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1996 Supreme(Bom) 26
IN THE HIGH COURT OF BOMBAY
M.B. Shah, C.J. A.V. Savant, JJ.
Amership Management Pvt. Ltd. and another.... Petitioners.
Versus
Union of India and others.... Respondents.
Writ Petition Nos. 520 of 1994 with 1814, 1962, 1995, 2283 of 1993 with W.P. Nos. 299, 326, 348, 515 596 of 1994, decided on 15/16/17-1-1996.
Advocates appeared :
E.P. Bharucha with K.A. Setalvad i/b M/s. Mulla Mulla Craigie Blunt Caroe, for the petitioners, in W.P. Nos. 520, 229 348 of 1994.
J.P. Deodhar with L.S. Vyas and K.C. Sidhwa, for the respondents, in W.P. Nos. 520 of 1994, 1814, 1962, 1995 2283 of 1993 W.P. Nos. 299, 326, 348, 515 596 of 1994.
E.P. Bharucha with D.B. Shroff, Shiraz Rustomjee, H.C. Daruwalla, Ms. Ruby Kerawalla and N.B. Kurup, for the petitioners, in W.P. Nos. 1814, 1995 2283 of 1993.
Ms. Jyoti Vyas i/b Vyas Bhalwal, for respondent No. 6, in W.P. No. 2283 of 1993.
Headnote:CUSTOMS ACT, 1962
Section 2(21)-Definition of vessel are exclusion definition-Apart from vessels carrying goods or passengers it includes vessels engaged in fishing or other operations in territorial waters.
The definition of the words foreign going vessel or aircraft given in Section 2(21) of the Customs Act is an inclusive definition. It, inter alia, provides that any foreign- going vessel is vessel for the time being engaged in the carriage of goods or passengers between any port in India and any port outside India, whether touching any intermediate port in India or not. It also includes any naval vessel of a foreign Government taking part in any naval exercise any vessel engaged in fishing, any vessel engaged in any other operations outside the territorial waters of India and any vessel proceeding to a place outside India for any purposes whatsoever. Therefore, apart from vessels which are engaged in carrying goods or passengers, vessels engaged in fishing or any other operations outside the territorial waters of India are included in the definition of the words foreign going vessel.
For understanding the meaning of the word vessel, the Court would first refer to the relevant provisions of the Merchant Shipping Act, 1958, Sections 3(13), 3(39), 3(45) and 3(55) of the Merchant Shipping Act, 1958.
Considering these definitions, it is apparent that for a vessel it is not necessary that it should be filled with mechanical means of propulsion. A vessel also includes a sailing vessel or other description of vessel used in navigation. Same is the definition of the word vessel under Section 3(63) of the General Clauses Act, 1897, which provides that vessel shall include any ship or boat or any other description of vessel used in navigation. Therefore, the word vessel is of a wide amplitude and it includes sailing vessel or other description of vessel used in navigation.
Sections 9 (1-A)-See Merchant Shipping Act, 1958-Section 299-A(1).
Sections 54 and 86(2)-Oil rigs vessels-Spare parts or equipments for oil rigs stores-Whether petitioners be entitled to get benefit of Section 86(2) ?
Held; if the goods are warehoused then the goods can be exported to a place outside India without payment of import duty if the conditions mentioned in the said sections are satisfied. In Section 69 the words which are used are not exporting to a port outside India, but the words used are to a place outside India. The result is that if the contention of the respondents is accepted that Section 54 provides for export as a port outside India and not to a place outside India then the petitioners could easily get exemption from customs duty by warehousing the said goods only for a few hours and thereafter exporting it to a place outside India. This would be an anomalous situation. Hence, the word port used in Section 54 is to be interpreted to mean any place outside India. There is no reason why the goods which are warehoused for a few hours should get the benefit of non-payment of import duty and the goods which are being tromitted to a place outside India without being warehoused should not get the same benefit.
Even if it is held that oil rigs are not vessels and, therefore, the equipment brought by the petitioners for the purpose of the said rigs cannot be considered as stores, yet the petitioners are entitled to get the benefit of Section 54 of the Customs Act if the conditions mentioned therein are satisfied.
In the result, each of these petitions are allowed, it is declared that oil rigs are vessels for the purpose of the Customs Act, 1962. Spare parts or equipments for the oil rigs are stores and the petitioners are entitled to get the benefit of Section 86(2) of the Customs Act, 1962. In this view of the matter, the alternative contention raised by the petitioners would not survive. However, it is declared that if the equipment imported by the petitioners are not considered as stores for the purpose of oil rigs, then the petitioners are entitled to get the benefit of Section 86(2) of the Customs Act, 1962. In this view of the matter, the alternative contention raised by the petitioners would not survive. However, it is declared that if the equipment imported by the petitioners are not considered as stores for the purpose of oil rigs, then the petitioners are entitled to get the benefit of Section 54 of the Customs Act, 1962. It would be for the Customs authorities to decide each matter on merits depending upon the facts of the case.
