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TMI Blog2019 (2) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... When we see this scheme in the light of the provisions contained in Chapter VI and particularly section 46 falling therein, it is evident that the filing of bill of entry means the importer of any goods, on importation, presenting this bill to the proper officer for home consumption or warehousing. If they have to be cleared for home consumption, then, the procedure under section 47 of the Customs Act, 1962 has to be followed and when they have to be warehoused after unloading, then, section 48 is the provision which has to be abided by the concerned persons. In case of warehoused goods, by section 71, it is categorically stated that goods not to be taken out of warehouse except as provided by this Act. - Thus, the import is complete on compliance of the above noted provisions of the Customs Act, 1962 and therefore, that expression for the purposes of the BST and the CST Act has to be understood accordingly. The clearance of goods for home consumption is dealt with by section 47 of the Customs Act, 1962, but storage of imported goods in warehouse only because they are not cleared after unloading having been dealt with by the Customs Act, 1962 and particularly section 48 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Special Counsel with Ms. Jyoti Chavan-AGP for the applicant (State). Mr. N.V. Tapare for the respondent. Judgment :- (Per S. C. Dharmadhikari, J.) 1. The Second Bench of the Maharashtra Sales Tax Tribunal at Mumbai (for short MSTT ) on 24th June, 2008, on two reference applications bearing Nos. 45 of 2008 and 46 of 2008 arising out of Second Appeal Nos. 1358 and 1359 of 2003, decided on 19th October, 2007, has referred the following question for opinion and answer of this court:- Whether on the facts and circumstances of the case and on a true and correct interpretation of the definition of the term 'crossing of customs frontiers of India' in section 2(ab) of the Central Sales Tax Act, 1956 and the provision in section 5(2) of the said Act the Tribunal was legally justified in holding that the impugned bonded sales effected to parties situate in Maharashtra are exempt from tax as sales in the course of import under the second limb of section 5(2) of the Central Sales Tax Act, 1956 for the reasons of the said sales having been effected by transfer of the documents of title to the goods before crossing the customs frontiers of India? 2. The fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the appellant filed the second appeals before the tribunal challenging the decision of the first appellate authority. 5. It was submitted on behalf of the Revenue that the cases of M/s. Indo Text Export Pvt. Ltd. (S. A. Nos. 284 and 285 decided on 17th June, 1995) and M/s. Sheventilal and Brothers (Appeal No. 104 of 1980 decided on 15th April, 1983) are applicable to the present matter. The above cited judgments decide the issue that once the imported goods are cleared from the area of custom station for being kept in the customs bond, the custom frontiers of India are crossed and the course of import comes to an end. Therefore, such bond sales do not qualify as high sea sales . On the other hand, the appellant, in support of its claim of high sea sales placed reliance on the Madras High Court judgment in the case of M/s. State Trading Corporation (12 STC 294) which was based on the Apex Court judgment in the case of M/s. Kiran Spinning (113 ELT 753). On interpretation of the definition of the term crossing the customs frontiers of India in section 2(ab) of the CST Act, the Madras High Court has unequivocally held that the bond sales do qualify as high sea sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned bond sales as sales in the course of import exempt from tax under the second limb of section 5(2) of the CST Act and accordingly deleted the taxed levied thereon. 9. As per the order, the impugned sales are allowed as exempted from tax under the second limb of section 5(2) (high sea sales) of the CST Act. The taxes levied thereon are deleted. As the Revenue is not satisfied with the said judgment, it has preferred these two applications under section 61(1) of the Bombay Act requesting the tribunal to refer certain questions of law to this court for opinion and answer. 10. The tribunal, at the instance of the Revenue and while deciding their reference applications, opined that all the sales effected parties are not situated in the State. Some of the sales are out of Maharashtra and the same are allowed as exempt from tax solely for the reason that they qualify as high sea sales under section 5(2) of the CST Act. After referring to the judgments rendered by the Madras High Court and the Andhra Pradesh High Court, the tribunal opined that both these judgments express contrary views on the interpretation of the definition of the term crossing the customs frontiers of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , according to Mr. Sonpal, the requirement of such sale being termed as sale in the course of import is not fulfilled. The crossing of customs frontiers occurs when goods were unloaded on the harbour when the frontiers of the customs was crossed first time and secondly and alternatively, crossing of customs frontiers occurs when bill of entry for warehousing was filed and duties assessed. Since the payment is deferred and goods were stored till then in bonded warehouse cannot be said to be a continuing course of import. Thus, according to Mr.Sonpal, the issue is what is meant by crossing of customs frontiers in India ? 