Crossing The Customs Frontier

It is clear from the one-sided view propounded in the article that the authour has not been able to come out of the groove of ex-DC, sales tax department. His only effort seems to be directed towards bringing more sales tax to the state irrespective of what happens to the trade.
Besides, he does not appear to be fully familiar with the customs law, otherwise he would not have opined that assessment of B/E should be the determining event for " crossing the customs frontier".
At several places in his article, he has tried to foster his own views in the guise of interpretation of law. This should have been avoided

v gupta 27/02/2012

 

The author has failed to understand one basic issue. Goods are permitted to be warehoused but till the filing of a bill of entry for home consumption, the duty liability is not discharged and the goods are not cleared from the clutches of the customs department. In between, the goods are at the total control of the customs, the warehouses themselves are under the control of the customs. So far I was under the impression that your editorial group vets the articles published. Big disappointment. Search for novelty should not end in getting absurdity.

sureshbala sureshbala 27/02/2012

 

I fully agree with comments of vkgvkg1234 that the author has given his own views which are impregated with his being in the Sales tax department for years together and without properly appreciating the provisions under Customs Act which governs imports and exports. he has failed to appreciate that clearance for warehousing is not clearance to the importer and goods remain under the control of the customs department and it is not just a case of deferment of payment of duty but the rate of duty also is on the date of filing of B/E for Ex-bonding ie for home consumption.

He should have refrained giving his own views against the decision of Supremem Court in case of Hotel Ashoka and it actually is a case of disrespect and contempt of Court.

A.K. Aggarwal
Jt. Commissioner Customs & Excise (Retd)

essar energy 27/02/2012

 

Comments on Article – Crossing the Customs Frontier:
I have 1.
2.
3.
4.
5.
6.
read few comments on my article which i would to like to respond to as under -
After reading the Apex Court judgment in the case of Hotel Ashoka, I thought of writing an article and bringing few more things such as history and case laws not discussed in the Judgment. My views are not at all against the Trade, On the contrary, I felt the trade should take conservative approach and tread cautiously in structuring the transactions since the stakes involved are huge and I wanted to show them the pitfalls.
Many readers are familiar with the Customs Act only and not so familiar with the Central sales tax Act, hence the object of this article was also to make them familiarise with the history and provisions under the Central Sales tax Act.
The Judgment in the case of Hotel Ashoka is in respect of levy of Sales tax and not in respect of levy of Customs duty. If you have read in my article as to how this concept of Customs Frontier has evolved over a period of time “for the purposes of” Sales tax laws, then you will realise that Hon’ble Courts faced with the problem of deciding the date when the ship crossed inside the Indian Customs territory to decide as to when the Import comes to end to decide “whether States can levy sales tax /VAT on the transaction”.
The term "Customs frontier" is used as a “legal fiction” and as a “notional boundary” (unlike in Customs Act) under Central Sales tax Act for deciding the taxability of the imported goods under the Sales tax laws. Hence, Central Sales tax Act just talks about “Customs Station” and not “Customs Area” which is defined differently under the Customs Act.
The term area of the “Customs Station" (and not "Customs Area") has been used in the very restrictive sense in the Central sales tax in so far as it should help the tax authorities deciding the "earliest recorded” (Emphasis supplied) point of time when the importer declares that the goods have reached the shores of Indian Port and that point of time is precisely reflected by his filing either Bill of entry for warehousing or Bill of entry for Home consumption, so that if thereafter the ownership is transferred, then it is liable to tax under the local Sales tax Law.
For the levy of Sales tax, whether the goods are in the control of Customs authorities or not (being in bonded warehouse) is really not material – In this respect the observations of the Apex Courts in the case of Burma Shell Oil (11 STC 764 – Five member bench of SC) and Madras Marine (63 STC 169 – Division bench of SC may be looked into when it lays down that Customs barrier does not set a terminal limit for the levy of sales tax.
Ajay Deoras.

Ajay deoras 27/02/2012