2007 (10) TMI 232 - HC - Customs

Receiving materials to get the vessel repaired & prepared for its onward voyage in appears reasonable no duty payable if vessel is foreign going vessel within there is no finding that the materials were consumed while the vessel was in Kandla port. Considering that the vessel has finally gone out of the country and considering that the trans-shipment permission was validly given by the Mumbai Customs authorities, demand & penalty by Kandla Customs authorities are not sustainable

Summary

Issues:
1. Justification of demand of duty and penal action by Kandla Customs.
2. Treatment of the vessel as "Foreign Run" under Customs Act, 1962.

Analysis:

Issue 1:
The High Court considered the Tribunal's decision regarding the demand of duty and penal action by Kandla Customs. The Tribunal had justified its decision by stating that the vessel had left the country, and trans-shipment permission was validly obtained from Mumbai Customs Authority. The Court noted that there was no evidence to prove that the goods were consumed while the vessel was in Kandla port. The Tribunal's reasoning was accepted by the Court, leading to the dismissal of the appeals challenging the Tribunal's decision.

Issue 2:
The Court also examined whether the vessel could be considered for "Foreign Run" under Section 2 (XXI) (ii)(iii) of the Customs Act, 1962. The respondent argued that the case fell under the definitions provided in the Act, specifically Clause 2 (21) (ii) and (iii), which define "foreign going vessel, or aircraft." It was contended that if the vessel met the criteria of a foreign going vessel, then no duty would be payable. The Court, after reviewing the Tribunal's findings and the relevant provisions of the Customs Act, upheld the decision to dismiss the appeals based on the respondent's classification as a foreign going vessel.

In conclusion, the High Court of Gujarat upheld the Tribunal's decision regarding the demand of duty and penal action by Kandla Customs, as well as the classification of the vessel as "Foreign Run" under the Customs Act, 1962. The appeals challenging the Tribunal's decision were dismissed based on the Court's analysis of the facts and applicable legal provisions.