# PRAKASH COTTON MILLS (P) LTD v. B. SEN & ORS

- **Citation:** [1979] 2 S.C.R. 1142
- **Court:** Supreme Court of India
- **Decided:** 1979-01-25
- **Bench:** P. N. Shinghal, 0. A. Desai
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/prakash-cotton-mills-p-ltd-v-b-sen-ors-7476
- **Pages:** 5

## Headnote

Customs Act, 1962 (52 of 1962) Ss. 14 & 15-~cope of-Goods imported
and stored in warehouse-Section amended increasing
the rate
of' dutyLl'V)' c,f duty whethe1· should be on the basi~ when goods were warehoused or
when cleared.
As a result of devaluation of Indian Currency in June. 1966, Ss. 14 & 1.5
of the Customs Act were amended by the Customs (Amendment) Ordinance,
1966--which was later replaced by an Act-with effect from July 7, 1966.
Section 15(1) provides that the rate of duty,
rate of exchange
and tariff
valuation applicable to any imported goods shall be the rate and valuation in
force . . . . . (b) in the case of goods cleared from a \Va.rehouse under s. 68,
on the date on which the goods were actually removed from the warehouse.
D
The appellant stored on December 22,
1965 in the
Customs warehouse,
goods imported by him under a licence, and cleared them on various dates
between September I, 1966 and February 20, 1967.
Under protest, they paid
customs duty nt 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 promulgation of the Ordinance, they were liable to pay duty at the rate prevailing on the date of ware~
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housing,
Their appeals and revision were unsuccessful.
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, rate of exchange"
for 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 coming into force "'of the Ordinance.
Dismissing the appeal,
G
HELD : The customs authorities were right in taking the view
that the
rate of duty applicable to the imported goods should be determined accordi11g
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 valuation 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. Under s. 49 an 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 warehoused goods may cloor them if the import duty leviableon them has been paid. That is why clause (b) of sub-section (,!) of s. 15
makes a reference to s. 68.
[1!46D, 1145H--1146C]
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PRAKASH COTTON MILLS v. B. SEN (Shinghal, J.)
1143
In the instant case the goods were removed from the warehouse after the
A
Ordinance canie into force on July 7, 1966.
[1146Dl
ClvIL APPELLATE JURISDICTION : Ci'vil
Appeal Nos.
1997 and 2219 of 1969.
1992Appeals by Special Leave from order dated 16-1-69 and 19-3-69
of the Govt. of India, Min. of Finance Dept. of Revenue in Orders
Nos. 8637-8642/68 and 1408/69.
Y. S. Chitale, J. B. Dadachanji and D. N. Misra for the Appellant
in all appeals.
B
S. Markrmdeya and Girish Chandra for the Respondents in all the
C
appeals.
'

