M/S. MANGALORE REF. & PETROCHEMICALS LTD . versus COMMISSIONER OF CUSTOMS, MANGALORE
[2015] 9 S.C.R. 620, Supreme Court of India, 2015
Outcome: Disposed off
Segment: Ratio
[2015] 9 S.C.R. 620 
A 
MIS. MANGALORE REF. & PETROCHEMICALS LTD . 
• V. 
COMMISSIONER OF CUSTOMS, MANGALORE 
(Civil Appeal No: 2753 of 2006 etc.) 
B 
SEPTEMBER 2, 2015 
[A.K. SIKRI AND R.F. NARIMAN, JJ.] 
Customs Act, 1962- ss. 12, 13, 14, 23 and 147 - Levy of 
c duty- On imporl of goods (crude oil) - Whether should be 
on the basis of the quantity of the oil mentioned in the Bills of 
Lading or on the basis of the quantity actually received on 
the shore tanks in India - Revenue levied duty on the basis 
of the Bill of Lading quantity, on the ground that the duty was 
D levied on ad valorem basis and not on a specific rate - Order 
of the Revenue affirmed by the Tribunal - On appeal, held: 
Under the Act, levy of duty cannot take place until goods are 
imporled, i.e. they become parl of the land m8ss of India -
The imporler is not liable to pay duty on the goods, which 
E are pilfered or lost or destroyed at any time before clearance 
for home consumption or deposit in a warehouse- Therefore, 
the quantity of crude oil actually received into a shore tank in 
a porl in India would be the basis for payment of customs 
duty- Levy of duty at specific rate or on ad valorem basis, 
F does not make any difference -
Customs Valuation 
(Determination of Price of Imported Goods) Rules, 1988- rr. 
4 and9. 
Disposing of the appeals, the Court 
G 
HELD: 1. The levy of customs duty under Section 
12 of Customs Act is only on goods imported into India. 
Goods are said to be imported into
India when they are 
brought into India from a place outside India. Unless 
H 
620
' 
MANGALORE REF. & PETROCHEMICALS LTD. v. 
621 
COMMNR. OF CUSTOMS, MANGALORE 
such goods are brought into India, the act of importation A 
which triggers the levy, does not take place. If the goods 
are pilfered after they are unloaded· or lost or destroyed 
at any time before clearance for home consumption or 
deposit in a warehouse, the importer is not liable to pay 
the ~uty leviable on such goods. This is for the reason B 
that the import of goods does not take place until they 
become part of the land mass of India and until the act 
of importation is complete which under Sections 13 and 
23 happens only after an order for clearance for home 
consumption is made and/or an order permitting the C 
deposit of goods in a warehouse is made. Under Section 
23(2), the owner of the imported goods may also at any 
time, before such orders have been made, relinquish his 
title to the goods and shall not be liable to pay any duty 0 
thereon. In short, he may abandon the said goods even 
after they have physically landed at any port in India but 
before any of the aforesaid orders have been made. This 
again is for the good reason that the act of importation 
is only complete when goods are in the hands of the E 
importer after they have been cleared either for home 
consumption or for deposit in a warehouse. Further, as 
per Section 47 of the Customs Act, the importer has to 
pay import duty only on goods that are entered for home 
consumption. Even under Section 14 of the
Customs F 
Act, when goods are to be valued for the purpose of 
assessment, such valuation i~ only when the goods are 
ordinarily sold or offered for sale for delivery at the time 
and place of importation in the course of international 
trade. Thus, under the Customs Act, the levy of import G 
duty cannot take place until goods are imported, that is, 
brought into India. Therefore, it is the quantity of goods 
brought into India alone that attracts the levy of import 
duty. [Para 10 &11] [629-F-H; 630-A-F] 
H
622 
SUPREME COURT REPORTS 
[2015] 9 S.C.R. 
A 
2. The Customs Valuation Rules which defines 
"transaction value" also speaks of the price that is 
actually paid or payable only for "imported goods". 
