M/S. MANGALORE REF. & PETROCHEMICALS LTD .versusCOMMISSIONER OF CUSTOMS, MANGALORE

                        [2015] 9 S.C.R. 620


A     MIS. MANGALORE REF. & PETROCHEMICALS LTD .
                                • V.

         COMMISSIONER OF CUSTOMS, MANGALORE
                (Civil Appeal No: 2753 of 2006 etc.)
B                      SEPTEMBER 2, 2015
               [A.K. SIKRI AND R.F. NARIMAN, JJ.]

  Customs Act, 1962- ss. 12, 13, 14, 23 and 147 - Levy of
  duty- On imporl of goods (crude oil) - Whether should be
c on the basis of the quantity of the oil mentioned in the Bills of
  Lading or on the basis of the quantity actually received on
  the shore tanks in India - Revenue levied duty on the basis
  of the Bill of Lading quantity, on the ground that the duty was
  levied on ad valorem basis and not on a specific rate - Order
D
  of the Revenue affirmed by the Tribunal - On appeal, held:
  Under the Act, levy of duty cannot take place until goods are
  imporled, i.e. they become parl of the land m8ss of India -
  The imporler is not liable to pay duty on the goods, which
E are pilfered or lost or destroyed at any time before clearance
  for home consumption or deposit in a warehouse- Therefore,
  the quantity of crude oil actually received into a shore tank in
  a porl in India would be the basis for payment of customs
  duty- Levy of duty at specific rate or on ad valorem basis,
F does not make any difference - Customs Valuation
  (Determination of Price of Imported Goods) Rules, 1988- rr.
  4 and9.
        Disposing of the appeals, the Court
G       HELD: 1. The levy of customs duty under Section
    12 of Customs Act is only on goods imported into India.
    Goods are said to be imported into India when they are            "'
    brought into India from a place outside India. Unless
H                                620
        MANGALORE REF. & PETROCHEMICALS LTD. v.                621
           COMMNR. OF CUSTOMS, MANGALORE

    such goods are brought into India, the act of importation      A
    which triggers the levy, does not take place. If the goods
    are pilfered after they are unloaded· or lost or destroyed
    at any time before clearance for home consumption or
    deposit in a warehouse, the importer is not liable to pay
    the ~uty leviable on such goods. This is for the reason        B
    that the import of goods does not take place until they
    become part of the land mass of India and until the act
    of importation is complete which under Sections 13 and
    23 happens only after an order for clearance for home
'   consumption is made and/or an order permitting the             C
    deposit of goods in a warehouse is made. Under Section
    23(2), the owner of the imported goods may also at any
    time, before such orders have been made, relinquish his
    title to the goods and shall not be liable to pay any duty
                                                                   0
    thereon. In short, he may abandon the said goods even
    after they have physically landed at any port in India but
    before any of the aforesaid orders have been made. This
    again is for the good reason that the act of importation
    is only complete when goods are in the hands of the            E
    importer after they have been cleared either for home
    consumption or for deposit in a warehouse. Further, as
    per Section 47 of the Customs Act, the importer has to
    pay import duty only on goods that are entered for home
    consumption. Even under Section 14 of the Customs              F
    Act, when goods are to be valued for the purpose of
    assessment, such valuation i~ only when the goods are
    ordinarily sold or offered for sale for delivery at the time
    and place of importation in the course of international
    trade. Thus, under the Customs Act, the levy of import         G
    duty cannot take place until goods are imported, that is,
    brought into India. Therefore, it is the quantity of goods
    brought into India alone that attracts the levy of import
    duty. [Para 10 &11] [629-F-H; 630-A-F]
                                                                   H
622       SUPREME COURT REPORTS             [2015] 9 S.C.R.