INTERNATIONAL CONVENTION ON LOAD LINES, 1966
Article 16-See Merchant Shipping Act, 1958-Sectlon 299-A(1).
Section 299-A(1)-Customs Act, 1962, Sections 9(1-A)-International convention on Load Lines 1966, Article 16-International convention-India party to-Oil rigs issued construction certificate as vessels,
Oil rigs are considered to be vessels or new ships.
Further, Insurance Policy for the oil rigs is issued on that basis. Copy of one of the Insurance Policies is also produced on record which provides for Navigational limits.
The petitioners have also produced on record documents showing that foreign Governments and their Departments which deal with shipping regard oil rigs as vessels. The said documents are produced on record along with the written submissions at pages 1 I, 68, 98 and 100, which says that the barge in question has been surveyed in accordance with the rules of the concerned Bureau of Shipping. Similarly, there is Certificate which mentions the name of the Foresight Driller III at page 10 of the written submissions. Various other Certificates are produced on record which indicate that oil rigs are considered to be ships. In Courts view, it is not necessary for the Court to consider all these certificates, but all these certificates do indicate that oil rigs are considered to be ships or vessels by all concerned. Further, the Customs Tariff. 1975 provides different heads for levy of tariff. Chapter 89 provides rate of tariff for ships, boats and floating structures. Heading 89.05 provides for light vessels, fire floats, dredgers, floating cranes and other vessels, the navigability of which is subsidiary to the main functions floating docks floating or submersible drilling or production plat forms. Entry 8905.20 also provides for floating or submersible drilling or production platforms. This would indicate that oil rigs which are floating structures would be vessels, For purposes of the Customs Act, the word vessel is of wide amplitude and oil rigs are vessels.
2. The contention in these petitions is that on the equipments or spare parts of oil rigs which are imported by the ship at Bombay for transhipment at the place of the oil rigs, the petitioners are not required to pay customs duty on two counts, namely, (1) that the goods are imported at the Bombay Port only for transhipment and (2) that the equipment are "stores" within the meaning of section 2(38) of the Customs Act and under section 86(2) of the said Act, without payment of customs duty it can be permitted to be transferred to oil rigs or under section 54 it can be transhipped to oil rigs without payment of customs duty.
3. For determining whether the petitioners are required to pay the Customs duty on the said goods, the main questions which require consideration are:
(1) Whether the oil rigs are 'vessels' for the purpose of the Customs Act, 1962 as defined in section 2(21) thereof?
(2) If yes, whether the petitioners are entitled to get benefit of section 86(2) of the Customs Act of transferring the "stores" without payment of Customs duty to oil rigs? and/or
(3) Whether the petitioners are entitled to get benefit of section 54 of the Customs Act, 1962, which provides transhipment of goods without payment of duty to any port outside India?
4. Before deciding the aforesaid questions, it would be necessary to State that under section 12 of the Customs Act, Customs duty is leviable on goods imported into, or exported from India. However, the goods which enter Indian territory can be classified as (1) goods for home consumption, (2) goods for warehousing, (3) goods in transit, and (4) goods for transhipment. In the case of goods in transit or goods for transhipment, the duty is not required to be paid subject to fulfilling the conditions prescribed by sections 53, 54, 55 and 56 of the Customs Act. For the purpose of levy of Customs duty, in order to determine whether any imported goods are 'goods for home consumption', the primary intended use of the goods is required to be found out when the goods are brought into Indian territorial waters. If the goods are intended to be primarily used in India, they are goods for home consumption notwithstanding that they may also be used for the same or other purposes outside India. The predominant purpose or use of the goods is required to be seen.
5. In this context, we would first refer to the decision rendered by the Supreme Court in (Chowgule Co. Pvt. Ltd. another v. Union of India others)1, 1987(28) E.L.T. 39, wherein the Court has discussed exhaustively the various provisions of the Customs Act and the scheme of levy of Customs duty. In paragraph 10 of its judgment, the Court has held as under:-
"10. In regard to the levy of Customs duty the scheme of the Act appears to be as follows:-
Goods which are imported into India, that is, goods which are brought into India from a place outside India, are on entry into India, broadly classified into (i) goods entered for home consumption under Section 46(1), (ii) goods entered for warehousing also under section 46(1); (iii) goods in transit; and (iv) goods for transhipment. In the case of goods in transit and goods for transhipment, duty is not required to be paid subject to fulfilling the conditions prescribed by sections 53, 54, 55 and 56. In the case of these goods, there is no need to present a Bill of Entry. Bill of Entry is necessary and has to be presented in the case of goods for home consumption or warehousing: Goods entered for home
