1980 (12) TMI 52 - HC - Central Excise

Transhippers whether exempt from payment of duty - Transhippers are vessels - Imports of spares for transhippers

Issues Involved:
1. Whether the Transhippers are vessels.
2. Whether the Transhippers are ocean-going vessels.
3. Whether spare parts for the Transhippers are exempt from customs duty.

Detailed Analysis:

1. Whether the Transhippers are vessels:
The petitioners argued that the Transhippers "Sanjeevani," "Gosalia Prospect," and "Priyadarshini" are vessels and thus exempt from customs duty under the Government of India, Ministry of Finance (Department of Revenue) Notification No. 262-Customs dated 11th October, 1958. The respondents contended that the Transhippers are floating docks and therefore goods subject to customs duty.

Court's Analysis:
- The court referred to section 3(63) of the General Clauses Act, which defines vessels to include any ship or boat used in navigation.
- The court rejected the respondents' argument that the Transhippers are not used for navigation because they are stationary and used only for transhipping ore. It was noted that the Transhippers move from one place to another on the sea.
- The court cited previous judgments, such as the Bombay High Court's decision in Misc. Petition No. 496/1970, which held that similar self-propelled Transhippers were vessels.
- The court also considered various English decisions where non-self-propelled barges and floating cranes were held to be ships within the meaning of the Merchants Shipping Act.

Conclusion:
The court concluded that all the Transhippers, including Priyadarshini, are ships and therefore vessels.

2. Whether the Transhippers are ocean-going vessels:
The petitioners claimed that the Transhippers are sea-going vessels and thus exempt from customs duty. The respondents argued that the Transhippers are not ocean-going and are liable to pay customs duty.

Court's Analysis:
- The court referred to section 3(41) of the General Clauses Act, which defines "sea-going" vessels as those proceeding to sea beyond inland waters.
- The court dismissed the distinction between "sea-going" and "ocean-going" vessels, noting that the terms are used interchangeably in legal contexts.
- The court observed that the Transhippers complied with formalities required for ocean-going vessels, such as filing Ships Cargo Manifesto, obtaining official numbers, and being manned by officers with certificates of competency.
- The court noted that the Priyadarshini was towed from Japan to Marmagoa and was intended for use in international ports, indicating its characteristics as an ocean-going vessel.

Conclusion:
The court determined that the Transhippers are sea-going vessels and are exempt from paying customs duty and filing bills of entry.

3. Whether spare parts for the Transhippers are exempt from customs duty:
The petitioners argued that the spare parts imported for the Transhippers should be exempt from customs duty. They contended that they had obtained specific permissions from the Government of India and the Reserve Bank of India, which should suffice for compliance with import regulations.

Court's Analysis:
- The court agreed with the respondents that the two Transhippers were not foreign-going vessels at the relevant time, as they were not engaged in carrying goods or passengers between Indian and foreign ports.
- The court rejected the petitioners' argument that obtaining permissions from the Government of India and the Reserve Bank of India constituted substantial compliance with the requirement to obtain an import license.

Conclusion:
The court dismissed the petitions related to the import of spare parts, holding that the petitioners were required to obtain an import license.

Final Judgment:
- Writ Petitions Nos. 2 of 1972, 9 of 1972, and 71 of 1972 are allowed, granting the prayers therein.
- Writ Petitions Nos. 102 of 1973, 16 and 17 of 1975, and 72 of 1976 are dismissed.
- There shall be no order as to costs.

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