A     2. The Customs Valuation Rules which defines
  "transaction value" also speaks of the price that is
  actually paid or payable only for "imported goods".
  Unless goods are imported, that is, "brought into India"
  no such price is actually paid or payable. Further, under
B Rule 4, such transaction value must be adjusted in
  accordance with the provisions of Rule 9. This Rule
  merely restates what is already stated in Section 14,
  namely, that the value of imported goods has to be the
  value of such goods for delivery only at the time and
C place of importation. (Paras 12 and 13] (630-G, H; 632-0-
  E]

        3. The taxable event in the case of imported goods,
   is "import". The taxable event in the case of a purchase
 D tax is the purchase of goods. The quantity of goods
   stated in a bill of lading would perhaps reflect the
   quantity of goods in the purchase transaction between
   the parties, but would not reflect the quantity of goods
   at the time and place of importation. A bill of lading
 E quantity therefore could only be validly looked at in the
   case of a purchase tax but not in the case of an import
   duty. [Para 16] (634-D-E]

        4. The basis of the judgment of the Tribunal is on a
 F complete misreading of Section 14 of the Customs Act.
  · The said Section is a section which affords the measure
    for the levy of customs duty which is to be found in
    Section 12 of the said Act. Even when the measure talks
    of value of imported goods, it does so at the time and
 G place of importation, which again is lost sight of by the
    Tribunal. And "transaction value" which occurs in the
    Customs Valuation Rules has to be read under Rules 4       ~
    and 9 as reflecting the statutory position, namely, that
 H valuation of imported goods is only at the time and place
    of importation. [Para 16] (634-F-H]
    MANGALORE REF. & PETROCHEMICALS LTD. v.                   623
       COMMNR. OF CUSTOMS, MANGALORE

     5. Whether customs duty is at a specific rate or is ad A
valorem, makes not the least difference to the above
statutory scheme. Customs duty whether at a specific
rate or ad valorem is not leviable on goods that are
pilferred, lost or destroyed until a bill of entry for home
consumpt~on is made or an order to warehouse the B
goods is made. The circular dated 12th January, 2006
on which strong reliance is placed by the revenue, is
contrary to law. [Para 17] [635-B-D]

    Garden Silk Mills Ltd. v. Union of India 1999 (8) SCC C
744 : 1999 (3) Suppl. SCR 295; Collector v. Hindustan
Petroleum Corporation (2001) 131 E.L. T. A87 (S.C.)- relied
on.

                  Case Law Reference                           D
   1999 (3) Suppl. s·cR 295          relied on   Para 15

   (2001) 131 E.L.T.A87 (S.C.)       relied on   Para 17

   CIVIL APPELLATE JURISDICTION: Civil Appeal No.              E
2753 of 2006.

     From the Judgment and Order No. 273/2006 dated
06.02.2006 of the Customs, Excise, Service Tax Appellate
Tribunal, South Zonal Bench, Bangalore in Appeal No. C/293/    F
2002.

                              With

    C.A. NO. 1109 of20b7.
                                                               G
   C.A. NOS. 4738-4755, 4770-4806, 4808-4809, 5465-
5562 of 2010. ·

    C.A. NOS. 7774-7775, 11357of2011.
                                                               H
    C.A. NOS. 9279-9283 of2012.
624        SUPREME COURT REPORTS                   [2015] 9 S.C.R.


A        C.A. NOS. 8666-8667of 2013.

         C. A. NOS. 4480-4486 of 2014.

         C.A. NOS. 6736-6773, 3628, 5074, 5052 of2015.

 B    PinkyAnand,ASG,A.K. Panda, V. Lakshmikumaran, M.P.
  Devanath, Vivek Sharma, Disha Jain, AbhinavJagnathan,
  Rachit Jain, Hemant Bajaj, Anandh K., S. Vasudvan, L.
  Charanaya, Arijit Prasad, Sunita Rani Singh, Karan Seth, B.
  Krishna Prasad, Anil Katiyar, Arvind Kumar Sharma for the
C appearing parties.

         The Judgment of the Court was delivered by

           R.F. NARIMAN, J. 1. Leave granted in Special Leave
 D    Petition (Civil) Nos. 1906-1943 of 2009.

        2. In this batch of appeals an interesting question arises
   on the import of crude oil by the appellants. We will take the
   facts contained in Civil Appeal No. 2753 of 2006 for the purpose
 E of deciding these matters.