Unless goods are imported, that is, "brought into India" 
no such price is actually paid or payable. Further, under 
B Rule 4, such transaction value must be adjusted in 
accordance with the provisions of Rule 9. This Rule 
merely restates what is already stated in Section 14, 
namely, that the value of imported goods has to be the 
value of such goods for delivery only at the time and 
C place of importation. (Paras 12 and 13] (630-G, H; 632-0-
E] 
3. The taxable event in the case of imported goods, 
is "import". The taxable event in the case of a purchase 
D tax is the purchase of goods. The quantity of goods 
stated in a bill of lading would perhaps reflect the 
quantity of goods in the purchase transaction between 
the parties, but would not reflect the quantity of goods 
at the time and place of importation. A bill of lading 
E quantity therefore could only be validly looked at in the 
case of a purchase tax but not in the case of an import 
duty. [Para 16] (634-D-E] 
4. The basis of the judgment of the Tribunal is on a 
F complete misreading of Section 14 of the Customs Act. 
· The said Section is a section which affords the measure 
for the levy of customs duty which is to be found in 
Section 12 of the said Act. Even when the measure talks 
of value of imported goods,
it does so at the time and 
G place of importation, which again is lost sight of by the 
Tribunal. And "transaction value" which occurs in the 
Customs Valuation Rules has to be read under Rules 4 
~ 
and 9 as reflecting the statutory position, namely, that 
H valuation of imported goods is only at the time and place 
of importation. [Para 16] (634-F-H]
MANGALORE REF. & PETROCHEMICALS LTD. v. 
623 
COMMNR. OF CUSTOMS, MANGALORE 
5. Whether customs duty is at a specific rate or is ad A 
valorem, makes not the least difference to the above 
statutory scheme. Customs duty whether at a specific 
rate or ad valorem is not leviable on goods that are 
pilferred, lost or destroyed until a bill of entry for home 
consumpt~on is made or an order to warehouse the B 
goods is made. The circular dated 12th January, 2006 
on which strong reliance is placed by the revenue, is 
contrary to law. [Para 17] [635-B-D] 
Garden Silk Mills Ltd. v. Union of India 1999 (8) SCC C 
744 : 1999 (3) Suppl. SCR 295; Collector v. Hindustan 
Petroleum Corporation (2001) 131 E.L. T. A87 (S.C.)- relied 
on. 
Case Law Reference 
D 
1999 (3) Suppl. s·cR 295 
relied on 
Para 15 
(2001) 131 E.L.T.A87 (S.C.) 
relied on 
Para 17 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 
E 
2753 of 2006. 
From the Judgment and Order No. 273/2006 dated 
06.02.2006 of the Customs, Excise, Service Tax Appellate 
Tribunal, South Zonal Bench, Bangalore in Appeal No. C/293/ F 
2002. 
With 
C.A. NO. 1109 of20b7. 
C.A. NOS. 4738-4755, 4770-4806, 4808-4809, 5465-
5562 of 2010. · 
C.A. NOS. 7774-7775, 11357of2011. 
C.A. NOS. 9279-9283 of2012. 
G 
H
624 
SUPREME COURT REPORTS 
[2015] 9 S.C.R. 
A 
C.A. NOS. 8666-8667of 2013. 
C. A. NOS. 4480-4486 of 2014. 
C.A. NOS. 6736-6773, 3628, 5074, 5052 of2015. 
B 
PinkyAnand,ASG,A.K. Panda, V. Lakshmikumaran, M.P. 
Devanath, Vivek Sharma, Disha Jain, AbhinavJagnathan, 
Rachit Jain, Hemant Bajaj, Anandh K., S. Vasudvan, L. 
Charanaya, Arijit Prasad, Sunita Rani Singh, Karan Seth, B. 
Krishna Prasad, Anil Katiyar, Arvind Kumar Sharma for the 
C appearing parties. 
The Judgment of the Court was delivered by 
R.F. NARIMAN, J. 1. Leave granted in Special Leave 
D Petition (Civil) Nos. 1906-1943 of 2009. 
2. In this batch of appeals an interesting question arises 
on the import of crude oil by the appellants. We will take the 
facts contained in Civil Appeal No. 2753 of 2006 for the purpose 
E of deciding these matters. 
