IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 16.09.2011 Coram THE HONOURABLE MRS.JUSTICE CHITRA VENKATARAMAN AND THE HONOURABLE MR.JUSTICE M.JAICHANDREN TC(R). No.914 of 2006 The State of Tamil Nadu rep. By the Deputy Commissioner (CT) Chennai (North) Division Greams Road, Chennai 600 006 ... Petitioner -vs- Kawarlal and Co., 27, Raghunayakalu Street Chennai -3 ... Respondent Tax Case Revision filed u/s 38 of the TNGST Act of 1959 to revise the orders of the Tamil Nadu Sales Tax Appellate Tribunal (AB), Chennai in S.T.A.No.209/99 dated 4.5.2000 and against the order of the Appellate Assistant Commissioner dated 21.10.98 made in A.No. AP 168/98 and against the order of the Commercial Tax Officer, Park Town I Assessment Circle, Chennai-1 dated 27.02.1998 made in Asst No.TNGST No.052272/92-93. For Petitioner : Mr.R.Sivaraman, Special Government Pleader (Taxes) For respondent : Mr.K.Sundareswaran ORDER (Order of the Court was made by CHITRA VENKATARAMAN,J) The Revenue is on revision as against the order of the Tribunal relating to assessment year 1992-93. The following substantial questions of law were raised for consideration:- (i) Whether in the facts and circumstances of the case, the order of the Tribunal upholding the claim of exemption as high sea sales under Section 5(2) of the CST Act is legally sustainable? (ii) Whether in the facts and circumstances of the case, the finding of the Tribunal that the sale was effected by https://hcservices.ecourts.gov.in/hcservices/ transfer of documents of title have been taken place before crossing the customs frontier is legally sustainable?" 2. The assessee herein is a dealer in pharmaceuticals and chemicals. On verification of accounts, it was seen that the assessee claimed exemption on the turnover of Rs.12,50,814/- under Section 5 (2) Central Sales Tax Act as representing High Sea Sales effected. In support of the claim, the assessee filed Bill of Lading and High Seas Agreement and pointed out that the goods in question were cleared by the purchaser by paying customs duty through clearing and forwarding agent and that the assessee had nothing to do with the clearance of the said goods. 3. The contention of the assessee, however, was rejected by the Officer, pointing out that on verifying the original Bill of Entry available in the Office of the Customs Department with the photocopy furnished by the assessee, it was found that the name of the assessee was found written in the original copy of the Bill of Entry available in the Customs Department. Hence, the photocopy furnished by the assessee could not be relied upon. Consequently, the Assessing Officer rejected the plea of the assessee. Aggrieved by the same, the assessee filed an appeal before the Appellate Assistant Commissioner. 4. It is seen from the order the Appellant Assistant Commissioner that after perusing the import documents and the High Sea Sales agreement, High Sea sales invoices, forwarding and clearing agent's letters and payment of customs duty by the ultimate buyer to the Customs Department, the said authority held that high sea sales were effected at Chennai Port and the buyers had paid the customs duty and the clearing and forwarding agents had cleared the goods. 5. Following the decisions of the Apex Court reported in 107 STC 75 – BRIJLAL TULSION v. COMMERCIAL TAX OFFICER and 11 STC 186 – J.V.COKAL & CO., v. ASSISTANT COLLECTOR OF SALES TAX (INSPECTION AND OTHERS), as well as the decision of the Andhra Pradesh High Court reported in 110 STC 394 – MINERALS AND METALS TRADING CORPORATION OF INDIA v. STATE OF ANDHRA PRADESH, the Appellate Authority came to the conclusion that when the import documents produced revealed that the goods imported were sold on high sea sale basis as per the agreement entered into with the ultimate buyers and the goods were cleared by clearing and forwarding agents on behalf of purchasers, the assessment could not be upheld. Thus the appeal was allowed. As against this, the Revenue went on appeal before the Sales Tax Appellate Tribunal, who concurred with the view of the Appellate Assistant Commissioner, thereby, disallowed the Revenue's appeal. Aggrieved by this, the Revenue is on revision before this Court. 6. It is seen from the facts herein that the assessee effected high sea sales by endorsing the document of title to the goods as https://hcservices.ecourts.gov.in/hcservices/ follows:- --------------------------------------------------------------------- Sl. No. Bill of Lading Date Name of the party to whom endorsed 1. 930-830-618 5.5.92 M/s.Micro Labs Ltd., 92, SIPCOT Industrial Complex Hosur 2. 