         3. In the said Civil Appeal, during the period 13.01.1996
   to 15.03.1998, crude oil was imported by the appellant by way
   144 voyages of vessels, and 71 consignments out of the said
 F 144 voyages were said to have escaped payment of full
   customs duty. As a result the total duty thus short paid for the
   71 consignments out of the 144 voyages worked out to
   Rs.6,59,49,685/- (Basic Duty Rs.6,16,88,210/- and Special
   Customs Duty Rs.42,61,475/-) on the total differential
 G assessable value of Rs.23, 71,30,242/- for the period from
   13.1.9~ to 15.3.98. These figures were arrived at as revenue
   in its show cause notice dated 7th January, 2000 stated that
   the quantity of crude oil mentioned in the various bills of lading
   should be the basis for payment of duty, and not the quantity
 H actually received into the shore tanks in India. This was stated
MANGALORE REF. & PETROCHEMICALS LTD. v. COMMNR. 625
    OF CUSTOMS, MANGALORE [R.F. NARIMAN, J.]

on the basis that since duty was now levied on an ad va/orem A
basis and not on a specific rate, the duty should be paid on
the bill of lading quantity based on the ullage obtained when
the goods were loaded on the vessel in the country of export.
On 14th April, 2000, the appellant submitted its reply to the
show cause notice and stated that it makes no difference as B
to whether the basis for customs duty is at a specific rate or is
ad va/orem, inasmuch as under the various judgments of the
Tribunal upheld by the Supreme Court, the quantity of goods
at the time of import alone is to be looked at. This flows from a
reading of the Customs Act, 1962 and the Customs Valuation C
(Determination of Price of Imported Goods) Rules, 1988 and
therefore the show cause notice ought to be dropped.

    4. On 24th July, 2002, the Commissioner of Customs
passed a detailed order in which he held that since the basis      D
of customs duty had changed into an ad va/orem regime,
"transaction value" would necessarily mean the value at which
the goods were to be purchased from the foreign supplier.
According to the learned Commissioner, full payment for the
goods has to be made by the importer only on the basis of the      E
quantity mentioned in the bill of lading. This being the case,
therefore the "transaction value" of the said goods would only
be as per the payment made of the amounts stated in the bill
of lading and not the quantity received ultimately in the shore    F
tanks at ports in India.

    5. An appeal filed to CESTAT was dismissed on 61h
February, 2006. The Tribunal accepted the Commissioner's
reasoning.
                                                                   G
    6. Shri Lakshmikumaran, learned counsel appearing for
the appellants in these appeals, urged before us that the
Tribunal in the present case had lost sight of the fact that the
taxable event is only when goods are imported, and that
therefore valuation at the time of import alone has to be looked   H
626         SUPREME COURT REPORTS                     [2015] 9 S.C.R.


A     at. He further argued that the reasoning of the Tribunal was
      entirely fallacious, and that it misconstrued Section 14 of the
      Customs Act and did not give proper heed to Sections 12, 13
      and 23 of the said Act. In any event, he argued that ''transaction
      value" which is laid down under the Customs Valuation Rules
 B    cannot be read in such a manner that it would go contrary to
      the provisions of the parent statute.

        7. Ms. Pinky Anand, learned Additional Solicitor General
  appearing on behalf of the revenue, supported the judgment
C of the Tribunal and argued that since the basis of customs duty
  has changed and since a circular dated 12th January, 2006 by
  the Government of India, Finance Department made it clear
  that import duty should be based only on the invoice price which
  is the price paid or payable for imported goods irrespective
D of the quantity ascertained through shore tank measurement,
  it is this price alone that should be taken into account for
  valuation purposes. Further, according to her, "transaction
  value" would necessarily mean the price that is payable for
  goods when sold for export to India and that therefore such
E price would only be referable to the quantity of goods
  mentioned in the bill of lading.

