Holding

The petitioner is liable to pay customs duty at the enhanced rate prevailing on the date the goods were actually removed from the warehouse, and the writ under Article 32 is not maintainable.

Summary

Northern Corporation imported MSCR defective sheets in 1984 and stored them in a customs warehouse. The Income Tax Department imposed a ban under Section 132(1) of the Income Tax Act, 1961, preventing the goods from being cleared. After the ban was lifted in 1988, customs demanded payment of duty at the higher rate prevailing at that later date. The corporation filed a writ petition under Article 32, claiming the demand was arbitrary, illegal and unconstitutional. The Supreme Court held that under Section 15(1)(b) of the Customs Act, duty is payable at the rate in force on the date the goods are actually removed from the warehouse, and the ban merely postponed that date, making the enhanced rate applicable. The Court also ruled that the petition was not maintainable under Article 32 as no fundamental right was infringed, directing that the matter be dealt with under the appropriate statutory remedies. Consequently, the writ petition was dismissed.

Issues considered

Whether customs duty is payable at the rate prevailing on the date the goods are actually removed from the warehouse despite a prior ban by the Income Tax authorities.
Whether a writ petition under Article 32 of the Constitution is maintainable for a dispute concerning the rate of customs duty and procedural compliance.

Legislation cited

Customs Act, 1962s. 15(1)(b), s. 16, s. 49, s. 59, s. 68
Income Tax Act, 1961s. 132(1)

Subjects

Customs dutySection 15(1)(b)Income Tax banArticle 32Fundamental rightsWarehousingImport clearanceStatutory interpretation

Judgment

NORTHERN CORPORATION
A
v.
UNION OF INDIA AND ORS.

AUGUST 6, 1990

[SABYASACHI MUKHARJI, CJ. AND K.N. SAIKIA, JJ.] B

Customs Act, 1962: Section 15( l)(b)-Customs duty-Deter-
mination of rate-Goods imported could not be cleared due to ban
-!~~imposed by income tax authorities-Whether importer liable to pay at
the enhanced rate prevailing at the time of clearance.

Constitution of India, 1950: Article 32-Scope of-Excise duty-- c
Liability to pay particular duty-Dependant on interpretation of law
and determination of facts-Enforcement of provisions of the Act-
Whether a breach of fundamental right-Whether permissible to move
the Court without seeking relief within the procedure prescribed by the
Act. D

The petitioner-Corportion imported certain goods. The goods
were bounded, and could not be got released due to the ban imposed by
the Income Tax authorities, under Section 132(1) of the Income Tax
Act, 1961. Subsequently after the ban was lifted, the petitioner
approached the authorities for clearance of the goods, but the customs E
authorities demanded payment of customs duty at the enhanced rate
which was prevailing at the time of clearance. Hence the petitioner filed
a Writ Petition before this. Court challenging the demand as arbitrary,
illegal and unconstitutional.

It was contended that though the petitioner was,willing to clear F
~ the goods on payment of the then prevailing custom duty, the goods
-) could not be cleared due to circumstances beyond its control, by the
order of the Income Tax authorities and, therefore, the authorities
could not claim enhanced duty.

On behalf of the respondents it was contended that in view of Section G
IS(I)(b) of the Customs Act, especially the expression "actually
removed" used therein, the liability of the petitioner to pay the duty
was the duty at the time of clearance of the goods.
- --...,
Disposing of the Writ Petition, this Court,
H

621
622 SUPREME COURT REPORTS [ 1990] 3 S.C.R.

HELD: J. Section 15(l)(b) of the Customs Act, 1962 clearty
A requires that the rate of duty, rate of exchange and tariff applicable to ..!.,._-
any imported goods shall be the rate and valuation in force on the date
on which goods are actually removed from the warehouse. Therefore, in
view of the language used in Section 15(l)(b) of the Act, specially in the
light of the expression 'actually removed' the petitioner was liable to
B pay excise duty at enhanced rate prevailing on the date the goods were
cleared. The prohibitory orders, arbitrary or not, would postpone the
date of clearance, and as such would postpone the determination of the- __
duty. [626F; 627C] ~

Prakash Cotton Mills (P) Ltd. v. B. Sen & Ors., [1979] 2 SCR
1142, relied on.
c
2.1 Recourse to Art. 32 of the Constitution can be had if there is a
breach of the fundamental rights, provided the other conditions are
satisfied. But in a matter where liability of a citizen to pay a particular
duty depends on interpretation of law and determination of facts and
D the provision of a particular statute, for which elaborate procedure is
prescribed, enforcing of those provisions of the Act would not breaclt
fundamental right and, without taking any resort to the provisions of
the Act, it is not permissible to move this Court on the theoretical basis
that there is breach of fundamental right. Whenever a person comp-
lains and claims that there is a violation of law, it does not involve
E breach of fundamental right for the enforcement of which alone Art. 32
of the Constitution is attractrd. [627E; 628A-D]

Smt. Ujjam Bai v. State of Uttar Pradesh, [1963] I SCR 778,
relied on.

