ASSIGNMENT

SEMESTER & PROGRAM: B COM. LL.B. (HONS.) TAXATION

LAW
VIII SEMESTER

SECTION 19 OF CUSTOM ACT 1962

Arjun Parashar
500046043
R129215027

Submitted under the guidance of:

Ms. Preetika Sharma
Assistant Professor

School of Law
University of Petroleum and Energy Studies
Dehradun
What is sec 19 of CUSTOM ACT 1962 ?

SEC 191 SAYS - Determination of duty where goods consist of articles liable to different
rates of duty.—Except as otherwise provided in any law for the time being in force, where
goods consist of a set of articles, duty shall be calculated as follows:—

(a) articles liable to duty with reference to quantity shall be chargeable to that duty;

(b) articles liable to duty with reference to value shall, if they are liable to duty at the same
rate, be chargeable to duty at that rate, and if they are liable to duty at different rates, be
chargeable to duty at the highest of such rates;

(c) articles not liable to duty shall be chargeable to duty at the rate at which articles liable to
duty with reference to value are liable under clause (b): Provided that,—

(a)accessories of, and spare parts or maintenance and repairing implements for, any article
which satisfy the conditions specified in the rules made in this behalf shall be chargeable at
the same rate of duty as that article;

(b)if the importer produces evidence to the satisfaction of the proper officer regarding the
value of any of the articles liable to different rates of duty, such article shall be chargeable to
duty separately at the rate applicable to it.

ILLUSTRATION

SUB SECTION A says that according to the quantity of the goods ,duty will be charged.

SUB SECTION b says that it fully depend on the value of goods,if there are two different
rates of value of goods ,then the highest rate will prevail.

Associated case laws

Godrej Soaps Private Limited Vs. A.K. Bandyopadhyay and Others

In the said case2 the very question arose viz. whether animal feed or animal compound feed
fell within the provisions of Section 19 of the Customs Act and/or Item No. 19 of the Indian
Customs and Central Excise Tariff. On considering this matter, the said Court held that

1
www.cbic.gov.in/htdocs-cbec/customs/cs-act/cs-act-ch1-revised3
2
1981 (8) ELT 555 Bom
although the animal compound feed was made up of different ingredients, a new product had
resulted and the identity of the material mixed was lost and the provisions of Section 19 of
the Customs Act, 1962, or Item 19 of the Indian Customs and Central Excise Tariff would not
be applicable.

Commissioner of Customs Vs. Spic Ltd.

The issue3 that arises for consideration in the appeals is whether the Stainless Steel Screw
with Plastic Washers imported can be treated as set of articles and if so taking into
consideration the interpretative rules, for interpretation of the tariff, and Section 19(b) of the
Customs [Act], 1962, and the description of goods under Tariff Item 7318.15 the same can be
assessed under Chapter 39 or Tariff Heading 7318. We observe that the two items are
imported together and the Plastic Washers imported is intended to be used along with
Stainless Steel Screw. The two items, therefore, have to be considered as set of articles
inasmuch as Stainless Steel Screw and the Washers as such carry different descriptions and
perform different functions. Washers perform a supplementary function for which Stainless
Steel Screw is used. Under Tariff Heading 7318 as it is, Steel Screw and Steel Washers have
been specified separately.

It is seen that the range of products covered under this is vast and among other items,
artificial resins are covered. Polyols is separately covered and so also Polyester resins. Some
of the goods under this groups are resin while other are not so. The legislature in its wisdom
has extended the benefit of the notification only in respect of Polyester resins i.e. one of the
items covered under tariff Heading 3907.99 figuring at Sl. No. 10 of the notification.
Therefore, amongst the range of items covered by the two headings at Sl. No. 10, unless it
can be shown that the appellants’ goods answer to the description of Polyester resin set out
under Sl. No. 10, the benefit cannot be allowed. There is no claim from the respondents that
Polyol imported by them can be considered as Polyester resin. As it is, the Polyester resin has
been described as under in the Mac Graw Hill dictionary:

3
1997 ECR 449 Tri Chennai, 1998 (97) ELT 137 Tri Chennai
There is nothing to show that the item are resinous in nature and that of Polyester variety. In
view of the above, we hold that the lower appellate authority’s order is well reasoned and the
appellant’s plea for benefit under Notification 133/86 cannot be allowed. The Cross appeals
of the appellants are, therefore dismissed.

Commissioner of Customs Vs. Datamatics Ltd.

In the present case also, the prices have been spilt into the price of modem and the price
of a card having the software. The shows cause Notice dtd. 03.08.1998. in para 6 admits -

He stated that the value of software is decided by their suppliers as per the application an
available on the respective software and they publish the price list of these goods....

A perused of the said notice are not demonstrated to reveal, that any value of the modem
has been artificially or otherwise transferred on to the software. If in this case the price of
software is to be determined by the supplier based on the kind of use the software can be
put into, and since price lists for the said software are available, there is no material to
hold, that the prices so spilt, on an advise of buyer or otherwise by the supplier, are not in
excess of the printed Price Lists of manufacturer & or supplier available & issued, there
can be no reason therefore to arrive at any mens rhea on part of the importers to, in
conducting the exercise of splitting of prices to evade duty. The charges of putting the
value, of the cards & denial of software exemption/assessment on such values of the card
therefore cannot be upheld in view of the material, in this case following the settled
position in law.

(d) When under valuations charges cannot be upheld. There can be no cause for penalty.

(e) No merits are found in the plea of the Revenue to reopen the part assessments made &
or the future assessment to be finalized as proposed in the appeal in absence of material
on inflated card prices, if such material is available, the split of prices can be questioned.
The notice does not survive.

When the Show cause notice issued does not survive, the order of Commissioner is to be
upheld & Revenues appeal rejected. Benefit of the Commissioners order to be granted
with consequential interest as applicable.
Appeal disposed ordering accordingly.

Commissioner of Customs Vs. Hewlett Packard (i) Ltd.

As regards the applicability of Section 19 of the Customs Act, the importers contend that the
provisions thereof do not apply to the present case as that Section relates to determination of
rate of duty and is subject to the provisions of the Customs Tariff Act, 1975. Section 19 reads
as under:4

Section 19. Determination of duty where goods consist of articles liable to different rates of
duty.- Except as otherwise provided in any law for the time being in force, where goods
consist of a set of articles, duty shall be calculated as follows:

(a) articles liable to duty with reference to quantity shall be to that duty;

(b) articles liable to duty with reference to value shall, if they are liable to duty at the same
rate, be chargeable to duty at that rate, and if they are liable to duty at different rates, be
chargeable to duty at the highest of such rates;

(c) articles not liable to duty shall be chargeable to duty at the rate at which articles liable to
duty with reference to value are liable under Clause (b):

Provided that, -

(a) accessories of, and spare parts or maintenance and repairing implements for, any article
which satisfy the conditions specified in the rules made in this behalf shall be chargeable at
the same rate of duty as that article;

(b) if the importer produces evidence to the satisfaction of the proper officer regarding the
value of any of the article liable to different rates of duty, such article shall be chargeable to
duty separately at the rate applicable to it.

4
2006 (107) ECC 49, 2006 ECR 49 Tri Mumbai, 2006 (199) ELT 317 Tri Mumbai
From the language of the Section, it is clear that if there is any other law in force under which
the rate of duty on imported goods is determined, then Section 19 will not apply.