By TIOL News Service

KOLKATA, MARCH 21, 2015: THE petitioners claim to be the members of a joint family, consisting of eight adult members and one minor member, maintaining the same domestic establishment at their residence at Salt Lake. On October 17, 2005 all the nine people, comprising their joint family, returned from Singapore by the same flight.

The petitioners produced the two television sets to the customs authorities for clearance under the Customs Act, 1962 and the Baggage Rules, 1998 and claimed exemption of the entire amount of customs duty on the ground that all the nine members of the joint family were travelling together, and the said televisions sets were to be used by members of their joint family.

However, the customs authorities at the airport did not accept such contention of the petitioners and directed each of the petitioners to pay customs duty of Rs.19,992/-. Each of the petitioners paid the customs duty of the said amount of Rs. 19,992/- on 18.10.2005. It is evident that value of each of the said television sets was Rs. 81,000/- and an allowance of Rs. 25,000/- was allowed in respect of each of the said television sets and thereafter customs duty was imposed at the rate of Rs.19,992/- for each of the said television.

On October 20, 2005 the petitioners claimed refund of the customs duty paid by submitting that since all the nine members of the family of the petitioners landed at the said Airport on October 17, 2005 together, in terms of Section 79 of the Customs Act, read with Rule 2(iv) and Rule 3 (Appendix-'A') of the said Baggage Rules, they were entitled to exemption, by way of free allowance, on the entire value of the said television sets totaling Rs.1,79,900/-.

By two separate letters dated October 31, 2005, the respondent customs authorities refused to entertain the claim of the petitioners for refund by relying upon the Explanation appearing below Appendix 'A' of Rule 3 of Baggage Rules, 1998 which reads - "The free allowance under this Rule shall not be allowed to be pooled with the free allowance of any other passenger."

Based on the said letters issued by the Customs authorities, the present Writ Petitions have been filed.

The primary submission of the petitioner is -

+ That there is no dispute that all the nine members comprising the joint family of the petitioners had travelled to Singapore together and all of them landed at the said Calcutta Airport on October 17, 2005 by the same flight.

+ Section 79 of the Customs Act provides for the power of the customs officer at an airport to pass free of duty any article in the baggage of a passenger subject to the Baggage Rules, 1998.

+ In view of rule 2, the word "family" includes all persons who are residing in the same house and form part of the same domestic establishment.

+ Since the said two television sets were brought by the petitioners while accompanied by other six members of the joint family, the petitioners were entitled to the benefit of exemption for Rs.2 lakhs, that is, by clubbing exemption limit Rs. 25,000/- for each member of the said family and no duty could be levied any of the petitioners on account of the said two television sets valued at Rs. 81,000/- each.

+ If the definition of the expression "family" in Rule 2(iv) of the said Baggage Rules creates any ambiguity, the petitioner should get the benefit of the interpretation of Section 79(1)(b) of the Customs Act for obtaining the exemption of customs duty, by way of free allowance, for the entire value of the said television sets as claimed in this petition.

The following case laws were also relied upon in support- C. Krishna Prasad - 2002-TIOL-1235-SC-IT, State of Jammu and Kashmir vs. Lakhwinder Kumar and Ors. in (2013) 6 SCC 333, Vartika Township (P) Ltd. reported in (2015) 1 SCC 1 = 2014-TIOL-78-SC-IT-CB.

The counsel for the Revenue submitted that from a fair reading of the provisions contained in Section 79 of the Customs Act read with Rule 3 and Appendix-A of the said Baggage Rules, it is evident that the exemption granted in respect of bona fide Baggage containing articles like that of the said television sets upto Rs. 25,000/- is applicable in respect of an individual passenger alone and the explanation provided in the said Appendix-A to the said Baggage Rules, in clear and uncertain terms provides that the free allowance under the said Rule shall not be allowed to be pooled with the free allowance of any other passenger.

The High Court extracted the provisions contained in Section 79 of the Customs Act and Rules 2(iv), 3 read with Appendix-A of the Baggage Rules & inter alia observed -

++ Sub-section (2) of Section 79 empowers the Central Government to frame rules for the purpose of carrying out the provisions of Section 79. In exercise of such power, the Central Government has framed the said Baggage Rules. Rule 3 of the said Baggage Rules provides, inter alia, that an Indian resident, returning from any country other than Nepal, Bhutan, Myanmar and China shall be allowed clearance free of duty articles in his bona fide baggage to the extent mentioned in column (2) of Appendix "A".

++ In this case, the petitioners claimed exemption of customs duty in respect of the said television sets under Clause (a) under Column-1 read with Clause (ii) under column (2) of the said Appendix A, which provide that "All passengers" of and above 10 years of age and returning after stay abroad of more than three days would be allowed exemption from customs duty for certain articles upto a value of Rs.25,000/-, if the same are carried on the person or in the accompanied baggage of the passenger. The opening words used in the different clauses under Column - 1 of the said Appendix A are "All passengers…".

++ However, the enabling provisions contained in Section 79 of the Customs Act provide for the power of the proper officer to pass an article (s) free of duty, that is to grant exemption from customs duty, in the baggage of a passenger or member of the crew. In other words, Section 79 of the Customs Act provides for granting of exemption of customs duty in respect of any article brought by a passenger himself/herself, for his/her personal use or for the use of his/her family. There cannot two opinion that the word "family" appearing in clause (b) of sub-section (1) of Section 79 relates to the user of the article(s) brought by any passenger from foreign countries.

++ The said Baggage Rules were framed under Section 79(2) of the Customs Act for regulating the exemption granted under the enabling section 79(1) of the said Act and while framing the said Baggage Rules the Central Government was conscious of the fact that as per Section 79 exemption is granted in respect of an article or articles in the baggage of an individual passenger brought for his own use or for the use of his/her family. Thus, in order to ensure that the user of the words "All Passengers" in the opening sentences in Clauses (a) to (d) under Column 1 of the said Appendix does not give rise to any ambiguity in spite of the clear language of Section 79 of the Customs Act, the Explanation was put under Appendix "A" to exclude any claim for free allowance by a passenger, by pooling the free allowance of any other passenger. Any other interpretation, as contended by the petitioners, shall render the said Explanation otiose.

In the matter of the contention of the petitioner that the definition of "family" under Rule 2(iv) of the said Baggage Rules creates ambiguity or that the said definition of family can be interpreted to uphold the claim of the writ petitioners, the High Court observed that none of the case laws cited have any application to the case & further held -

++ After considering the provisions of sub-section (2) of Section 79 of the Custom Act, as stated above and the relevant Rules of the said Baggage, I cannot but hold, that in Rule 2(d) of the said Baggage Rules, the definition of "family" has been provided for the purpose of interpreting the user of an article brought by a passenger for the use of his family under Section 79(2)(b) of the Customs Act and the said definition of family in Rule 2(d) of the Baggage Rules does not create any ambiguity.

Holding that there is no illegality in the collection of customs duty for a sum of Rs.39,984/- from the petitioners on account of the said television sets, the Writ Petition was dismissed.

(See 2015-TIOL-690-HC-KOL-CUS)