13. Relying on the definition of crossing the customs frontiers of India , it is urged that the documents of title to the goods have been transferred after removing the goods from port area for warehousing, by filing bill of entry for warehousing and assessment of duty under the Customs Act, 1962. Therefore, it cannot be said that a sale by transfer of documents of title to goods before crossing customs frontiers of India has taken place. 14. Mr. Sonpal submits that crossing of customs frontiers of India occurs when bill of entry is filed and duty assessed. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v) M/s. Indo Burma Trading corporation vs. State of Maharashtra, 2004 (30) MTJ 443. (v) State Trading Corporation of India Ltd. vs. State of Tamil Nadu and Anr., 2003 (129) STC 294. (vi) Kiran Spinning Mills vs. Collector of Customs, (2000) 10 SCC 228. (vii) P. U. Usha vs. State of Kerala, (2007) 5 VST 484. (viii) Apar Private Ltd. and Ors. vs. Union of India and Ors., 1985 (22) ELT 644. (ix) Indian Tourist Development Corporation Limited vs. Assistant Commissioner of Commercial Taxes and Anr., (2012) 3 SCC 204. (ix) Deepak Bhandari vs. Himachal Pradesh State Industrial Development corporation Limited, Civil Appeal No. 1019 of 2014, decided on 29th January, 2014 (S. C.). (x) Minerals and Metal Trading Corporation of India Ltd. vs. Sales Tax Officer and Ors., (1998) 7 SCC 19. (xi) Narang Hotels and Resorts Pvt. Ltd. vs. State of Maharashtra and Ors., (2004) 135 STC 289. 16. For properly appreciating the rival contentions, one would have to make a brief reference to the relevant statutory provisions. Insofar as the BST Act is concerned, from its preamble, it would be evident that it is an Act to consolidate and amend the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stituted under the Road Transport Corporations Act, 1950; (h) Customs Department of the Government of India administering the Customs Act, 1962; (i) Insurance and financial corporations or companies and Banks included in the Second Schedule to the Reserve Bank of India Act, 1934; (j) Advertising agencies; (k) any other corporation, company, body or authority owned or set-up by, or subject to administrative control of the Central Government or any State Government. (l) incorporated or un-incorporated society, club or other association of persons; (ii) an auctioneer, who sells or auctions goods belonging to any principal whether disclosed or not and whether the offer of the intending purchaser is accepted by him or by the principal or a nominee of the principal, shall, notwithstanding anything contained in clause (5A) or any other provisions of this Act, be deemed to be a dealer; (iii) a factor, broker, commission agent, del credere agent or any other mercantile agent, by whatever name called, who carries on the business of buying, selling, supplying or distributing goods belonging to any principal or principals whether disclosed or not, shall notwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tallments; (iii) the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drinks (whether or not intoxicating, where such supply or service is made or is given on or after the 2nd day of February 1983, for cash, deferred payment or other valuable consideration; (iv) the transfer, otherwise than in pursuance of a contract of property in any goods for cash, deferred payment or other valuable consideration; (v) the supply of goods by any unincorporated association or body of persons, to a member thereof for cash, deferred payment or other valuable consideration; shall be deemed to be a sale. 19. The comprehensive definition of the term sale denotes that it means sale of goods made within the State and for the purpose of section 2(28), the explanation which was added by the Maharashtra Act 24 of 1990 indicates that the sale within the State includes a sale determined to be inside the State in accordance with the principles formulated in sub-section (2) of section 4 of the CST Act and every disposal of goods referred to in the explanation to clause (11) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility to pay tax, other than tax already levied or leviable, shall until his turnover of sales or of purchases again first exceeds the relevant limit specified in sub-section (4), ceases: Provided that, where the dealer becomes liable to pay tax again in the same year in which he ceased to be liable as aforesaid, then in respect of such sales and purchases as take place during the period commencing on the date of cessation of liability to tax and upto the time when his turnover of sales or of purchases does not exceed the relevant limit applicable to him under sub-section (4), no tax shall be payable. (4) For the purposes of this sub-section, the limits of turnover shall be as follows: (i) Limits of turnover ₹ 1,00,000 (a) In the case of a dealer, who is an importer, and the value of taxable goods sold or purchased by him during the year is not less than ₹ 