          8. Having heard learned counsel for the parties it is
      important to first set out the relevant provisions contained in
 F    the Customs Act as under:-

       "Section 2. Definitions

        (22) "goods" includes -
G           (a)      vessels, aircrafts and vehicles;
            (b)      stores;
            (c)       baggage;
            (d)      currency and negotiable instruments; and
            (e)      any other kind of movable property;
 H
MANGALORE REF. & PETROCHEMICALS LTD. v. COMMNR. 627
    OF CUSTOMS, MANGALORE [R.F. NARIMAN, J.]

   2(23) "import", with its grammatical variations and             A
   cognate expressions, means bringing into India from a
   place outside India;

   2(25) · "imported goods" means any goods brought into
   India from a place outside India but does not include           B
   goods which have been cleared for home consumption;

   Section 12. Dutiable goods. - (1) Except as otherwise
   provided in this Act, or any other law for the time being in
   force, duties of customs shall be levied at such rates as       c
   may be specified under the Customs Tariff Act, 1975 (51
   of 1975), or any other law for the time being in force, on
   goods imported into, or exported from, India.

   (2) The provisions of sub-section ( 1) shall apply in respect   D
   of all goods belonging to Government as they apply in
   respect of goods not belonging to Government.

   Section 13. Duty on pilferred goods. - If any imported
   goods are pilferred after the unloading thereof and before      E
   the proper officer has made an order for clearance for
   home consumption or deposit in a warehouse, the
   importer shall not be liable to pay the duty leviable on
   such goods except where such goods are restored to
   the importer after pilferage.                                   F

   Section 23. Remission of duty on lost, destroyed or
   abandoned goods. -

   (1) Without prejudice to the provisions of section 13, G
   where it is shown to the satisfaction of the Assistant
   Commissioner of Customs or Deputy Commissioner of
   Customs that any imported goods have been lost
   otherwise than as a result of pilferage or destroyed, at
                                                                   H
628   SUPREME COURT REPORTS                     [2015) 9 S.C.R.


A     any time before clearance for home consumption, the
      Assistant Commissioner of Custom or Deputy
      Commissioner of Customs shall remit the duty on such
      goods.

 s    (2) The owner of any imported goods may,. at any time
      before an order for clearance of goods for home
      consumption under section 4 7 or an order for permitting
      the deposit of goods in a warehouse under section 60
      has been made, relinquish his title to the goods and
C     thereupon he shall not be liable to pay the duty thereon."

      Section 47. Clearance of goods for home consumption.-
      (1) Where the proper officer is satisfied that any goods
      entered for home consumption are not prohibited goods
 o    and the importer has paid the import 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 of the goods for home
      consumption.
 E
      (2) Where the importer fails to pay the import duty under
      sub-section ( 1) within two days, excluding holidays from
      the date on which the bill of entry is returned to him for
      payment of duty, he shall pay interest at such rate, not
 F    below ten per cent and not exceeding thirty-six per cent
      per annum, as is for the time being fixed by the Central
      Government, by notification in the Official Gazette on such
      duty till the date of payment of said duty:

 G    Provided that the Central Government may, by notification
      in the Official Gazette, specify the class or classes of
      importers who shall pay such duty electronically:

      Provided further that where the bill of entry is returned for
      payment of duty before the commencement of the
 H
  MANGALORE REF. & PETROCHEMICALS LTD. v. COMMNR. 629
      OF CUSTOMS, MANGALORE [R.F. NARIMAN, J.]

      Customs (Amendment) Act, 1991 and the importer has             A
      not paid such duty before such commencement, the date
      of return of such bill of entry to him shall be deemed to be
      the date of such commencement for the purpose of this
      section:
                                                                     B
      Provided also that if the Board is satisfied that it is
      necessary in the public interest so to do, it may, by order
      for reasons to be recorded, waive the whole or part of
      any interest payable under this section."
                                                                     c
      9. Rules 2(1 )(f) and 4(1) of the Customs Valuation
 (Determination of Price of Imported Goods) Rules, 1988 read
 as follows:-

      "2. Definitions - (1) In these rules, unless the context       D
      otherwise requires:

      (f) "transaction value" means the value determined in
      accordance with Rule 4 ofthese rules"

      Rule 4. Transaction value. -(1) The transaction value of       E
      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."