3. In the said Civil Appeal, during the period 13.01.1996 
to 15.03.1998, crude oil was imported by the appellant by way 
144 voyages of vessels, and 71 consignments out of the said 
F 
144 voyages were said to have escaped payment of full 
customs duty. As a result the total duty thus short paid for the 
71 consignments out of the 144 voyages worked out to 
Rs.6,59,49,685/- (Basic Duty Rs.6,16,88,210/- and Special 
Customs Duty Rs.42,61,475/-) on the total differential 
G assessable value of Rs.23, 71,30,242/- for the period from 
13.1.9~ to 15.3.98. These figures were arrived at as revenue 
in its show cause notice dated 7th January, 2000 stated that 
the quantity of
crude oil mentioned in the various bills of lading 
should be the basis for payment of duty, and not the quantity 
H actually received into the shore tanks in India. This was stated
MANGALORE REF. & PETROCHEMICALS LTD. v. COMMNR. 625 
OF CUSTOMS, MANGALORE [R.F. NARIMAN, J.] 
on the basis that since duty was now levied on an ad va/orem A 
basis and not on a specific rate, the duty should be paid on 
the bill of lading quantity based on the ullage obtained when 
the goods were loaded on the vessel in the country of export. 
On 14th April, 2000, the appellant submitted its reply to the 
show cause notice and stated that it makes no difference as B 
to whether the basis for customs duty is at a specific rate or is 
ad va/orem, inasmuch as under the various judgments of the 
Tribunal upheld by the Supreme Court, the quantity of goods 
at the time of import alone is to be looked at. This flows from a 
reading of the Customs Act, 1962 and the Customs Valuation C 
(Determination of Price of Imported Goods) Rules, 1988 and 
therefore the show cause notice ought to be dropped. 
4. On 24th July, 2002, the Commissioner of Customs 
passed a detailed order in which he held that since the basis D 
of customs duty had changed into an ad va/orem regime, 
"transaction value" would necessarily mean the value at which 
the goods were to be purchased from the foreign supplier. 
According to the learned Commissioner, full payment for the 
goods has to be made by the importer only on the basis of the E 
quantity mentioned in the bill of lading. This being the case, 
therefore the "transaction value" of the said goods would only 
be as per the payment made of the amounts
stated in the bill 
of lading and not the quantity received ultimately in the shore 
F 
tanks at ports in India. 
5. An appeal filed to CESTAT was dismissed on 61h 
February, 2006. The Tribunal accepted the Commissioner's 
reasoning. 
G 
6. Shri Lakshmikumaran, learned counsel appearing for 
the appellants in these appeals, urged before us that the 
Tribunal in the present case had lost sight of the fact that the 
taxable event is only when goods are imported, and that 
therefore valuation at the time of import alone has to be looked 
H
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SUPREME COURT REPORTS 
[2015] 9 S.C.R. 
A 
at. He further argued that the reasoning of the Tribunal was 
entirely fallacious, and that it misconstrued Section 14 of the 
Customs Act and did not give proper heed to Sections 12, 13 
and 23 of the said Act. In any event, he argued that ''transaction 
value" which is laid down under the Customs Valuation Rules 
B cannot be read in such a manner that it would go contrary to 
the provisions of the parent statute. 
7. Ms. Pinky Anand, learned Additional Solicitor General 
appearing on behalf of the revenue, supported the judgment 
C of the Tribunal and argued that since the basis of customs duty 
has changed and since a circular dated 12th January, 2006 by 
the Government of India, Finance Department made it clear 
that import duty should be based only on the invoice price which 
is the price paid or payable for imported goods irrespective 
D of the quantity ascertained through shore tank measurement, 
it is this price alone that should be taken into account for 
valuation purposes. Further, according to her, "transaction 
value" would necessarily mean the price that is payable for 
goods when sold for export to India and that therefore such 
E price would only be referable to the quantity of goods 
mentioned in the bill of lading. 