10,000 and the value of any goods whether taxable or not brought by him into the State or despatched to him from outside the State during the year is not less then ₹ 25,000. Or (b) In the case of a dealer who is a manufacturer, and the value of ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtance in inter-State trade or commerce and specify the restriction and conditions to which State laws imposing taxes on the sale or purchase of such goods of special importance shall be subject. The Statement of Objects and Reasons leading to the CST Act demonstrates that it is in the interest of the national economy of India, certain amendments were undertaken in the Constitution by the Constitution (Sixth Amendment) Act, 1956. The taxes on sales or purchases of goods in the course of inter-State trade or commerce were brought expressly within the purview of the legislative jurisdiction of Parliament. The restrictions could be imposed on the powers of State Legislatures with respect to the levy of taxes on the sale or purchase of goods within the State where the goods are of special importance in inter-State trade or commerce and that is how the formulation of principles for determining when sale or purchase takes place in the course of inter-State trade or commerce or in the course of export or import or outside a State in order that the legislative spheres of Parliament and the State legislatures become clearly demarcated. We are not concerned with the goods of special importan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we would like to refer to and contained in Chapter I. Firstly, we would reproduce four important definitions and they are of the words and expressions appropriate State , business , crossing the customs frontiers of India and dealer . They read as under:- 2(a) appropriate State means - (i) in relation to a dealer who has one or more places of business situated in the same State, that State; (ii) in relation to a dealer who has places of business situated in different States, every such State with respect to the place or places of business situated within its territory. 2(aa) business includes - (i) any trade, commerce or manufacture, or any adventure or concern in the nature of trade, commerce or manufacture, whether or not such trade, commerce, manufacture, adventure or concern is carried on with a motive to make gain or profit and whether or not any gain or profit accrues from such trade, commerce, manufacture, adventure or concern; and (ii) any transaction in connection with or incidental or ancillary to, such trade, commerce, manufacture, adventure or concern; 2(ab) crossing the customs frontiers of India means crossing in the limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, shall except in relation to any sale, supply or distribution of surplus, un-serviceable or old stores or materials or waste products or obsolete or discarded machinery or parts or accessories thereof, be deemed to be a dealer for the purposes of this Act; 27. The word goods is defined in section 2(d) and the term place of business is defined in section 2(dd), which reads as under:- 2(dd) place of business includes - (i) in any case where a dealer carries on business through an agent by (whatever name called), the place of business of such agent; (ii) a warehouse, godown or other place where a dealer stores his goods; and (iii) a place where a dealer keeps his books of account. 28. The word sale is defined in section 2(g), which reads as under:- 2(9) sale , with its grammatical variations and cognate expressions, means any transfer of property in goods by one person to another for cash or deferred payment or for any other valuable consideration, and includes, - (i) a transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (ii) a transfer of prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of clause (b), be deemed to commence at the time of such delivery and terminate at the time when delivery is taken from such carrier or bailee. Explanation 2. - Where the movement of goods commences and terminates in the same State it shall not be deemed to be a movement of goods from one State to another by reason merely of the fact that in the course of such movement the goods pass through the territory of any other State. Explanation 3. - Where the gas sold or purchased and transported through a common carrier pipeline or any other common transport or distribution system becomes co-mingled and fungible with other gas in the pipeline or system and such gas is introduced into the pipeline or system in one State and is taken out from the pipeline in another State, such sale or purchase of gas shall be deemed to be a movement of goods from one State to another. 4. When is a sale or purchase of goods said to take place outside a State. - (1) Subject to the provisions contained in section 3, when a sale or purchase of goods is determined in accordance with sub-section (2) to take place inside a State, such sale or purchase shall be deemed to have taken place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emed to take place in the course of the export of goods out of the territory of India. Explanation . - For the purposes of this sub-section, designated Indian carrier means any carrier which the Central Government may, by notification in the Official Gazette, specify in this behalf. 