearance for home consumption that is prescribed as the relevant date for determining the rate of duty. We are unable to see how the provision can be characterised as discriminatory.
6. Learned counsel for the petitioner, however, sought to sustain his plea of discrimination on the following reasoning: according to Section 12, custom duty is leviable on goods imported into India, which means that date of import is the date relevant for determining the incidence and rate of duty. Once the goods are landed and are warehoused on the territory of India, the goods are imported into India and it is the date of import that should determine the duty. Prescribing a later date, viz., date of clearance from warehouse is irrelevant for the purpose of entry. Section 15(1)(b) providing for such a course is discriminatory and violative of Article 14 inasmuch as the duty may be larger on the date of clearance under Section 68 than on the date of actual import. It is not possible to agree.
7. The first aspect to be noticed is that Section 12 opens with the words “except as otherwise provided in this Act or any other law for the time being in force”. Thus, Section 12 is subject to Section 15 among others. Secondly, Section 12 does not purport to prescribe the date with reference to which rate of duty shall be determined. It only says that duties of customs shall be levied at such rate as may be specified under the Customs Tariff Act on goods imported. It is Section 15 that prescribes the date with reference to which the rate of duty and tariff valuation of imported goods shall be determined. A reading of Sections 15, 46 and 68 makes it clear that they provide an option to the importer either to file a bill of entry for home consumption straight away (in which case he has to pay the duty determined with reference to that date) or to file a bill of entry for warehousing. In the latter case, the goods are merely warehoused. The import duty will be levied at the rate and on the basis of the valuation determined in accordance with the provisions prevailing on the date of clearance from the warehouse for which purpose the importer has to file a fresh bill of entry for home consumption. In other words, it is the date of filing the bill of entry for home consumption which determines the rate of duty in clauses (a) and (b) of Section 15. Inasmuch as the matter is left to the option of the importer and also because a uniform principle is adopted by the Act, as explained above, we see no room for any legitimate grievance of discrimination. There is also no presumption that rate of duty always goes up. It may also go down, in which case, the importer stands to gain.
8. The writ petition accordingly fails and is dismissed with no order as to costs.
Alert