8. Having heard learned counsel for the parties it is 
important to first set out the relevant provisions contained in 
F the Customs Act as under:-
"Section 2. Definitions 
(22) "goods" includes -
G 
(a) 
vessels, aircrafts and vehicles; 
(b) 
stores; 
(c) 
baggage; 
(d) 
currency and negotiable instruments; and 
(e) 
any other kind of movable property; 
H
MANGALORE REF. & PETROCHEMICALS LTD. v. COMMNR. 627 
OF CUSTOMS, MANGALORE [R.F. NARIMAN, J.] 
2(23) "import", with its grammatical variations and A 
cognate expressions, means bringing into India from a 
place outside India; 
2(25) · "imported goods" means any goods brought into 
India from a place outside India but does not include 
B 
goods which have been cleared for home consumption; 
Section 12. Dutiable goods. - (1) Except as otherwise 
provided in this Act, or any other law for the time being in 
force, duties of customs shall be levied at such rates as c 
may be specified under the Customs Tariff Act, 1975 (51 
of 1975), or any other law for the time being in force, on 
goods imported into, or exported from, India. 
(2) The provisions of sub-section ( 1) shall apply in respect D 
of all goods belonging to Government as they apply in 
respect of goods not belonging to Government. 
Section 13. Duty on pilferred goods. - If any imported 
goods are pilferred after the unloading thereof and before E 
the proper officer has made an order for clearance for 
home consumption or deposit in a warehouse, the 
importer shall not be liable to pay the duty leviable on 
such goods except where such goods are restored to 
the importer after pilferage. 
F 
Section 23. Remission of duty on lost, destroyed or 
abandoned goods. -
(1) Without prejudice to the provisions of section 13, G 
where it is shown to the satisfaction of the Assistant 
Commissioner of Customs or Deputy
Commissioner of 
Customs that any imported goods have been lost 
otherwise than as a result of pilferage or destroyed, at 
H
628 
SUPREME COURT REPORTS 
[2015) 9 S.C.R. 
A 
any time before clearance for home consumption, the 
Assistant Commissioner of Custom or Deputy 
Commissioner of Customs shall remit the duty on such 
goods. 
s 
(2) The owner of any imported goods may,. at any time 
before an order for clearance of goods for home 
consumption under section 4 7 or an order for permitting 
the deposit of goods in a warehouse under section 60 
has been made, relinquish his title to the goods and 
C 
thereupon he shall not be liable to pay the duty thereon." 
Section 47. Clearance of goods for home consumption.-
(1) Where the proper officer is satisfied that any goods 
entered for home consumption are not prohibited goods 
o 
and the importer has paid the import duty, if any, 
assessed thereon and any charges payable under this 
Act in respect of the same, the proper officer may make 
an order permitting clearance of the goods for home 
consumption. 
E 
F 
G 
H 
(2) Where the importer fails to pay the import duty under 
sub-section ( 1) within two days, excluding holidays from 
the date on which the bill of entry is returned to him for 
payment of duty, he shall pay interest at such rate, not 
below ten per cent and not exceeding thirty-six per cent 
per annum, as is for the time being fixed by the Central 
Government, by notification in the Official Gazette on such 
duty till the date of payment of said duty: 
Provided that the Central Government may, by notification 
in the Official Gazette,
specify the class or classes of 
importers who shall pay such duty electronically: 
Provided further that where the bill of entry is returned for 
payment of duty before the commencement of the
MANGALORE REF. & PETROCHEMICALS LTD. v. COMMNR. 629 
OF CUSTOMS, MANGALORE [R.F. NARIMAN, J.] 
Customs (Amendment) Act, 1991 and the importer has A 
not paid such duty before such commencement, the date 
of return of such bill of entry to him shall be deemed to be 
the date of such commencement for the purpose of this 
section: 
Provided also that if the Board is satisfied that it is 
necessary in the public interest so to do, it may, by order 
for reasons to be recorded, waive the whole or part of 
any interest payable under this section." 
