1986 (12) TMI 216 - AT - Customs

Ship Stores - Foreign going vessel bringing ship s stores for unloading in India exempt from duty

Issues Involved:
1. Whether the vessel M.V. Anupama was a "foreign going vessel" during the relevant period.
2. Whether the levy of duty on the stores of M.V. Anupama was justified.
3. Applicability of the judgments of the Calcutta and Madras High Courts.
4. Validity of the review show cause notice issued by the Government of India.

Issue-wise Detailed Analysis:

1. Whether the vessel M.V. Anupama was a "foreign going vessel" during the relevant period:

The primary issue was to determine if M.V. Anupama was a "foreign going vessel" as defined under Section 2(21) of the Customs Act, 1962. The Department argued that the vessel reverted to coastal trade after discharging its cargo at Bhavnagar and hence, could not be considered a foreign going vessel. The respondents contended that the vessel acted as a daughter vessel to super-tankers and continued their foreign voyage by transporting goods from the super-tankers to Indian ports. The Tribunal concluded that the character of the vessel should be determined by the voyage it performed and the nature of the goods carried. Since M.V. Anupama was engaged in transporting imported cargo between Indian ports and did not carry Indian goods, it was considered a foreign going vessel.

2. Whether the levy of duty on the stores of M.V. Anupama was justified:

The Assistant Collector had levied duty on the stores of M.V. Anupama, asserting that the vessel reverted to coastal trade. The respondents argued that the stores should not attract duty as the vessel was a foreign going vessel. The Tribunal noted that under Sections 12 and 87 of the Customs Act, duty on stores could be avoided if the vessel remained a foreign going vessel. Since M.V. Anupama was considered a foreign going vessel, the levy of duty on its stores was not justified.

3. Applicability of the judgments of the Calcutta and Madras High Courts:

The respondents relied on the judgments of the Calcutta High Court in M/s Turner Morrison & Co. v. The Assistant Collector of Customs and the Madras High Court in The Assistant Collector of Customs, Madras v. Shaw Wallace & Co. Ltd. These judgments held that daughter vessels continuing the voyage of mother vessels should be treated as foreign going vessels. The Tribunal found these judgments applicable to the present case, as M.V. Anupama functioned as a daughter vessel to super-tankers, continuing their foreign voyage.

4. Validity of the review show cause notice issued by the Government of India:

The respondents argued that the review show cause notice was barred by limitation. The Department contended that the notice was issued within one year from the date of the Appellate Collector's order, and thus, was valid. The Tribunal did not find merit in the limitation argument and proceeded to evaluate the substantive issues.

Separate Judgments:

Majority Opinion (Members K. Gopal Hegde and K.L. Rekhi):
The majority held that M.V. Anupama was a foreign going vessel during the relevant period, and the levy of duty on its stores was not justified. They relied on the judgments of the Calcutta and Madras High Courts, concluding that the vessel's voyages were a continuation of the super-tankers' foreign voyages. Consequently, the appeal of the Collector of Customs, Ahmedabad was rejected, and the review show cause notice was discharged.

Dissenting Opinion (Member K.S. Dilipsinhji):
The dissenting member argued that M.V. Anupama reverted to coastal trade as per the request of its agents, and thus, the levy of duty on its stores was justified. He distinguished the facts of the present case from the Calcutta and Madras High Court judgments and emphasized the vessel's status as a coastal vessel during the relevant period.

Final Order:
Based on the majority opinion, the appeal of the Collector of Customs, Ahmedabad was rejected, and the review show cause notice issued by the Government of India was discharged.

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