Legal principle

Directions or instructions issued under Section 151A are valid only as flexible guidelines to secure uniformity in assessment and cannot operate as mandates or commands requiring a particular assessment in a particular case, which must be decided on its own merits including its transaction value.

Court decision

The petitioners' challenge to the constitutional validity of Section 151A failed and the provision was upheld, the Article 14 contention being found to have no merit; however, the petitions were partly allowed against the three Standing Orders, which were not struck down but read down as instructions or flexible guidelines, not mandates or commands, to be used only as assistance in the quasi-judicial determination of value; interim provisional assessment orders were vacated and regular assessment permitted.

Facts

Importers (Ramchandra Art Silk Yarn and allied petitioners) before the Gujarat High Court challenged the constitutional validity of Section 151A of the Customs Act, 1962 and three Circulars styled as Standing Orders (Nos. 7493/1999, 7495/1999 and 7514/2000) issued by the Chief Commissioner of Customs, Mumbai. The Standing Orders directed assessing officers to value plastic items, non-ferrous metal scrap, polyester chips, P.O.Y., P.F.Y., P.S.F., acrylic fibre, viscose staple fibre and silk by reference to international prices in foreign finance journals such as LME Bulletin, PLATT's Weekly Report and Metal Bulletin (with freight and insurance added to F.O.B. prices to reach C.I.F. value). The Union defended the Orders as guidelines to secure uniformity and avoid discriminatory treatment across Commissionerates.

Key provisions

• Section 151A, Customs Act, 1962 — Instructions to officers of customs
• Section 14, Customs Act, 1962 — Valuation of goods