        10. On a reading of the aforesaid provisions, it is clear F
  that the levy of customs duty under Section 12 is only on goods
  imported into India. Goods are said to be imported into India
  when they are brought into India from a place outside India.
· Unless such goods are brought into India, the act of.importation
  which triggers the levy does not take place. If the goods are G
  pilferred after they are unloaded or lost or destroyed at any
  time before clearance for home consumption or deposit in a
  warehouse, the importer is not liable to pay the duty leviable
  on such goods. This is for the reason that the import of goods
  does not take place until they become part of the land mass of H
630         SUPREME COURT REPORTS                     [2015) 9 S.C.R.


A     India and until the act of importation is complete which under
      Sections 13 and 23 happens only after an order for clearance
      for home consumption is made and/or an order permitting the
      deposit of goods in a warehouse is made. Under Section
      23(2) the owner of the imported goods may also at any time
 B    before such orders have been made relinquish his title to the
      goods and shall not be liable to pay any duty thereon. In short,
      he may abandon the said goods even after they have physically
      landed at any port in India but before any of the aforesaid orders
      have been made. This again is for the good reason that the
C     act of importation is only complete when goods are in the hands
      of the importer after they have been cleared either for home
      consumption or for deposit in a warehouse. Further, as per
      Section 47 of the Customs Act, the importer has to pay import
      duty only on goods that are entered for home consumption.
 0
      Obviously, the quantity of goods imported will be the quantity
      of goods at the time they are entered for home consumption.

           11. Even under Sectiorr 14 of the Customs Act, when
      goods are to be valued for the purpose of assessment, such
 E    valuation is only when the goods are ordinarily sold or offered
      for sale for delivery at the time and place of importation in the
      course of international trade. It is thus seen that under the
      Customs Act, the levy of import duty cannot take place until
 F    goods are imported, that is, brought into India. Obviously,
      therefore, it is the quantity of goods brought into India alone
      that attracts the levy of import duty.

       12. The Customs Valuation Rules which defines
  "transaction value" also speaks of the price that is actually paid
G or payable only for "imported goods". Unless goods are
  imported, that is, "brought into India" no such price is actually
  paid or payable. Further, under Rule 4 of the Customs Valuation
  Rules, such transaction value must be adjusted in accordance
H with the provisions of Rule 9. Rule 9(2), the imporJ: of which
     MANGALORE REF. & PETROCHEMICALS LTD. v. COMMNR. 631
         OF CUSTOMS, MANGALORE [R.F. NARIMAN, J.]

     has been missed by the Tribunal in the impugned judgment,           A
     states as follows:-

          "Rule 9(2) For the purposes of sub-section (1) and sub-
          section (1A) of Section 14 of the Customs Act, 1962 (52
          of 1962) and these rules, the value of the imported goods      B
          shall be the value of such goods, for delivery at the time
          and place of importation and shall include -

          (a) The cost of transport of the imported goods to the
          place of importation;                                          c
          (b) loading, unloading and handling charges associated
          with the delivery of the imported goods at the place of
          importation; and

          (c) the cost of insurance:                                     D

          Provided that -

          (i) where the cost of transport referred to in clause (a) is
          not ascertainable, such cost shall be twenty per cent of       E
          the free on board value of the goods;

          (ii) the charges referred to in clause (b) shall be one per
          cent of the free on board value of the goods plus the cost
          of transport referred to in clause (a) plus the cost of
                                                                         F
          insurance referred to in clause (c);

          (iii) where the cost referred to in clause (c) is not
          ascertainable, such cost shall be 1.125% of free on board
          value of the goods;
                                                                         G
          Provided further that in the case of goods imported by
..        air, where the cost referred to in clause (a) is
          ascertainable, such cost shall not exceed twenty per cent
          of free on board value of the goods:
                                                                         H
632         SUPREME COURT REPORTS                   [2015] 9 S.C.R.


