1971 (12) TMI 45 - HC - Customs

Summary

Issues:
1. Interpretation of the definition of "foreign-going vessel" under the Customs Act, 1962.
2. Validity of circulars issued by the Collector of Customs regarding payment of duty on imported stores on board vessels engaged in coastal trade.
3. Application of Imported Stores (Retention on Board) Regulations, 1963 to vessels carrying predominantly coastal cargo.
4. Consideration of alternative remedy provided in the statute for challenging Customs duty demands.

Analysis:

1. The case involved a challenge against circulars issued by the Collector of Customs regarding payment of duty on imported stores on board vessels engaged in coastal trade. The petitioner, a limited company owning sea-going vessels, argued that its vessel, despite carrying coastal cargo, maintained the status of a "foreign-going vessel" under the Customs Act, 1962.

2. The respondent contended that the vessel, due to carrying predominantly coastal cargo on a voyage from Calcutta to Bombay, lost its foreign-going status, making the imported stores on board liable for Customs duty payment as per the circulars issued. The respondent also argued that the Imported Stores (Retention on Board) Regulations, 1963 applied to vessels carrying mostly coastal cargo.

3. The court analyzed the relevant sections of the Customs Act, specifically sections 2(7), 2(21), and 87, defining coastal goods, foreign-going vessels, and provisions for consuming imported stores on board a foreign-going vessel without payment of duty. The court emphasized that the carriage of goods for intermediate Indian ports did not affect the vessel's foreign-going status if cleared for a port outside India.

4. The court rejected the respondent's argument that the circular applied to vessels carrying predominantly coastal cargo, stating that the circulars were not applicable to imported stores on board a foreign-going vessel. The court held in favor of the petitioner, ruling that the demand for duty payment on consumable stores on a foreign-going vessel carrying coastal cargo was not sustainable. The court set aside the impugned order and restrained the respondents from enforcing the circulars against the petitioner.

5. The judgment highlighted that the provisions of Chapter XII, applicable to coastal goods, did not extend to imported stores on board a foreign-going vessel. The court upheld the petitioner's contention, ruling in their favor and granting relief by setting aside the circulars and restraining their enforcement. The court also stayed the operation of the order for three months, with no order as to costs.