Legal principle

For bulk liquid cargo, customs duty must be levied on the quantity actually delivered where that can be ascertained by a recognised method giving more accurate results, and the ullage survey report may be relied upon only in the absence of such a method, with the surveys conducted under customs supervision and signed by both the customs officer and the consignee.

Court decision

The Bombay High Court allowed the petitions in part, holding that the public notices and Circular No. 96/02 must be read to mean that wherever it is possible to determine the quantity actually delivered from the vessel into the tank lorry, that method must be adopted for assessment and the assessing authorities cannot be directed to assess only on the basis of the ullage report; only in the absence of any other recognised method giving more accurate results may the ullage-determined quantity be used, subject to safeguards that the pre-discharge and post-discharge ullage surveys are carried out under the supervision of a customs officer and signed by both the consignee and the customs officer. There was no order as to costs.

Facts

Godrej Industries Limited, a manufacturer of soaps, toiletries, detergents and chemicals, imported bulk liquid cargo such as oils and fats as raw materials and traditionally took delivery directly from the vessel into tank lorries, with duty remission granted on the basis of the B.P.T. Weigh-bridge report where short delivery was shown. The Collector of Customs, Mumbai issued Public Notice No. 49 dated 30-3-1992, followed by a public notice dated 17-9-1997 by the Commissioner of Customs (Imports), and the CBEC issued Circular No. 96/02 dated 27-12-2002, all directing that duty be assessed on the quantity determined by the ullage survey report at the port of discharge, irrespective of the quantity actually received by the importer. On the consignment in issue, the Bill of Lading showed 649.651 MT, the discharge-port ullage report 649.612 MT, but the B.P.T. Weigh-bridge showed only 642.600 MT actually received, so the petitioner had to pay duty on the higher ullage quantity. The petitioners challenged the validity of these public notices and the circular by writ petitions before the Bombay High Court.

Key provisions

• Section 116, Customs Act, 1962 — Penalty for not accounting for goods