2007 (5) TMI 159 - HC - Customs

Sale of Ocean Going Vessel which was imported by Port Trust in 1965 Demand raised on purchaser Impossible to keep track of records of duty pertaining to 1965 When Trust and Custom authority are doubtful about payment of duty on vessel in 1965, benefit of doubt must go in favors of appellant

Summary

Issues involved:
1. Dispute over payment of Customs duty on dismantled ship.
2. Validity of certificate issued by Port Trust regarding Customs duty payment.
3. Interpretation of notification exempting duty on imported Ocean-going vessels.
4. Liability of appellant as successor-in-interest for Customs duty payment.
5. Just enrichment principle in Customs duty imposition.
6. Benefit of doubt in favor of appellant due to lack of conclusive evidence.

Analysis:
1. The case revolved around the dispute regarding the payment of Customs duty on a dismantled ship imported by the Port Trust in 1965. The appellant, who acquired the ship as a successful bidder, refused to pay the Customs duty demanded by the Customs Authority, citing a certificate from the Port Trust confirming the duty payment at the time of import.

2. The Customs Authority contended that Ocean-going vessels were exempt from Customs duty until dismantled, and the appellant was obligated to submit a bill of entry for the dismantled ship. However, the Customs Authority failed to produce evidence supporting the exemption claim for the vessel.

3. The Single Judge held that the Port Trust was responsible for providing documentation to prove the duty payment in 1965. The certificate issued by the Port Trust was deemed insufficient to avoid duty payment. Consequently, the appellant, as the successor-in-interest, was held liable for the Port Trust's failure to produce necessary documents.

4. On appeal, the appellant reiterated their stance, supported by the Port Trust's certificate. The Customs Authority argued that a notification exempted duty on imported Ocean-going vessels until dismantled, relying on a Division Bench decision. However, the Division Bench clarified that duty was deferred, not exempted, until dismantling.

5. The Court acknowledged the difficulty in maintaining records from 1965 but emphasized that the Port Trust's certificate should be trusted. Imposing duty without conclusive evidence of payment would lead to unjust enrichment by the Customs Authority, which is impermissible in law.

6. Ultimately, due to the inability of both the Port Trust and Customs Authority to definitively establish duty payment in 1965, the benefit of doubt favored the appellant. The Court allowed the appeal, quashed the Customs Authority's demand, and directed the return of bank guarantee and cash security if no further appeal was filed.

This comprehensive analysis outlines the key legal issues, arguments presented by both parties, judicial reasoning, and the final decision of the Court, ensuring a detailed understanding of the judgment.