9. Rules 2(1 )(f) and 4(1) of the Customs Valuation 
(Determination of Price of Imported Goods) Rules, 1988 read 
as follows:-
B 
c 
"2. Definitions - (1) In these rules, unless the context D 
otherwise requires: 
(f) "transaction value" means the value determined in 
accordance with Rule 4 ofthese rules" 
Rule 4. Transaction value. -(1) The transaction value of E 
imported goods shall be the price actually paid or payable 
for the goods when sold for export to India, adjusted in 
accordance with the provisions of Rule 9 of these rules." 
10. On a reading of the aforesaid provisions, it is clear F 
that the levy of customs duty under Section 12 is only on goods 
imported into India. Goods are said to be imported into India 
when they are brought into India from a place outside India. 
· Unless such goods are brought into India, the act of.importation 
which triggers the levy does not take place. If the goods are G 
pilferred after they
are unloaded or lost or destroyed at any 
time before clearance for home consumption or deposit in a 
warehouse, the importer is not liable to pay the duty leviable 
on such goods. This is for the reason that the import of goods 
does not take place until they become part of the land mass of H
630 
SUPREME COURT REPORTS 
[2015) 9 S.C.R. 
A 
India and until the act of importation is complete which under 
Sections 13 and 23 happens only after an order for clearance 
for home consumption is made and/or an order permitting the 
deposit of goods in a warehouse is made. Under Section 
23(2) the owner of the imported goods may also at any time 
B before such orders have been made relinquish his title to the 
goods and shall not be liable to pay any duty thereon. In short, 
he may abandon the said goods even after they have physically 
landed at any port in India but before any of the aforesaid orders 
have been made. This again is for the good reason that the 
C 
act of importation is only complete when goods are in the hands 
of the importer after they have been cleared either for home 
consumption or for deposit in a warehouse. Further, as per 
Section 47 of the Customs Act, the importer has to pay import 
0 
duty only on goods that are entered for home consumption. 
Obviously, the quantity of goods imported will be the quantity 
of goods at the time they are entered for home consumption. 
11. Even under Sectiorr 14 of the Customs Act, when 
goods are to be valued for the purpose of assessment, such 
E valuation is only when the goods are ordinarily sold or offered 
for sale for delivery at the time and place of importation in the 
course of international trade. It is thus seen that under the 
Customs Act, the levy of import duty cannot take place until 
F goods are
imported, that is, brought into India. Obviously, 
therefore, it is the quantity of goods brought into India alone 
that attracts the levy of import duty. 
12. The Customs Valuation Rules which defines 
"transaction value" also speaks of the price that is actually paid 
G or payable only for "imported goods". Unless goods are 
imported, that is, "brought into India" no such price is actually 
paid or payable. Further, under Rule 4 of the Customs Valuation 
Rules, such transaction value must be adjusted in accordance 
H with the provisions of Rule 9. Rule 9(2), the imporJ: of which
.. 
MANGALORE REF. & PETROCHEMICALS LTD. v. COMMNR. 631 
OF CUSTOMS, MANGALORE [R.F. NARIMAN, J.] 
has been missed by the Tribunal in the impugned judgment, A 
states as follows:-
"Rule 9(2) For the purposes of sub-section (1) and sub-
section (1A) of Section 14 of the Customs Act, 1962 (52 
of 1962) and these rules, the value of the imported goods B 
shall be the value of such goods, for delivery at the time 
and place of importation and shall include -
(a) The cost of transport of the imported goods to the 
place of importation; 
c 
(b) loading, unloading and handling charges associated 
with the delivery of the imported goods at the place of 
importation; and 
(c) the cost of insurance: 
D 
Provided that -
(i) where the cost of transport referred to in clause (a) is 
not ascertainable, such cost shall be twenty per cent of E 
the free on board value of the goods; 
(ii) the charges referred to in clause (b) shall be one per 
cent of the free on board value of the goods plus the cost 
of transport referred to in clause (a) plus the cost of F 
insurance referred to in clause (c); 
(iii) where the cost referred to in clause (c) is not 
ascertainable, such cost shall be 1.125% of free on board 
value of the goods; 
G 
Provided further that in the case of goods imported by 
air, where the cost referred to in clause (a) is 
ascertainable, such cost shall not exceed twenty per cent 
of free on board value of the goods: 
H
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SUPREME COURT REPORTS 
[2015] 9 S.C.R. 