F 2 .2 In a particular situation whether customs duty is payable at
the rate prevalent on a particular date or not has to be determined
under the four corners of the Customs Act, 1962. [627FJ

In the instant case, the petitioner has no fundamental right as
such to clear any goods import•d without payment of duties in accor-
G dance with the law. There is procedure provided by law for determina-
tion of the payment of customs duty. The revenue.has proceeded on that
basis. The petitioner cannot seek to remove the goods without payment
at that rate or without having the matter determined by the procedure
envisaged and enjoined by the law for that determination. The
petitioner, without seeking to take any relief within the procedure
H envisaged under the Act, had moved this Court for breach of funds-
NORTHERN CORPN. v. U.0.1. [MUKHARJI, J.] 623

. mental right, This is not permissible and should never be entertained, A
->-t627F-H]
Relief under Article 32 of the Constitution is therefore, wholly
inappropriate in the facts and circumstances of the instant case, [6288]

ORIGINAL JURISDICTION: Civil Writ Petition No. 443 of 1988. B

(Under Article 32 of the Constitution of India).

Rajiv K. Garg and N.D. Garg for the Petitioner.

Soli J. Sorabjee, Attorney General, M. Chandrasekharan and P. C
Parmeswaran for the Respondents .

. .___ The Judgment of the Court was delivered by

SABYASACHI MUKHARJI, CJ, This is an application under
D
Article 32 of the Constitution. Northern Corporation is the petitioner
in the instant application and the Union of India, the Collector of
Customs and the Assistant Collector of Customs (Bond Departm~nt)
are the respondents.

On 11th May, 1983, the licensing authority issued impcrt licence
E
No. 2959845 for Rs.20, 12, 729 in favour of Mis Industrial Cable India
Ltd., Rajpura. The licence holder transferred the same in favour of
Mis Metalic metal Industries. The transferee-licence holder issued a
letter of authority in favour of the petitioner for the import of MSCR
defective sheets or coils. The. letter of authority was issued on 21st
May, 1984.
F
The petitioner herein placed order on M/s Sayani Enterprises
Pvt. Ltd., Singapore for the supply of MSGR defective sheets or coils
on 30th May, 1984. The foreign supplier shipped the material in three
consignments and the goods arrived at the Bombay Port on 12th June,
1984. The clearing agent of the petitioner filed bills of entry on 30th
G
July, 1984 for warehousing under section 59 of the Customs Act, 1962
(hereinafter referred to as 'the Act'), and the same was allowed. The
goods were bounded on 7th August, 1984. It may be mentioned that
. ·-....; the rate of duty on the day was 60% + 40% + Rs.650 per M.T. and
10% C.V.D. The total duty on the consignment was assessed as
Rs.26,20,109.55.
H
624 SUPREME COURT REPORTS (1990) 3 S.C.R.

On 21th August, 1984, the petitioner's clearing agent filed six
A bills of entry for ex bond clearance. However, the bills of entry were .. l, _
.....
returned with the remark that "please obtain no objection from the
income tax". This was endorsed on 24th August, 1984. The petitioner
states that thereafter he came to know that the income tax authorities
had imposed ban under section 132(1) of the Income Tax Act, 1961.
B The petitiqner asserted that he was ever ready and willing, rather was
anxious, to get the material on payment of the then prevailing customs
duty. However, due to circumstances beyond the control of the
petitioner, that it to say, by the order of the Income Tax Authorities
the goods could not be released. This factor was not of the petitioner's
making, according to the petitioner.

c On 30th March, 1988, the Income Tax Department issued the
necessary no objection certificate, thus lifting the ban. On 4th April,
1988, the petitioner's agent contacted the customs authority for clea-
rance of the goods. The duty as is prevalent now is Rs.5,000 per M.T.
+add!. duty 45% and C.V.D. at Rs.325 per M.T. The total duty came
Q to a very large sum of money. The demand, according to the
petitioner, was arbitrary, illegal and unconstitutional.

The instant writ was filed under Article 32 of the Constitution on
16th April, 1988 and on 22nd April, 1988, this Court passed the follow-

F.
ing order:
""-· .
"Pending notice, there will be limited stay to the extent
that the goods name, "MSCR defective sheets/coils" which
have arrived at Bombay Port per S.S. "SEA PRIMROSE"
will be released forthwith on petitioner's paying customs
and other duties as leviable on 21.8.84. In addition to the
F above payment the petitioner will deposit Rs.5 lakhs and
for the balance amount petitioner will furnish surety (which
may consist of ITC bond but excluding cash/bank guaran-
tee/NSC/FDR) to the satisfaction of the Collector of
Customs.''