242 22.12.92 M/s. Sri Sai Baba Pharmaceuticals Private Limited, Guindy, Chennai – 32 --------------------------------------------------------------------- 7. The details as regards high sea sales by endorsing the documents of title to the goods to the ultimate buyer who cleared the goods before the ship crossed the custom frontier are as below:- --------------------------------------------------------------------- Sl. Name of the Purchaser Inv. No. & Date Sale Value Date of No. area cro- ssing the custom station --------------------------------------------------------------------- 1. M/s.Micro Labs Ltd 01/K Co./ Rs.788314/- 25.6.92 Hosur 92-93 dt.26.5.92 2. M/s.Sri Sai Baba 03/K/Co./ Rs.462500/- 15.3.93 Pharmaceuticals Pvt 92-93, dt.19.2.93 Ltd., Guindy Chennai - 32 --------------------------------------------------------------------- 8. Going by the above said facts, it is clear that in respect of first purchaser, viz., M/s. Micro Labs Limited, the Bill of Lading dated 5.5.92 was endorsed on 26.05.1992 and in the case of second purchaser, the bill of lading dated 22.12.1992 was endorsed in favour of the another purchaser by name M/s.Sri Sai Baba Pharmaceuticals Private Limited on 19.02.1993. There is no dispute as far as these dates are concerned that the assessee had Bill of Lading endorsed in favour of the ultimate importers. 9. The only ground on which the Revenue seeks to disallow the claim of exemption is that the Bill of Entry furnished by the assessee and the one available with the Customs Department were at variance with each other, particularly as regards the name. As far as this contention is concerned, the first Appellate Authority pointed out that when the Bill of Lading endorsement was made even before the goods crossed the Customs Station, the sale thus concluded therein, on the mere contention of the Assessing Officer that the Bill of Entry had the assessee's name and the customs duty was paid https://hcservices.ecourts.gov.in/hcservices/ only on the imported value and not on the high seas value, were without any merit. 10. Given the fact that the Bill of Lading is the document of title and admittedly it carried the name of the ultimate buyer and that there was no denial of the fact that the assessee had transferred the goods before it crossed the Customs Station, rightly the said authority granted relief in favour of the assessee. As rightly pointed out, the only ground on which the claim was rejected was the difference in the name found in the Bill of Entry available with the assessee and the one with the Customs Authorities. It is of relevance to note herein that the Bill of Lading dated 05.05.1992 was endorsed in favour of the first purchaser M/s.Micro Labs Limited, Hosur; invoices dated 26.05.1992 and the date of crossing the Customs Station was given as 25.06.1992. On the said details available as regards the Bill of Lading and the invoices raised in favour of the ultimate buyer, we have no hesitation in holding that with the title to the goods thus endorsed even before it crossed the Customs Station, the claim of the assessee could not be denied just based on the Bill of Entry which is admittedly not a document of title. As regards the second Bill of Lading dated 22.12.1992 and the invoices of the ultimate purchaser dated 19.2.1993, even herein too, even before the date of crossing the Customs Station on 15.03.1993, the Bill of Lading was endorsed in favour of the purchaser. We do not find that the Revenue could successfully canvass its case based on the entries on the name found in the Bill of Entry. 11. It may be of relevance to note that the Bill of Entry is never treated as a document of title under the Customs Act. Under Section 46 of the Customs Act – Entry of goods on importation – the importer has to file Bill of Entry before the proper officer, which may be for home consumption or for ware housing. Only on filing the Bill of Entry for home consumption that the goods are allowed to be cleared after the payment of required customs duty. "Importer" is defined under Section 2(26), which reads as follows: "2(26) "Importer", in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner or any person holding himself out to be the importer" 12. In the light of the said definition and read in the background of Sections 46 and 47 of the Customs Act, we do not think that the Revenue can successfully canvass its case based on entries in the Bill of Entry. In the absence of any details as to whether the said entries relate to the one in the Bill of Entry for home consumption or any Bill of Entry for warehousing, the Revenue's revision merits to be dismissed. https://hcservices.ecourts.gov.in/hcservices/ 13. In the circumstances, the Tax Case (Revision) is dismissed. No costs. Sd/- Deputy Registrar //true copy// Sub Asst.Registrar bg To 1. The Deputy Commissioner (CT), Chennai (North) Division, Greams Road, Chennai 6 2. The Tamil Nadu Sales Tax Appellate Tribunal (AB), Chennai 3. The Appellate Assistant Commissioner CT-1, Chennai-108. 4. The Commercial Tax Officer, Park Town I Assessment Circle, Chennai-1. 1 cc to Mr.V.Sundareswaran, Advocate, Sr.No.57919 1 cc to Government Pleader, Sr.No.57724 TC.(R). No.914 of 2006 SAI {CO} TP/13.10.2011. https://hcservices.ecourts.gov.in/hcservices/