A 
Provided also that where the free on board value of the 
goods is not ascertainable, the costs referred to in clause 
(a) shall be twenty per cent of the free on board value of 
the goods plus cost of insurance for clause (i) above and 
the cost referred to in clause ( c) shall be 1.125% of the 
B 
free on board value of the goods plus cost of transport 
for clause (iii) above. 
Provided also that in case of goods imported by sea 
stuffed in a container for clearance at an Inland Container 
c 
Depot or Container Freight Station, the cost of freight 
incurred in the movement of container from the port of 
entry to the Inland Container Depot or Container freight 
Station shall not be included in the cost of transport 
referred to in clause (a)." 
D 
13. This Rule merely restates what is already stated in 
Section 14, namely, that the value of imported goods has to 
be the value of such goods for delivery only at the time and 
place of importation. Therefore, it is clear that even a reading 
E of "transaction value" under the Rules would necessarily arrive 
at the same result, namely, that the quantity of goods to be 
seen for purposes of valuation can only be after they are 
imported, that is, brought into India and have to be so at the 
time and place of importation. 
F 
14. The Tribunal's judgment dated 61h February, 2006 gives 
several reasons for arriving at the conclusion that the'bill of 
lading quantity alone is to be
looked at for the purpose of 
determining the value of goods imported. The first reason that 
G it gives is that duty has to be on the total payment made by the 
assessee irrespective of the quantity received. The second 
reason given is that an ad valorem duty would necessarily 
~
lead to this result but duty levied at the specific rate would not, 
the quantity of goods in the latter case being only on the basis 
H of the quantity of crude oil received in ihe shore tank. The third
MANGALORE REF. & PETROCHEMICALS LTD. v. COMMNR. 633 
OF CUSTOMS, MANGALORE [R.F. NARIMAN, J.] 
reason that it gives is that Section 14 kicks in when the duty is A 
on an ad valorem basis and Sections 13 and 23 do not stand 
in the way because it is not the question of demanding duty on 
goods not received, but it is the demand of duty on the 
transaction value. In spite of the "ocean loss", the appellant 
has to make payment on the basis of the Bill of Lading quantity. 
B 
15. We are afraid that each one of the reasons given by 
the Tribunal is incorrect in law. The Tribunal has lost sight of 
the following first principles when it arrived at the aforesaid 
conclusion. First, it has lost sight of the fact that a levy in the C 
context of import duty can only be on imported goods, that is, 
on goods brought into India from a place outside of India. Till 
that is done, there is no charge to tax. This Court in Garden 
Silk Mills Ltd. v. Union of India, 1999 (8) SCC 744, stated 
that this takes place, as follows:-
D 
"It was further submitted that in the case of Apar (P) Ltd. 
[(1999) 6 SCC 117: JT (1999) 5 SC 161] this Court was 
concerned with Sections 14 and 15 but here we have to 
construe the word "imported" occurring in Section 12 and 
E 
this can only mean that the moment goods have entered 
the territorial waters the import is complete. We do not 
agree with the submission. This Court in its opinion in 
Bill to Amend Section 20 of the Sea Customs Act, 1878 
and Section 3
of the Central Excises and Salt Act, 1944, 
F 
Re [AIR 1963 SC 1760: (1964) 3 SCR 787 sub nom 
Sea Customs Act (1878), S. 20(2), Re] SCR at p. 823 
observed as follows: 
"Truly speaking, the imposition of an import duty, by G 
and large, results in a condition which must be fulfilled 
before the goods can be brought inside the customs 
barriers, i.e., before they form part of the mass of 
goods within the country." 
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SUPREME COURT REPORTS 
[2015] 9 S.C.R. 