G We directed that the notice should be given to the revenue authority to
appear before us. Learned Attorney General had appeared pursuant
to the notice on behalf of the respondents. It is contended on behalf of
the respondents that for the payment of duty, the liability of the
petitioner to pay the duty is the duty at the time of clearance of the
goods. Our attention was drawn to section 15(1)(b) of the Act which
H postulates that the rate of duty and tariff valuation, if any, applicable
NORTHERN CORPN. v. U.O.I. [MUKHARJI, J.] . 625

to any imported goods, shall be the rate and valuation in force, in case
A
-.v-~- ·the goods are cleared from a warehouse under section 68, on the date
on which the goods are actually removed from the warehouse. Section
15 of the Aci reads as under:

'.'S. 15. Date for. determination of rate of duty and tariff
valuation of imported goods. B

(-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 consump-
tion under section 46, on the date on which a bill of entry in c
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 actu-
ally removed from the warehouse; D

(c) in .. the case of any other goods, on the date of
payment of duty:

•. ..-1 Provided that if a bill of entry has been presented
before the date of entry fowards of the vessel by which the E
goods are imported, the bill of entry shall be deemed to
have been presented on the date of such entry inwards.

(2) The provisions of this section shall not apply to bag-
gage and goods imported by post."
F
Learned Attorney General laid emphasis on the expression
"actually removed" ii1 clause (b) of section 15( 1) of the Act. Our
attention was also drawn to section .16 of the Act which reads as under:

"S.16. Date for determination of rate of duty and tariff
valuation of export goods. G

(1) The rate of duty and tariff valuation, if any, applicable
to any export goods, shall be the rate and valuation in
force-

(a) in the case of goods entered for export under· H
626 SUPREME COURT REPORTS [1990] 3 S.C.R.

section 50, on the date on which the proper officer makes
A an order permitting clearance and loading of the goods for 1<
exportation under section 51;

(b) in the case of any other goods, on the date of
payment of duty.
B
(2) The provisions of this section shall not apply. to
baggage and goods exported by post."

It was contended on behalf of the revenue that in view of the
aforesaid, it would not be possible for the petitioner to clear the goods
on payment of duty on the date when the petitioner was actualling
C expressed willingness to remove the goods. Our attention was drawn
to the decision of this Court in Prakash Cotton Mills (P) Ltd. v. B. Sen
& 9rs., [1979] 2 SCR 1142. In that case,the appellant stored on De- __....-
cember 22, 1965 in the Customs warehouse, goods imported by him
under a licence, and cleared them on various dates between September
D 1, 1966 and February 20, 1967. Under protest, they paid customs duty
at the enhanced rates in accordance with the amended provisions.
Later, they claimed rebate alleging that since the consignments had
been received, stored and assessed to duty much before the promulga-
tion of the Ordinance, they were liable to pay duty at the rate prevail-
ing on the date of warehousing. Their appeals and revision were unsuc- ~
E cessful. In appeal to this Court it was contended that the material
change in s. 15 being only the substitution of the words "the rate of
duty" the customs authorities were not entitled to take into account
the new rate of exchange at the appreciated value of currency in
respect of the consignments stored in the warehouse prior to the com-
ing into force of the Ordinance. Dismissing the appeal, this Court held .im
F that the customs authorities were right intaking the view that the rate
of duty applicable to the imported goods should be determined accord- ~-
ing to the law prevalent on the date they were actually removed from
the warehouse. Section 15(1)(b) clearly requires that the rate of duty,
rate of exchange and tariff applicable to any imported goods shall be
the rate and valuation in force on the date on which goods are actually
G removed from the warehouse. Under s. 49 and importer may apply to
the Assistant Collector of Customs for permission to store the
imported goods in a warehouse pending their clearance and he may be
permitted to do so; and s. 68 provides that an importer of any Y-
warehoused goods may clear them if the import duty leviable on them
has been paid. In that case, it was found that as the goods were
H removed from the warehouse after the amending Ordinance had come
NORTHERN CORPN. v. U.O.J. [MUKHARJI, J.) 627

_ ~ into force, the customs authorities and the Central Government were
A
::.---·~right in taking the view that the rate of duty applicable to the imported
goods should be determined according the law prevalent on the date
these were actually removed from the warehouse.