## Text

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1142
PRAKASH COTTON MILLS (P) LTD.
v.
B. SEN & ORS.
January 25, 1979
[P. N. SHINGHAL AND 0. A. DESAI, JJ.J
Customs Act, 1962 (52 of 1962) Ss. 14 & 15-~cope of-Goods imported
and stored in warehouse-Section amended increasing
the rate
of' dutyLl'V)' c,f duty whethe1· should be on the basi~ when goods were warehoused or
when cleared.
As a result of devaluation of Indian Currency in June. 1966, Ss. 14 & 1.5
of the Customs Act were amended by the Customs (Amendment) Ordinance,
1966--which was later replaced by an Act-with effect from July 7, 1966.
Section 15(1) provides that the rate of duty,
rate of exchange
and tariff
valuation applicable to any imported goods shall be the rate and valuation in
force . . . . . (b) in the case of goods cleared from a \Va.rehouse under s. 68,
on the date on which the goods were actually removed from the warehouse.
D
The appellant stored on December 22,
1965 in the
Customs warehouse,
goods imported by him under a licence, and cleared them on various dates
between September I, 1966 and February 20, 1967.
Under protest, they paid
customs duty nt 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 promulgation of the Ordinance, they were liable to pay duty at the rate prevailing on the date of ware~
E
housing,
Their appeals and revision were unsuccessful.
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, rate of exchange"
for 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 coming into force "'of the Ordinance.
Dismissing the appeal,
G
HELD : The customs authorities were right in taking the view
that the
rate of duty applicable to the imported goods should be determined accordi11g
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 valuation 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. Under s. 49 an 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 warehoused goods may cloor them if the import duty leviableon them has been paid. That is why clause (b) of sub-section (,!) of s. 15
makes a reference to s. 68.
[1!46D, 1145H--1146C]
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PRAKASH COTTON MILLS v. B. SEN (Shinghal, J.)
1143
In the instant case the goods were removed from the warehouse after the
A
Ordinance canie into force on July 7, 1966.
[1146Dl
ClvIL APPELLATE JURISDICTION : Ci'vil
Appeal Nos.
1997 and 2219 of 1969.
1992Appeals by Special Leave from order dated 16-1-69 and 19-3-69
of the Govt. of India, Min. of Finance Dept. of Revenue in Orders
Nos. 8637-8642/68 and 1408/69.
Y. S. Chitale, J. B. Dadachanji and D. N. Misra for the Appellant
in all appeals.
B
S. Markrmdeya and Girish Chandra for the Respondents in all the
C
appeals.
'
The Judgment of the Court was delivered by
SHINGHAL J. These appeals by special leave arise out of an order
of the Central Government dated Jannary 16, 1969 by which six revisional applications of the appellants were dismissed, and a similar order
D
dated March 19, 1969, in the remaining case. As the basic facts and the
law governing them are quite similar, it will be sufficient to deal with
the common point in controversy before us on the basis of the admitted facts, and to dispose of the appeals together.
The appellants obtainted licences for the import of
102
cases of 3,000 Kgs. of nylon yarn.
The yarn was shipped to Bombay
on the basis of a letter of credit in favour of the foreign suppliers.
When the shipment arrived, the appellants received the bill of lading
and other documents of title from the bankers on or about August 23,
1965, and paid for the same.
They lodged the bill of entry the same
day, and it has been claimed that the goods were assessed for duty by
the customs authorities at a certain figure.
The appellants stored the
goods in the warehouse on December 22, 1965.
They cleared 32
cases for "home" consumption on May 10, 1966, and there is
no
controversy in regard to it.
The currency was devalued on June 6,
1966, and the Customs (;Amendment) Ordinance, 1966, was promulgated on July 7, 1966, by which sections 14 and 15 of the Customs
Act, hereinafter referred to as the Act, were amended.
The Ordinance was replaced by the Customs (Amendment) Act, 1966. The
appellants cleared 12 cases of the aforesaid consignment on or about
September 1, 1966. Another 12 cases were cleared on October 10,
1966, and 46 cases were cleared in two lots on or about December
30, 1966 and February 20, 1967.
Their
grievance was that the
cases were allowed to be cleared on payment of "enchanced" duty
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1144
SUPREME COURT REPORTS
(1979] 2 s.c.R.
according to the amended provisions of the Act.
They paid the duty
under protest and applied for refund of the excess payment on the
ground that the amended law was not applicable as the consignments
had been received, stored and assessed to duty before the promulgation of the Ordinance. The application~ of the appellants for refund
were rejected by the customs authorities, and their appeals were dismissed by the Appellate Collector of Customs on the ground that the
amended sections 14 and 15 of the Act were applicable to the consignments in question.
The appellants filed revision applications before
the Central Government, but they were dismissed by the aforesaid
common impugned order dated January 16, 1969. They have therefore approached this Court for a redress of their grievance.
