1987 (10) TMI 60 - HC - Customs

Summary

Issues Involved:

1. Applicability of Customs duty exemption notification for ocean-going vessels.
2. Determination of the date of import for Customs duty purposes.
3. Requirement of clearance from the Metal Scrap Trade Corporation (M.S.T.C.) for scrapping vessels imported before its constitution.
4. Validity and applicability of the Public Notice dated March 1, 1984, regarding the assessment of Indian Flag vessels for scrapping.

Detailed Analysis:

1. Applicability of Customs Duty Exemption Notification for Ocean-Going Vessels:

The judgment discusses the exemption notification dated October 11, 1958, which exempts ocean-going vessels from Customs duty, provided they are not imported to be broken up. The exemption is conditional upon the vessel being used as an ocean-going vessel and not for scrapping at the time of import. The Court noted that the two vessels, m.v. Vijay Jivan and m.v. Vijay Vaibhav, were imported in 1968 and used as ocean-going vessels until they became obsolete in 1983. The Court concluded that the vessels were initially exempt from Customs duty under the 1958 notification.

2. Determination of the Date of Import for Customs Duty Purposes:

The Court relied on the Full Bench decision in Apar Private Ltd. v. Union of India, which established that the event of import occurs when goods enter the territorial waters of India. The Court held that the two vessels were imported in 1968 when they entered the territorial waters of India. The duty payable should be based on the value and rate prevalent in 1968.

3. Requirement of Clearance from M.S.T.C. for Scrapping Vessels Imported Before Its Constitution:

The Court examined whether the petitioners needed clearance from M.S.T.C., established in 1978, for scrapping vessels imported in 1968. The Court referred to the Division Bench decision in Ram Niwas Chaudhary v. Metal Scrap Trade Corporation Ltd., which held that M.S.T.C. could not insist on a no-objection certificate for ships imported before its establishment. The Court agreed with this view, stating that the requirement of M.S.T.C. clearance did not apply to the petitioners' vessels.

4. Validity and Applicability of the Public Notice Dated March 1, 1984:

The Public Notice required ship owners to obtain a certificate from M.S.T.C. regarding the current import price of similar vessels for scrapping and a no-objection certificate. The Court held that this notice could not be applied retroactively to vessels imported before the notice was issued. The Court found that the petitioners were not required to comply with the Public Notice for their 1968-imported vessels.

Conclusion:

The Court directed respondents to assess and recover duties based on the 1968 import value and rates, considering the vessels were imported for breaking up in 1968. The Court also granted reliefs sought by the petitioners, discharging the bank guarantees furnished under the interim order. The Court refused the request for leave to appeal to the Supreme Court and the continuation of the bank guarantee.