31. Chapter III is titled as Inter-State Sales Tax . Therein, we find sections 6, 6-A, 7, 8, 8-A, 9, 9-A, 9-B, 10, 10-A and sections 11 to 13. We need not refer to rest of the Chapters for the simple reason that section 3 of this Act deals with sale or purchase of goods which is said to have taken place in the course of interState trade or commerce and section 4 deals with a sale or purchase of goods which is said to have taken place outside a State. Section 5 deals with a sale or purchase of goods in the course of import or export. Since sub-section (1) of section 5 as also sub-section (2) expressly contain the words crossing the customs frontiers of India . What we should bear in mind is that a sale or purchase of goods shall be deemed to have taken place in the course of export of the goods out of the territory of India only if the sale or purchase either occasions such export or is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the revenue thus caused. In order to deal with the menace of smuggling, the authorities are enabled to detect, conduct search and seizure, and if necessary, confiscate such smuggled goods, within the territory of India. .. 12. Dutiable goods are goods whose import is permitted by the Act or any other law in force. Duty is the tax leviable on the goods occasioned by their import into India or their export out of India. The dutiability of the goods is covered by Section 12 of the Act which is the charging section. Under this section, all goods imported into or exported from India are liable to customs duty unless the Customs Act itself or any other law for the time being in force provides otherwise. The rate of duty is fixed by the Customs Tariff Act, 1975. Import and imported goods mean that if goods are brought into India, meaning thereby into the territory of India from outside, there is import of goods and the goods become imported goods and become chargeable to duty up to the moment they are cleared for home consumption. The word importer has been defined in the Act as importer in relation to any goods at any time between their importation and the time when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Chapter VIA is introduced for payment through electronic cash ledger, whereas, Chapter VIII deals with goods in transit. Chapter IX is titled as Warehousing and that is important for our purpose. The rest of the Chapters deal with drawback, special provisions regarding baggage, goods imported or exported by post, courier and stores. Chapters XII, XIIA contain provisions relating to coastal goods and vessels carrying coastal goods and audit. Chapter XIII has been enacted to provide for searches, seizure and arrest, following which, Chapter XIV deals with confiscation of goods and conveyances and imposition of penalties. There are Chapters in relation to settlement of cases, appeals, offences and prosecutions and they are Chapters XIVA, XV and XVI. Finally, Chapter XVII contains miscellaneous provisions. 35. For understanding the meaning of the words and expressions used in various Chapters, in Chapter I (section 2), there are definitions. This section opens with the words in this Act unless the context other requires . The word bill of entry is defined in section 2(4) to mean a bill of entry referred to in section 46. Then, the term customs airport is defined in section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proved by the Principal Commissioner of Customs or Commissioner of Customs until they are cleared for home consumption or are warehoused or are transhipped in accordance with the provisions of Chapter VIII. (2) The person having custody of any imported goods in a customs area, whether under the provisions of subsection (1) or under any law for the time being in force, - (a) shall keep a record of such goods and send a copy thereof to the proper officer; (b) shall not permit such goods to be removed from the customs area or otherwise dealt with, except under and in accordance with the permission in writing of the proper officer or in such manner as may be prescribed. (3) Notwithstanding anything contained in any law for the time being in force, if any imported goods are pilferred after unloading thereof in a customs area while in the custody of a person referred to in sub-section (1), that person shall be liable to pay duty on such goods at the rate prevailing on the date of delivery of an arrival manifest or import manifest or, as the case may be, an import report to the proper officer under section 30 for the arrival of the conveyance in which the said goods we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the day (excluding holidays) on which the aircraft or vessel or vehicle carrying the goods arrives at a customs station at which such goods are to be cleared for home consumption or warehousing: Provided that a bill of entry may be presented at any time not exceeding thirty days prior to the expected arrival of the aircraft or vessel or vehicle by which the goods have been shipped for importation into India: Provided further that where the bill of entry is not presented within the time so specified and the proper officer is satisfied that there was no sufficient cause for such delay, the importer shall pay such charges for late presentation of