The exemption from customs duty granted to ocean-going vessels under the notification issued by the Central Government was subject to the condition that if the vessel was subsequently broken up, it would be chargeable with duty as if it were imported for breaking up.

( 1 ) THE Customs Authorities and the Union of India have filed an appeal against two interlocutory orders dated June 21, 1982 and July 12, 1982 passed by a learned Single Judge of this Court. The said two interlocutory orders have been passed by the learned Judge in the Rule Nisi issued on the writ petition of Ramniwas Choudhury, carrying on business under the trade name of Choudhury Shipbreaking Co. By the first order, the learned Judge restrained the Central Government from proceeding with a revision case suo moto started by it against the petitioner under Section 131 (3) of the Customs Act, 1962 and, by the second order, the learned Judge directed the Customs Authorities to refund to the petitioner a sum of Rs. 35,98,428/- plus Rs. 2,91,000/- upon furnishing a bank guarantee for the aggregate of the said amounts. It may be stated at the outset that the said sum of Rs. 2,91,000/- is included within the said sum of Rs. 35,98,428/- which has been admittedly paid by the petitioner on account of customs duty for a vessel, and the petitioner claimed a refund of the said sum contending inter alia that no customs duty was payable. The direction of the learned Judge as given in the said order dated July 12, 1982 for the refund of the sum of Rs. 2,91,000/- over and above the said sum of Rs 35,98,428/- is, obviously, a mistake.

( 2 ) IN the appeal, the respondents have filed an application praying for stay of operation of the said orders of the learned Judge. When the application for stay was taken up for hearing, it was prayed by the learned Counsel for both parties that as the principal point involved in the Rule Nisi and also in the appeal and the application relates to the interpretation of an exemption notification issued by the Central Government, which will be referred to by us presently, the Rule Nisi might be disposed of and such disposal would mean the disposal of the appeal and the application. As prayed for by the learned Counsel, we treated the Rule Nisi as on day's list and heard the same. As the appeal was not on the list, we also treated the same as on day's list.

( 3 ) UNDER item No. 76 (1) of schedule to the Indian Tariff Act, 1934, as amended in 1949, customs duty was leviable on ail ships, boats and vessels imported into India either for the purpose of navigation or for breaking up. On October 11, 1958, the Central Government issued the following notification"g. S. R. 930 - In exercise of the powers conferred by Section 23 of the Sea Customs Act, 1878 (8 of 1978) as in force in India and as applied to the State of Pandicherry, the Central Government hereby exempts ocean-going vessels imported into India or the State of Pandicherry, other than vessels imported to be broken up, from the whole of the duty of customs 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. "

( 4 ) ONE Ratnakar Shiping Company Limited purchased an ocean going vessel named MV ERINGTON COURT at 2,75,000 in 1963 and imported the same into India. In view of the said exemption notification dated October 11, 1958, as the said vessel was an ocean going vessel, no customs duty was levied thereon. After her importation into India, the vessel changed hands and was ultimately purchased by POOMPAHAR SHIPPING CORPORATION as an ocean going vessel and she was renamed by the said Corporation as MV TAMIL PERIYAR. Since its importation into India in 1963, the vessel had been used as an ocean going vessel for about 18 years. On December 30, 1980, POOMPAHAR SHIPPING CORPORATION, the owner of the vessel proposed to sell the same to the METAL SCRAP TRADE CORPORATION, hereinafter referred to as MSTC, inasmuch as she lost her seaworthiness. MSTC invited tenders for the sale of the vessel. The petitioner submitted his tender for the purchase of the vessel and his tender being the highest it was accepted by MSTC and it