1981 (1) TMI 82 - HC - Central Excise

Summary

Issues Involved:
1. Interpretation of the expressions "vessel bound for any foreign port" and "Ocean going vessel on foreign run."
2. Justification of demand notices negating rebate of Excise duty and exemption of additional duty.
3. Applicability of definitions from the Customs Act, 1962 to the Central Excise Act and related notifications.
4. Determination of whether vessels temporarily engaging in coastal trade lose their status as foreign-going vessels.

Issue-wise Detailed Analysis:

1. Interpretation of the expressions "vessel bound for any foreign port" and "Ocean going vessel on foreign run":

The court examined the meaning of the expressions "vessel bound for any foreign port" and "Ocean going vessel on foreign run" as used in the Government Notifications dated 5th April 1949 and 9th October 1967. It was noted that these expressions were not defined in the relevant statutes or notifications. The court emphasized that in a taxing statute, regard must be had to the clear meaning of the words, and the interpretation beneficial to the taxpayer must be adopted. The court found that the plain and natural meaning of "vessel bound for foreign port" would be a vessel going or intending to go to a foreign port. Similarly, "vessel on foreign run" would mean a vessel on course or route to a foreign port traveling with regularity.

2. Justification of demand notices negating rebate of Excise duty and exemption of additional duty:

The court considered whether the authorities were justified in issuing demand notices that negated the rebate of Excise duty and exemption of additional duty on the basis that the vessels concerned could not be treated as foreign-going vessels under Section 2(21) of the Customs Act, 1962. The court rejected this justification, holding that the Excise duty and Customs duty are different in nature, concept, scope, and operation, and therefore, the statutes governing them cannot be considered cognate or allied. Consequently, expressions in one statute could not be interpreted by reference to expressions in another statute.

3. Applicability of definitions from the Customs Act, 1962 to the Central Excise Act and related notifications:

The court found that the expressions "vessel bound for foreign port" and "ocean going vessel on foreign run" in the notifications could not be interpreted with reference to the definition of "foreign-going vessel" in Section 2(21) of the Customs Act, 1962. The court noted that the Excise Act and the relevant notifications were enacted many years before the Customs Act, making it inappropriate to interpret expressions in the earlier statute by reference to a later statute. Additionally, the court observed that the expressions in the notifications were not the same as the expression in the Customs Act, further supporting the conclusion that the demand notices were based on extraneous considerations.

4. Determination of whether vessels temporarily engaging in coastal trade lose their status as foreign-going vessels:

The court addressed the contention that vessels temporarily engaging in coastal trade would cease to be considered foreign-going vessels. The court rejected this argument, stating that a vessel bound for a foreign port or on a foreign run would not lose its status merely because it discharged cargo at Indian ports with special permission under Section 407 of the Merchant Shipping Act. The court referred to a previous decision in M/s The Great Eastern Shipping Co. Ltd. v. The Union of India, where it was held that a vessel principally engaged in delivering foreign cargo would not lose its status as a foreign-going vessel even if it temporarily engaged in coastal trade. The court concluded that the vessels in question retained their character as foreign-going vessels despite temporarily engaging in coastal trade.

Conclusion:

The appeal was dismissed, and the court upheld the trial court's judgment allowing the petitioners' petition. The court found that the demand notices issued by the authorities were unjustified and based on extraneous considerations. The expressions "vessel bound for any foreign port" and "Ocean going vessel on foreign run" were interpreted based on their plain and natural meanings, and the vessels in question were determined to retain their status as foreign-going vessels despite temporary engagement in coastal trade. The court refused the application for leave to appeal to the Supreme Court.