A          Provided also that where the free on board value of the
           goods is not ascertainable, the costs referred to in clause
           (a) shall be twenty per cent of the free on board value of
           the goods plus cost of insurance for clause (i) above and
           the cost referred to in clause (c) shall be 1.125% of the
 B         free on board value of the goods plus cost of transport
           for clause (iii) above.

           Provided also that in case of goods imported by sea
           stuffed in a container for clearance at an Inland Container
 c         Depot or Container Freight Station, the cost of freight
           incurred in the movement of container from the port of
           entry to the Inland Container Depot or Container freight
           Station shall not be included in the cost of transport
           referred to in clause (a)."
 D
            13. This Rule merely restates what is already stated in
      Section 14, namely, that the value of imported goods has to
      be the value of such goods for delivery only at the time and
      place of importation. Therefore, it is clear that even a reading
 E    of "transaction value" under the Rules would necessarily arrive
      at the same result, namely, that the quantity of goods to be
      seen for purposes of valuation can only be after they are
      imported, that is, brought into India and have to be so at the
      time and place of importation.
 F
         14. The Tribunal's judgment dated 61h February, 2006 gives
   several reasons for arriving at the conclusion that the'bill of
   lading quantity alone is to be looked at for the purpose of
   determining the value of goods imported. The first reason that
 G it gives is that duty has to be on the total payment made by the
   assessee irrespective of the quantity received. The second
   reason given is that an ad valorem duty would necessarily             ~


   lead to this result but duty levied at the specific rate would not,
   the quantity of goods in the latter case being only on the basis
 H of the quantity of crude oil received in ihe shore tank. The third
 MANGALORE REF. & PETROCHEMICALS LTD. v. COMMNR. 633
     OF CUSTOMS, MANGALORE [R.F. NARIMAN, J.]

reason that it gives is that Section 14 kicks in when the duty is   A
on an ad valorem basis and Sections 13 and 23 do not stand
in the way because it is not the question of demanding duty on
goods not received, but it is the demand of duty on the
transaction value. In spite of the "ocean loss", the appellant
has to make payment on the basis of the Bill of Lading quantity.    B

      15. We are afraid that each one of the reasons given by
the Tribunal is incorrect in law. The Tribunal has lost sight of
the following first principles when it arrived at the aforesaid
conclusion. First, it has lost sight of the fact that a levy in the C
context of import duty can only be on imported goods, that is,
on goods brought into India from a place outside of India. Till
that is done, there is no charge to tax. This Court in Garden
Silk Mills Ltd. v. Union of India, 1999 (8) SCC 744, stated
that this takes place, as follows:-                                 D

     "It was further submitted that in the case of Apar (P) Ltd.
     [(1999) 6 SCC 117: JT (1999) 5 SC 161] this Court was
     concerned with Sections 14 and 15 but here we have to
     construe the word "imported" occurring in Section 12 and       E
     this can only mean that the moment goods have entered
     the territorial waters the import is complete. We do not
     agree with the submission. This Court in its opinion in
     Bill to Amend Section 20 of the Sea Customs Act, 1878
     and Section 3 of the Central Excises and Salt Act, 1944,       F
     Re [AIR 1963 SC 1760: (1964) 3 SCR 787 sub nom
     Sea Customs Act (1878), S. 20(2), Re] SCR at p. 823
     observed as follows:

        "Truly speaking, the imposition of an import duty, by G
        and large, results in a condition which must be fulfilled
        before the goods can be brought inside the customs
        barriers, i.e., before they form part of the mass of
        goods within the country."
                                                                    H
634         SUPREME COURT REPORTS                       [2015] 9 S.C.R.