the bill of entry as may be prescribed. (4) The importer while presenting a bill of entry shall make and subscribe to a declaration as to the truth of the contents of such bill of entry and shall, in support of such declaration, produce to the proper officer the invoice, if any, and such other documents relating to the imported goods as may be prescribed. (4A) The importer who presents a bill of entry shall ensure the following, namely:- (a) the accuracy and completeness of the information given therein; (b) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be specified by rules made in this behalf, and if he fails to pay the duty within the time so specified, he shall pay interest on the duty not paid or short-paid till the date of its payment, at such rate, not less than ten per cent. but not exceeding thirty-six per cent. per annum, as may be fixed by the Central Government, by notification in the Official Gazette: Provided that the Central Government may, by notification in the Official Gazette, specify the class or classes of importers who shall pay such duty electronically: Provided further that where the bill of entry is returned for payment of duty before the commencement of the Customs (Amendment) Act, 1991 and the importer has not paid such duty before such commencement, the date of return of such bill of entry to him shall be deemed to be the date of such commencement for the purpose of this section: Provided also that if the Board is satisfied that it is necessary in the public interest so to do, it may, by order for reasons to be recorded, waive the whole or part of any interest payable under this section. 41. Then, by section 48, there is a procedure in case of goods not cleared, warehoused or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customs port and customs station would indicate that these are the notified places where the goods on import, until they are cleared, have to be placed. Their custody is with the person referred by us in the aforereferred provisions. Thus, once the imported goods are unloaded in the customs area, then, there has to be entry made, save and except such goods which are intended for transit or transhipment and there is a provision for clearance of goods for home consumption. 44. The question before us is the word import means bringing into India from a place outside India. The term import manifest is a term defined in section 2(24) together with import report required to be delivered under section 30. Section 2(25) deals with imported goods and we have seen that definition, which means any goods brought into India from a place outside India, but does not include goods which have been cleared for home consumption. The term importer is defined in section 2(26) to mean, in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner, beneficial owner or any person holding himself out to be the impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... echnology park unit or software technology park unit or any warehouse wherein manufacture or other operations have been permitted under section 65, till their clearance from the warehouse; (b) in the case of goods other than capital goods intended for use in any hundred per cent export oriented undertaking or electronic hardware technology park unit or software technology park unit or any warehouse wherein manufacture or other operations have been permitted under section 65, till their consumption or clearance from the warehouse; and (c) in the case of any other goods, till the expiry of one year from the date on which the proper officer has made an order under sub-section (1) of section 60: Provided that in the case of any goods referred to in this clause, the Principal Commissioner of Customs or Commissioner of Customs may, on sufficient cause being shown, extend the period for which the goods may remain in the warehouse, by not more than one year at a time: provided further that where such goods are likely to deteriorate, the period referred to in the first proviso may be reduced by the Principal Commissioner of Customs or Commissioner of Customs to such shor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the warehoused goods with the sanction of the proper officer is preserved. Now, with the amended provision as well, the owner has a discretion to inspect the goods, deal with their containers in such manner as may be necessary to prevent loss or deterioration or damage to the goods, show the goods for sale. By other sections falling in this Chapter, the warehoused goods can be dealt with and can also be removed from one warehouse to another. 