Mr. Garg, appe;rring for the petitioner, on the other hand con-
tended before us that his client was willing indeed to pay the duty when B
the goods crossed the customs barrier and were in the process of being
-.r-- cleared, but could not be cleared because of the prohibitory orders of
the Income Tax Department under section 102 of the Customs Act. In
that light, it was not possible, Mr. Garg contended, for the Income Tax
Department to claim enhanced duty due to facts which were not for
the fault of the petitioner. In view of the language used in section
15( l)(b) of the Act, it is difficult to accept this contention specially in c
the light of the expression used 'actually removed'. It must be accepted
.....__. · that the prohibitory orders, arbitrary or not, would postpone the date
of clearance and as such would postpone the determination of the
duty. Therefore, it is difficult to accept Mr. Garg's contention.
D
However, there is a far more serious objection in entertaining
this application under Article 32 of the Constitution. Article 32 of the
Constitution guarantees the right to move the Supreme Court for
enforcement of fundamental rights. If there is breach of the fundamen-
tal rights, the petitioner can certainly have recourse to Article 32 of the
Constitution provided other conditions are satisfied. But we must, in E
all such cases, be circumventive of what is the right claimed. In this

..
->
case, the petitioner as such has no fundamental right to clear the goods
imported except in due process of law. Now in the facts of this case,
such clearance can only be made on payment of duty as enjoined by
the Customs Act. In a particular situation whether customs duty is
payable at the rate prevalent on a particular date or not has to be
determined under the four comers of the Customs Act, 1962. The
F

petitioner has no fundamental right as such to clear any goods
imported without payment of duties in accordance with the law. There
is procedure provided by law for determination of the payment of
customs duty. The revenue has proceeded on that basis. The petitioner
contends that duty at a particular rate prevalent at a particular date G
was not payable. The petitioner cannot seek to remove the goods
without payment at that rate or without having the matter determined
by the procedure envisaged and enjoined by the law for that deter-
mination. The petitioner without seeking to take any relief within the
procedure envisaged under.the Act had moved this Court for breach of
fundamental right. This is not permissible and should never be H
628 SUPREME COURT REPORTS [199U] 3 S.C.R.

entertained. In a matter of this nature where liability of a citizen to pay / _
A a particular duty depends on interpretation of law and determination · "'.:
of facts and the provision of a particular statute for which elaborate
procedure is prescribed, it cannot conceivably be contended that
enforcing of those provisions of the Act would breach fundamental
right which entitle a citizen to seek recourse to Article 32 of the Con-
B stitution. We are, therefore, clearly of the opinion that relief under
Article 32 of the Constitution is wholly inappropriate in the facts and
the circumstances of this case. It has further to be reiterated that for - --,._.
enforcement of fundamental right which is dependent upon adjudica-
tion or determination of questions of law as well as question of fact
without taking any resort to the provisions of the Act, it is not permis-
sible to move this Court on the theoretical basis that there is breach of
c the fundamental right. Whenever a person complains and claims that
there is a violation of law, it does not automatically involve breach of
fundamental right for the enforcement of which alone Article 32 of the --"'
Constitution is attracted. It appears that the facts of this nature require
elaborate procedural investigation and this Court should not be moved
and should not entertain on these averments of the Article 32 of the
Constitution. This position is clearly well settled, but sometimes we
are persuaded to accept that an allegation of breach of law is an action
in breach of fundamental right. In this connection, reference may be
made to the decision of this Court in Smt. Ujjam Bai v. State of Uttar
Pradesh, [ 1963] 1 SCR 778, where this Court observed at p. 842.of the ~
E report as under:

"In my opinion, the correct answer to the two qustions
which have been referred to this larger Bench must be in
the negative. An order of assessment made by an authority
under a taxing statute which is intra vires and in the
F undoubted exercise of its jurisdiction cannot be challenged
on the sole ground that it is _passed .on a misconstruction of
a provision of the Act or of a notification issued there-
under. Nor can the validity of such an order be questioned
in a petition under Art. 32 of the Constitution. The proper
remedy for correcting an error in such an order is to pro-
G ce·ed by way of appeal, or if the error is an error apparent
on the face of the record, they by an application under Art.
226 of the Constitution. It is necessary to observe here that
Art. 32 of the .Constitution does not give this Court an
appellate jurisdiction such as is given by Arts. 132 to 136.
Article 32 guarantees the right to a constitutional remedy
H and 'felates only to the enforcement of the rights conferred
NORTHERN CORPN. v. U.0.1. IMUKHARJI, J.] 629

by Part III of the Consutution. Unless a question of the A
enforcement of a fundamntal right .arises, Art. 32 does not
apply. There can be no question of the enforcement of a
fundamental right if the order challenged is a valid and
legal order, in spite of the allegation that it is erroneous. I
have, therefore, come to the conclusion that no question of
B
· the enforcement of a fundamental right arises in this case
and the writ petition is not maintainable."

In the aforesaid view of the matter, we are clearly of the opinion
that Article 32 of the Constitution should not have been resorted to
and this application does not lie under Article 32 of the Constitution.
c
However, it appears that this Court has passed an order on 22nd
April, as indicated hereinbefore. It is stated that the goods have been
cleared pursuant to that order. The revenue would be at liberty to take
appropriate action in accordance with law for the recovery of the dues.

This writ petition is accordingly disposed of. D

N.P.V. Petition disposed of.