A         It would appear to us that the import of goods into India
          would commence when the same cross into the territorial
          waters but continues and is completed when the goods
          become part of the mass of goods within the country; the
          taxable event being reached at the time when the goods
 B        reach the customs barriers and the bill of entry for home
          consumption is filed." [at paras 17 and 18]

            16. Secondly, the taxable event in the case of imported
      goods, as has been stated earlier, is "import''. The taxable event
C     in the case of a purchase tax is the purchase of goods. The
      quantity of goods stated in a bill of lading would perhaps reflect
      the quantity of goods in the purchase transaction between the
      parties, but would not reflect the quantity of goods at the time
      and place of importation. A bill of lading quantity therefore
 D    could only be validly looked at in the case of a purchase tax
      but not in the case of an import duty. Thirdly, Sections 13 and
      23 of the Customs Act have been wholly lost sight of. Where
      goods which are imported are lost, pilfered or destroyed, no
      import duty is leviable thereon until they are out of customs
 E    and come into the hands of the importer. It is clear therefore
      that it is only at this stage that the quantity of the goods imported
      is to be looked at for the purposes of valuation. Fourthly, the
      basis of the judgment of the Tribunal is on a complete
 F    misreading of Section 14 of the Customs Act. First and
      foremost, the said Section is a section which affords the
      measure for the levy of customs duty which is to be found in
      Section 12 of the said Act. Even when the measure talks of
      value of imported goods, it does so at the time and place of
 G    importation, which again is lost sight of by the Tribunal. And
      last but not the least, "transaction value" which occurs in the
      Customs Valuation Rules has to be read under Rules 4 and 9
      as reflecting the aforesaid statutory position, namely, that            ..
      valuation of imported goods is only at the time and place of
 H    importation.
MANGALORE REF. & PETROCHEMICALS LTD. v. COMMNR. 635
    OF CUSTOMS, MANGALORE [R.F. NARIMAN, J.]

      17. The Tribunal's reasoning that somehow when customs A
duty is ad valorem the basis for arriving at the quantity of goods
imported changes, is wholly unsustainable. Whether customs
duty is at a specific rate or is ad va/orem makes not the least
difference to the above statutory scheme. Customs duty
whether at a specific rate or ad valorem is not leviable on . B
goods that are pilferred, lost or destroyed until a bill of entry for
home consumption is made or an order to warehouse the
goods is made. This, as has been stated above, is for the
reason that the import is not complete until what has been stated
above has happened. The circular dated 121h January, 2006 C
on which strong reliance is placed by the revenue is contrary
to law. When the Tribunal has held that a demand or duty on
transaction value would be leviable in spite of "ocean loss", it
flies in the face of Section 23 of the Customs Act in particular,
                                                                       0
the general statutory s9heme and Rules 4 and 9 of the Customs
Valuation Rules. Indeed, this Court has, in Collector v.
Hindustan Petroleum Corporation, (2001) 131 E.L.T.A87
(S.C.) stated:                                                      ··

      "The Appellate Tribunal in its order in question on the E
      issue as to which of these two viz. the quantity of crude
      oil as revealed by theVessel's Ullage Survey Report or
      the quantity determined by dip measurement in the shore
      tanks as revealed by the Cargo Intake Certificate, should F
      be adopted for the purpose of assessment of duty of the
      imported crude oil, following its decision in the case of
      Commissioner v. HPCL [2000 (121) E.L.T. 109
      (Tribunal)] had held that quantity of crude oil shown in
      Ullage Survey Report relates to point of time prior to G
      actual unloading of goods and as such is not the correct
      "quantity imported", since the import occurs only when
      the goods are unloaded and form part of mass of goods
      in lndi~. Accordingly the "imported quantity" of crude oil
      was the quantity as determined by dip measurement in H
636          SUPREME COURT REPORTS                 [2015) 9 S.C.R.

A           the shore tanks and therefore the assessment of duty
            was liable to be finalised on the basis of such quantity
            as revealed by the Cargo Intake Certificate."

        18. We therefore set aside the Tribunal's judgment and
B declare that the quantity of crude oil actually received into a
  shore tank in a port in India should be the basis for payment of
  customs duty. Consequential action, in accordance with this
  declaration of law, be carried out by the customs authorities in
  accordance with law. All the aforesaid appeals are disposed
C of in accordance with this judgment.

      Kalpana K. Tripathy                         Appeals disposed of.