The facts relating to Civil Appeal No. 2219 of 1969, are quite
similar, except that the consignment in that case was of 63 cases of
nylon yarn, which were stored in the warehouse on
December 14,
1965, and were cleared on May 25, 1967. In that case also, the
appellants paid the duty under the provisions of the amended se<:- ,
tions under protest, and unsuccessfully applied for refund of the socalled excess duty.
They failed in their
appeals to the Appellate
Collector of Customs and their application for revision was rejected
by the Central Government on March 19, 1969.
It will thus appear that the controversy in these two sets of cases
relates to the short question whether the customs authorities were justified in applying the rate of duty (to the imported goods in question)
according to the rate prevalent on the date of their actual removal
from the warehouse.
It will be recalled that the Customs (Amendment) Ordinance,
1966, was promulgated and came into force on July 7, 1966, and
was replaced by the Customs (Amendment) Act, 1966. The amendments in question were by way of substitution of sections 14 and 15
of the Act by the new sections. It has been argned by Mr. Chitale
for the appellants that the material change was that made in subsection ( 1) of section 15 of the Act by substituting the words "The
rate of duty,
rate
of
exchange"
for
the
words "The
rate of duty".
He has therefore argned that the customs authorities
were not entitled to take the new "rate of exchange", at the depreciated value of the currency, into consideration in respect of the consignments in question as they had been shipped to Bombay and stored
in the warehouse before the amended section 15 came into force.
The learned counsel tried to argue that the orders of assessment of
the customs duty were also made before the amendment Ordinance
)
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PRAKASH COTTON MILLS v. B. SEN (Shinghal, l.)
1145
was promulgate<! on July 7, 1966, but he did not pursue that line of
argument because he was not in a position to produce the so-called
assessment orders. But, as we shall show, even if it were assumed
that any such order or orders had been made before July 7, 1966,
that could not possibly affect the correct rate of duty applicable to the
imported goods.
A reference to sections 14 and 15 of the Act will show that while
section 14 deals with the valuation of goods for purposes of assessment, it is section 15 which specifies the date for determination of
the rate of duty and tariff valuation of imported goods.
The amended section reads as follows,-
"15 (1) The rate of duty, rate of exchange and tariff
valuation, if any, applicable to any imported goods, shall
be the rate and valuation in force,-
(a) i'n the case of goods enter~d 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 provisions of this section shall not apply to
baggage and goods imported by post.
(3) For the purpooes of section 14 and this section-
( a) "rate of exchange" means the rate of exchange
determined by the Central Government for the conversion of
Indian currency into foreign currency or foreign currency
into Indian currency;
(b) "foreign cuw,ncy" and "Indian currency" have the
meanings respectively assigned to them in the Foreign Exchange Regulation Act, 1947."
It fa thus the clear requirement of clause (b) of sub-section (1)
of
section 15 of the Act that the rate of duty, rate of exchange and U1riff
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SUPREME COURT REPORTS
[1979] 2 S.C.R.
valuation applicable to any imported goods shall be the rate and valuation in force on the date on which the warehoused goods are actually
removed from the warehouse.
A cross-reference to section 49 of the
Act shows that an importer may apply to the Assistant Collector o!
Customs for permission to store the imported goods in a warehouse
pending their clearance, and he may be permitted to do so. The other
relevant provision is that contained in section 68 of the Act which
provides that the importer of any warehoused goods may clear them
for "home consumption" if, inter alia, the import duty leviable on
them has been paid.
That is why clause (b) of sub-section ( 1) of
section 15 of the Act makes a reference to section 68. It is therefore
quite clear that the rate of duty, rate of exchange and tariff vaLuation
shall be those in force on the date of actual removal of the warehoused goods from the warehouse. As it is not in dispute before us
that the goods, which are the subject matt.or of the appeals before us,
were removed from the warehouse after the amending Ordinance had
come into force on July 7, 1966, the customs authorities
and the
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Central Government were quite right in taking the view that the rate
of duty applicable to the imported goods had to be determined according to the law which was prevalent on the date they were actually removed from the warehouse, namely, tho amended sections 14 and 15
of the Act.
There is therefore no force in the argument that the
requirement of the amended section 15 should have been ignored
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simply because the goods were imported before it came into force, or
that their bills of lading or bills of entry were lodged before that date.
As we find no force in these appeals, they are dismissed with costs.
N. V. K.
Appeals dismissed.
•