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Issues:
1. Liability to pay customs duty and other taxes on the auctioned vessel. 2. Claim for exemption from payment of customs duty. 3. Legal validity of the auction sale and liability of the highest bidder. 4. Interpretation of Customs Act, 1962 regarding import duty on salvaged vessel. 5. Classification of the vessel under Customs Tariff Act, 1975 for duty levy. 6. Allegation of hostile discrimination in customs duty imposition. Analysis: Issue 1: Liability to pay customs duty and other taxes on the auctioned vessel The petitioner, a partnership firm, participated in an auction for a salvaged vessel named 'Al Madina'. The terms and conditions of the auction explicitly stated that the highest bidder was obligated to pay customs duty and other taxes over and above the bid value. The petitioner emerged as the highest bidder with a bid of Rs. 13,00,000. Despite prior clarifications and undertakings to pay the customs duty, the petitioner later sought exemption from this payment. However, both Respondent No. 1 and the Government of India rejected this request, affirming the petitioner's liability to pay the customs duty. The petitioner eventually paid the import duty and other charges as approved by the Additional Collector. Issue 2: Claim for exemption from payment of customs duty The petitioner's claim for exemption from the payment of customs duty was based on a request made to the Minister of Ports and Transport, Government of Gujarat, which was forwarded to the Government of India. The Government of India, after careful examination, declined the request for exemption. Despite this decision, the petitioner persisted in seeking relief from the duty payment, which was ultimately rejected. Issue 3: Legal validity of the auction sale and liability of the highest bidder The respondents contended that the petitioner, by participating in the auction and entering into a contract, had agreed to the terms and conditions, including the liability to pay customs duty. Citing a precedent from the Bombay High Court, the respondents argued that granting relief to the petitioner would be unfair and could lead to a breach of contract terms. The Court agreed with this position, emphasizing that the petitioner's attempt to avoid paying customs duty after the auction would provide an unfair advantage and disrupt the agreed-upon terms of the sale. Issue 4: Interpretation of Customs Act, 1962 regarding import duty on salvaged vessel The petitioner argued that the salvaged vessel, due to being drifted into Indian waters by a sea-storm, should not be considered as imported, thus exempting it from import duty. However, the Court referred to Section 21 of the Customs Act, 1962, which treats goods like the salvaged vessel as if they were imported into India, thereby rejecting the petitioner's contention. Issue 5: Classification of the vessel under Customs Tariff Act, 1975 for duty levy The petitioner contended that if any duty was applicable, it should fall under a specific heading in the Customs Tariff Act, 1975. However, the Court noted that the vessel's classification for duty levy was under Heading No. 89.04, which covered ships, boats, and other vessels for breaking up, attracting a duty of 40%. Issue 6: Allegation of hostile discrimination in customs duty imposition The petitioner raised concerns about potential hostile discrimination in the imposition of customs duty, citing past instances where no duty was charged in similar cases. However, the Court did not delve into this argument as the petitioner did not press this contention during the proceedings, leading to its rejection. In the final judgment, the Court rejected the petitioner's plea for a refund of the customs duty paid, emphasizing the contractual obligations agreed upon during the auction and the lack of merit in the petitioner's claims for exemption and discriminatory treatment in duty imposition.
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