49. Section 68 is important for our purpose and reads as under:- 68. Clearance of warehoused goods for home consumption. - Any warehoused goods may be cleared from the warehouse for home consumption if - (a) a bill of entry for home consumption in respect of such goods has been presented in the prescribed form; (b) the import duty, interest, fine and penalties payable in respect of such goods have been paid; and (c) an order for clearance of such goods for home consumption has been made by the proper officer: Provided that the order referred to in clause (c) may also be made electronically through the customs automated system on the basis of risk evaluation through appropriate selection criteria: Provided further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of high seas sale was disallowed. The transaction was treated as a local sale. We have already seen from the provisions of the Customs Act, 1962 that the term customs station is defined to mean any customs port, customs airport or land customs station. Now, if the goods are stated to be crossing the customs frontiers of India, then, in terms of the CST Act that means crossing the limits of the area of customs station in which the imported goods or export goods are ordinarily kept before clearance by the customs authorities. That also is evident by the fact that when the goods arrive in India, they are dealt with by Chapter VI of the Customs Act, 1962, which contains provisions relating to conveyances carrying imported or export goods. Therein, section 29 deals with arrival of vessels and aircrafts in India and section 30 deals with delivery of arrival manifest or import manifest or import report and that is an obligation of a person carrying imported goods either by vessel or an aircraft and he has to deliver to the proper officer such a manifest. Then, by sections 31 and 32, it is clear that the imported goods cannot be unloaded from the vessel until entry inwards is granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1995 and the agreement for sale has been executed thereafter. Once these are the admitted dates and events, then, this is not a case where the documents of title to the goods have been transferred before the goods have crossed the customs frontiers of India. This is, therefore, a local sale. 54. Mr. Tapare appearing on behalf of the dealer-respondent before us argued orally as also placed his written submissions. In para 2 of the written submissions in clauses (a) to (d), the respondent-dealer has set out the details of the transactions. It is conceded that the respondent imported the goods from foreign country by sea. It is then conceded that on arrival of vessels, the goods were unloaded, ex-bond bill of entry was filed by the respondent and provisional duty was assessed and goods were kept in bonded warehouse under the control and supervision of customs authorities. It is further stated that the assessee-dealer then entered into the contract, by relying on the bill of lading which is a document of title to the goods, with the local customers. It is stated that the customers, which are local, on the basis of this bill of lading, prepared the bill of entry for home consumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 46 of the Customs Act, 1962, before its amendment by the Finance Act, 2017 and thereafter amply clarifies that the bill of entry under sub-section (1) may be presented at any time for delivery of the import manifest or report, as the case may be and the proviso to sub-section (3), prior to its amendment also throws light on this aspect. Hence, we are unable to accept the argument of Mr.Tapare that the customs frontiers of India are not crossed until the goods find their free access into the country by crossing the outer limits of the area of customs station and it is possible only at the time of clearance by the customs authorities by making the payment of customs duty. This argument is not sound on facts and in law. Merely because the Customs Act, 1962 is referred in his written arguments, but without referring to the specific provisions thereof, it is not possible to accept his argument that the course of import comes to an end when the goods are brought in clearance namely, when the imported goods are made free for home consumption. Till then, they are in custody and control of the customs authorities. Without following the procedure under the Customs Act, 1962, they can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation to the facts before us. This decision was rendered in entirely different factual background and controversy. We do not think that the respondent can take any assistance of this decision. 61. Then, reliance is placed on the judgment in the case of Kiran Spinning Mills vs. Collector of Customs (2000) 10 SCC 228. The issue there was whether the appellant before the Hon'ble Supreme Court, who imported the goods but placed them in bonded warehouse after they landed in India, was liable to pay additional duty under section 3 of the Customs Tariff Act, 1975. There, an Ordinance was promulgated on 3rd October, 1978 effective from 4th October, 1978, whereunder, articles were charged with additional duty of excise equal to 10% of the basic excise duty payable on such articles under the Central Excise and Salt Act, 1944. It was not disputed that under section 3 of the Customs Tariff Act, 1975, additional duty on such articles, which were imported, became payable equivalent to the additional excise duty levied under that Ordinance. The goods, which were imported by the appellant were cleared from the bonded warehouse after 4th October, 1978 and that is why demand of addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nes by the flight kitchen were in the course of export within the meaning of section 5(1) of the CST Act. The said sales occasioned export of the goods out of the territory of India by transfer of documents of title to the goods, after the goods crossed the customs frontiers of India. As such, the sales effected by them to the foreign airlines were not exigible to the provisions of the BST Act. In answering this, the Division Bench of this Court held that such sales are not sales in the course of export. The necessary ingredients to establish that sale are not satisfied. It is in that context that the Division Bench held that the argument of the Department/ Revenue was correct. 