A 
It would appear to us that the import of goods into India 
would commence when the same cross into the territorial 
waters but continues and is completed when the goods 
become part of the mass of goods within the country; the 
taxable event being reached at the time when the goods 
B 
reach the customs barriers and the bill of entry for home 
consumption is filed." [at paras 17 and 18] 
16. Secondly, the taxable event in the case of imported 
goods, as has been stated earlier, is "import''. The taxable event 
C in the case of a purchase tax is the purchase of goods. The 
quantity of goods stated in a bill of lading would perhaps reflect 
the quantity of goods in the purchase transaction between the 
parties, but would not reflect the quantity of goods at the time 
and place of importation. A bill of lading quantity therefore 
D could only be validly looked at in the case of a purchase tax 
but not in the case of an import duty. Thirdly, Sections 13 and 
23 of the Customs Act have been wholly lost sight of. Where 
goods which are imported are lost, pilfered or destroyed, no 
import duty is leviable thereon until they are out of customs 
E and come into the hands of the importer. It is clear therefore 
that it is only at this stage that the quantity of the goods imported 
is to be looked at for the purposes of valuation. Fourthly, the 
basis of the judgment of the Tribunal is on a complete 
F misreading of Section 14 of the
Customs Act. First and 
foremost, the said Section is a section which affords the 
measure for the levy of customs duty which is to be found in 
Section 12 of the said Act. Even when the measure talks of 
value of imported goods, it does so at the time and place of 
G importation, which again is lost sight of by the Tribunal. And 
last but not the least, "transaction value" which occurs in the 
Customs Valuation Rules has to be read under Rules 4 and 9 
as reflecting the aforesaid statutory position, namely, that 
valuation of imported goods is only at the time and place of 
H importation. 
..
MANGALORE REF. & PETROCHEMICALS LTD. v. COMMNR. 635 
OF CUSTOMS, MANGALORE [R.F. NARIMAN, J.] 
17. The Tribunal's reasoning that somehow when customs A 
duty is ad valorem the basis for arriving at the quantity of goods 
imported changes, is wholly unsustainable. Whether customs 
duty is at a specific rate or is ad va/orem makes not the least 
difference to the above statutory scheme. Customs duty 
whether at a specific rate or ad valorem is not leviable on . B 
goods that are pilferred, lost or destroyed until a bill of entry for 
home consumption is made or an order to warehouse the 
goods is made. This, as has been stated above, is for the 
reason that the import is not complete until what has been stated 
above has happened. The circular dated 121h January, 2006 C 
on which strong reliance is placed by the revenue is contrary 
to law. When the Tribunal has held that a demand or duty on 
transaction value would be leviable in spite of "ocean loss", it 
flies in the face of Section 23 of the Customs Act in particular, 
0 
the general statutory s9heme and Rules 4 and 9 of the Customs 
Valuation Rules. Indeed, this Court has, in Collector v. 
Hindustan Petroleum Corporation, (2001) 131 E.L.T.A87 
(S.C.) stated: 
· · 
"The Appellate Tribunal in its order in question on the E 
issue as to which of these two viz. the quantity of crude 
oil as revealed by theVessel's Ullage Survey Report or 
the quantity determined by dip measurement in the shore 
tanks as revealed by the Cargo
Intake Certificate, should 
F 
be adopted for the purpose of assessment of duty of the 
imported crude oil, following its decision in the case of 
Commissioner v. HPCL [2000 (121) E.L.T. 109 
(Tribunal)] had held that quantity of crude oil shown in 
Ullage Survey Report relates to point of time prior to G 
actual unloading of goods and as such is not the correct 
"quantity imported", since the import occurs only when 
the goods are unloaded and form part of mass of goods 
in lndi~. Accordingly the "imported quantity" of crude oil 
was the quantity as determined by dip measurement in 
H

636 
SUPREME COURT REPORTS 
[2015) 9 S.C.R. 
A 
the shore tanks and therefore the assessment of duty 
was liable to be finalised on the basis of such quantity 
as revealed by the Cargo Intake Certificate." 
18. We therefore set aside the Tribunal's judgment and 
B declare that the quantity of crude oil actually received into a 
shore tank in a port in India should be the basis for payment of 
customs duty. Consequential action, in accordance with this 
declaration of law, be carried out by the customs authorities in 
accordance with law. All the aforesaid appeals are disposed 
C of in accordance with this judgment. 
Kalpana K. Tripathy 
Appeals disposed of.