1981 (5) TMI 80 - HC - Customs

Summary

Issues Involved:
1. Whether the import of bunkers into the customs port at Tuticorin attracted duty under Section 20(1)(a) of the Sea Customs Act, 1878.
2. Whether customs duty was payable by a coasting vessel without filing a bill of entry.
3. Whether the customs authorities' failure to demand duty before granting port clearance precluded later demands.
4. Whether the Superintendent of Central Excise had the authority to review the clearance order and demand import duty.
5. Whether the demands for duty were time-barred under Section 39 of the Act.

Issue-wise Detailed Analysis:

1. Import of Bunkers and Duty under Section 20(1)(a):
The court examined whether the import of bunkers (fuel oil) taken on board at Colombo and remaining on the petitioner's vessels when they touched Tuticorin attracted duty under Section 20(1)(a) of the Sea Customs Act, 1878. The court concluded that import customs duty is payable only in respect of goods that are or are intended to be discharged by the vessel at a port for purposes of home consumption or warehousing. Therefore, no import duty was payable in respect of the bunkers taken on board at Colombo and remaining on board the petitioner's ships when they touched Tuticorin. The customs authorities were right in granting clearance to these vessels without demanding any import duty from them in respect of the bunkers.

2. Duty Payable by a Coasting Vessel without Filing a Bill of Entry:
The court rejected the argument that no duty was payable by the petitioner's vessels because they were not required to and did not file any bill of entry. Under Section 162(2), a bill of entry by the owner of the goods is necessary even in the case of a coasting vessel where it has touched at a foreign port before coming to the customs port or where it has some dutiable goods on board. Therefore, if the contention of the respondent that duty is attracted the moment a ship enters the territory of India is correct, there was an obligation on the part of the ship's owner or master to file a bill of entry in respect of the bunkers and pay duty in respect thereof.

3. Failure to Demand Duty Before Granting Port Clearance:
The court considered whether the customs authorities' failure to demand duty before granting port clearance precluded later demands. The court concluded that the grant of port clearance involves a decision regarding the duties payable, and this decision becomes final under the Act. The customs authorities' failure to demand duty at the time of granting port clearance cannot be rectified after the lapse of several years.

4. Authority to Review Clearance Order and Demand Duty:
The court examined whether the Superintendent of Central Excise had the authority to review the clearance order and demand import duty. The court concluded that no power of review of his own order by the same authority can be presumed in the absence of a specific statutory provision. The only section that authorizes the same officer to set right a previous determination is Section 39, which requires action to be taken within three months of the original order. Therefore, the Superintendent of Central Excise did not have the authority to review the clearance order and demand import duty after such a long lapse of time.

5. Time-barred Demands under Section 39:
The court considered whether the demands for duty were time-barred under Section 39 of the Act. The court concluded that the demands were indeed time-barred. Section 39 authorizes action within three months of the original order, and this period had long expired. Therefore, the demands for duty were not legally sustainable.

Conclusion:
The court held that the bunkers in question were not assessable to import customs duty. Even if they were, and duty was omitted to be charged before the ships left port due to an error, the respondent could not revise, review, or rectify the position after the lapse of so many years. Consequently, the court issued a writ of certiorari quashing the nine orders of the Superintendent, Central Excise, and the appellate and revisional orders confirming in part the orders of the Superintendent. The demands amounting to Rs. 2,59,692.35 made on the petitioner were quashed and ordered to be refunded. The writ petition was allowed, and the petitioner was entitled to its costs.