Important Point
Vessels which are used as transhippers can also be treated as “Ocean going vessels” and are thus entitled to the benefit of the notifica­tion dated 11.10.58 issued under Customs Act, 1962.

Judgment

Thomas, J.-Whether vessels which are used as transhippers can also be treated as “ocean going vessels” is the short but hotly mooted issue involved in these appeals. It was once decided by a Bench of two Judges of this Court in Chowgula & Co. Pvt. Ltd. v. Union of India & Ors.1 that such vessels cannot be termed as “ocean-going vessels”. Another Bench has now expressed the opinion that the ratio in the above decision requires reconsideration by a larger Bench. Thus, these matters have come up before us.

2. Some facts necessary for these appeals can be stated thus:

3. Section 46 of the Customs Act, 1962 requires the importer of any goods, other than goods intended for transit or transhipment, to present a Bill of Entry for home consumption of such goods in the prescribed form. By a notification issued by the Ministry of Finance (Department of Revenue) Government of India on 11.10.1958, “ocean-going vessels” have been exempted from payment of customs duty. The said notification reads thus :

“Under Govt. of India Ministry of Fin­ance (Dept. of Revenue) Notifica­tion No. 262-Customs dated the 11th October, 1958, ocean-going vessels other than vessels imported to be broken up, are exempt from the pay­ment of customs duty leviable thereon. Provided that any such vessel if subsequently broken up shall be chargeable with the duty which would be payable on her if she were imported to be broken up.”

3. Some persons who imported transhippers (vessels fitted with equip­ment for transhipping and topping operations) claimed the benefit of the said notification on the premise that those transhippers are also ocean-going vessels. But the Customs authorities insisted on them to file Bills of Entry under Section 46 of the Act in respect of such vessels. The Assistant Collector of Customs ordered, in confirmation of the aforesaid stand of the customs officials, that the importers should file Bills of Entry for payment of customs duty. Then those importers challenged the orders of the Assistant Collector. Some of them went straight to the High Court under Article 226 of the Consti­tution while others approached the statutory authorities up to the Customs Excise and Gold (Control) Appellate Tribunal. The orders impugned before us thus relate to the question whether such tranship­pers are ocean-going vessels. Importers have filed the appeal chal­lenging the decision which negatived their contention and Union of India has filed the appeals challenging those decisions which upheld the contention of the importers.

4. The common features in all cases are the following: Transhippers are vessels used for carrying cargo loaded from the harbour and they proceed to outer sea for unloading it into large vessels afloat in high seas. Such transhippers have been specially fitted with adequate equipment to carry out the said task. (That operation is called top­ping up work.) Some of the vessels were fitted with added holds on both sides, cranes, conveyors and other ship loading equipment de­signed for transfer operations.

In Chowgule & Co. Pvt. Ltd. (supra), learned Judges have noted that the transhippers involved in that decision were capable of being used as ocean going vessels and were, in fact, so used during off-seasons when it was not practicable to do topping up operations. Those vessels are not only capable of being used but were actually used as cargo ships during off-seasons. They were structurally and technically competent to go on the high seas and they were certified to be so competent by appropriate maritime authorities. Even in the course of topping up operations during off-seasons, those transhippers have to go into the open sea to reach the bulk carriers.

5. Despite all the aforesaid features learned Judges did not agree with the contentions of the importers that those vessels were ocean-going vessels. The following observation is the ratio of the decision:

“But in our view, these operations do not make these vessels ocean going vessels