64. We do not see how this paragraph relied upon by Mr.Tapare from this judgment can be applied de-hors the factual position and the controversy. That paragraph cannot be read in isolation. Paras 41 and 42 so also para 44 of this judgment, hence, cannot be pressed into service. Before us the issue is very clear and that is that the Customs Act, 1962 imposes a duty on import. The goods which are described loosely as imported goods are now expressly defined and section 2(25) of the Customs Act, 1962 says th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ews print was stored in that customs port, which was also the customs station, before clearance by the customs authorities was also not disputed. The Madras High Court distinguished the judgment of the Andhra Pradesh High Court in the case of Minerals and Metal Trading Corporation of India (supra). The relevant paragraphs of the judgment in this case of the High Court of Madras are as under:- 12. As held by the Supreme Court in the case of Kiran Spinning Mills vs. Collector of Customs (1999) 113 ELT 753 , which arose under the Additional duty of Excise (Textiles and Textile Articles) Ordinance, 1978 the taxable event is the crossing of the customs barrier, and not the date when the goods had landed in India, or had entered the territorial waters. When goods are imported into India even after the goods are unloaded from the ship, and even after the goods are assessed to duty subsequent to the filing of a bill of entry, the goods cannot be regarded as having crossed the customs barrier until the duty is paid and the goods are brought out of the limits of the customs station. In the case of Kiran Spinning Mills (1999) 113 ELT 753 , the apex Court has observed thus; In oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sale effected by the assessee/dealer was clearly one which was in the course of import. The impugned order of the Tribunal upholding the denial of exemption to the dealer in respect of these sales is, therefore, unsustainable and is set aside. The writ petitions are allowed. 68. Pertinently, before the High Court of Madras, the clearance was after transfer of documents of title and not earlier. The factual position before us is otherwise. Hence, for the reasons aforestated, this judgment is also distinguishable. 69. For similar reasons, the other judgment of the Madras High Court in the case of Tarajyot Polimars Limited vs. Deputy Commercial Tax Officer and Ors. 2005 (140) STC 239 is also distinguishable. 70. Now, we turn to the judgments relied upon by Mr.Sonpal. Mr.Sonpal made very detailed submissions and urged that several judgments which are referred by him in the written submissions should be referred by us. We only refer to the judgment of the four Judge Bench in the case of State of Madras vs. Davar and Co. (supra). In this judgment, the Hon'ble Supreme Court made the distinction very clear. Paragraphs 10 to 14 of this judgment are relevant. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion as to the extent of the territorial waters of India. That Proclamation has been published with the notification of the Government of India in the Ministry of External Affairs, No. S.R.O. 669, dated March 22, 1956 and is as follows: S.R.O. 669.- The following proclamation by the President is published for general information: PROCLAMATION WHEREAS international law has always recognised that sovereignty of a state extends to a belt of sea adjacent to its coast; AND WHEREAS international practice is not uniform as regards the extent of this sea-belt commonly known as the territorial waters of the State, and consequently it is necessary to make a declaration as to the extent of the territorial waters of India; I, Rajendra Prasad, President of India, in the Seventh Year of the Republic, do hereby proclaim that, notwithstanding any rule of law or practice to the contrary which may have been observed in the past in relation to India or any part thereof, the territorial waters of India extend into the sea to a distance of six nautical miles measured from the appropriate base line. RAJENDRA PRASAD, President. On September 30, 1967 another Proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madras when the sales were effected by the assessees by transfer of documents of title to the buyers. If so, it follows that the claim made by the assessees that the sales in question were sales in the course of import, has been rightly rejected by the assessing authority. Unfortunately, though various aspects seem to have been pressed before the High Court by the State of Madras, this notification of August 6, 1955 issued by the Government of India, defining the 'customs frontiers' of India, was not brought to the notice, of the High Court. 71. The Division Bench of the Andhra Pradesh High Court [(M/s. Minerls and Metals Trading Corporation of India (supra)] dealt with a similar contention and by noticing the words employed in the later part of sub-section (2) of section 5 of the CST Act crossed the customs frontiers of India . These words have been expressly defined in section 2(ab) of the CST Act to remove any ambiguity. This definition has been inserted by Act 103 of 1976. 72. In the case of Madras Marine and Co. vs. State of Madras AIR 1986 SC 1760 the Hon'ble Supreme Court noticed the position prior to this Amendment Act and later on as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amendment introduced by Act 103 of 1976 by incorporating in clause (ab) of section 2 of the Central Sales Tax Act, 1956 does not affect the position. In this connection reference may be made from the observations of this Court in Burmah Shell oil Storage Ltd., (supra) where it has been held that customs barrier does not set a terminal limit to the territory of the State for sales-tax purposes. Sale, therefore, beyond the customs barrier is still a sale within the State. The amendment introduced in section 2 by the Act 103 of 1976 does not affect the position because the custom station is within the State of Tamil Nadu. That question might have been relevant if we were considering the case of sale by the transfer of documents of title to the goods as contemplated by section 5 of the Central Sales-Tax Act. In the premises we are unable to accept the contentions urged on behalf of the appellants in the Civil Appeals and also the contentions urged in the Writ Petition. 73. The distinction made by the Hon'ble Supreme Court in the case of Minerals and Metals Trading Corporation of India Ltd. vs. Sales Tax Officer and Ors AIR 1999 SC 121 is clear. There, the bill of lading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it was difficult to determine whether, at the time of the sale or purchase, the goods had entered or crossed the territorial waters. The actual checking of the goods took place in the customs station and not at the edge of the territorial waters. It was, therefore, necessary to so define the expression. A customs station has, by reason of the Explanation to Section 2(ab), the same meaning as in the Customs Act, 1962, and that is : any customs port, customs airport or land customs station . A customs port is any port appointed under Clause (a) of Section 7 of the Customs Act to be a customs port. (That Paradeep Port is a customs port is not in dispute). 7. Section 5, sub-section 2 has two parts. A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India if the sale or purchase either (i) occasions such import or (ii) it is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India, that is to say, before the goods have crossed the limits of the area of the customs station in which they are kept before clearance by the customs authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had taken place long after the introduction of Section 2 (ab) and, therefore, the question whether they were sales in the course of import had to be judged on the basis of its provisions. 11. The aforesaid sales being covered by the provisions of the latter part of Section 5(2) read with Section 2(ab) of Central Sales Tax Act, they are sales in the course of import and not liable to sales tax. 74. The High Court of Judicature of Andhra Pradesh at Hyderabad was dealing with a similar case (Minerls and Metals Trading Corporation of India Ltd. vs. The State of Andhra Pradesh (1998) 110 STC 394) where the argument that the imported goods were transferred by endoursement of bill of lading in favour of the local buyers before the customs clearance of goods was turned down. The MMTC approached the High Court of Andhra Pradesh at Hyderabad and this argument was dealt with by the Division Bench as under:- 14. In order to get over the judgment of the Supreme Court the amendment in Section 2(ab) is made. On the basis of the report submitted by the Law Commission recommending amendment to Section 2 of CST to get over the difficulty to actually ascertain the point of time whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and after making the assessment of the import duty payable under Section 28 of the Customs Act, 1962. 75. We do not think that our view is in any way different. We have noticed all the sections of the Customs Act, 1962 which are relevant to the issue, including Chapter VI and particularly sections 15 and 18 thereof. Hence, we are of the firm view that it is not necessary to refer to all the judgments relied upon by Mr.Sonpal. 76. The judgment finally relied upon by Mr.Tapare and at the close of his submissions in the case of Hotel Ashoka (supra) is distinguishable on facts. There, the India Tourism Development Corporation managed a duty free shop at the international airport. The argument was that the return under the CST Act was not filed as no tax was payable. The goods which had been sold from this duty free shop were sold directly to the customers before importing the goods or before the goods had crossed the customs frontiers of India. There, on facts, it was found that the goods which had been brought from foreign countries had been kept in bonded warehouse and they were transferred to duty free shop situated at the international airport of Bengaluru. The further adm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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