Customs duty is only applicable at the time of first entry into India, and not on subsequent conversions, as retrospective application of exemptions violates established legal principles.

ORDER :

ANITA SUMANTH, J.

Mr. Karthik, learned counsel, makes an endorsement not pressing the relief sought in W.P.No. 19300 of 2012, recording which, W.P.No.19300 of 2012 is dismissed as not pressed, leaving the question to be decided in any other appropriate case.

2. Now coming to W.P.Nos. 19298 & 19299 of 2012, the relief sought for is a certiorarified mandamus challenging communication dated 11.07.2012 in respect of two vessels i.e., ‘Jug Rahul’ and ‘Jug Rishi’ for non-payment of countervailing duty (CVD) on conversion from foreign to coastal run.

3.The impugned communications refer primarily, to Notification No. 12/2012 where Serial No. 462 stipulates that goods under tariff heading 8901 (foreign going vessels), are exempt from basic customs duty (BCD) and CVD, subject to the condition that appropriate duty is remitted upon conversion to coastal run.

4. ‘Jug Rahul’ has been imported in 2005. No Bill of Entry has been filed as the law did not mandate the filing of Bill of Entry at that relevant point in time. As far as ‘Jug Rishi’ is concerned, Bill of Entry has been filed on 28.03.2011. Both imports are prior to date of Notification dated 12/2012.

5. The petitioner relies on a decision of the Orissa High Court in its own case Great Eastern Shipping Company Ltd and Ors v Union of India and Ors, 379 ELT 318(Ori) : W.P(C) No. 4 of 2013. The challenge is identical in that case as well and relates to three other vessels being ‘Jug Arnav’, ‘Jag Ratan’ and ‘Jag Rani’, that had been imported on 30.04.2003, 13.11.2007 and 26.08.2011, respectively. The Court proceeds on the basis that Notification No. 12/2012 would not adversely impact those imports that had taken place prior to date of Notification being 17.03.2012 as the applicability of the Notification is prospective.

6. The admitted position in the present case is that, post date of Notification there has been conversion from foreign run to coastal run. However, one of the question that has been taken note of by the Orissa High Court referring to Commissioner of Customs, Mumbai v Aban Loyd Chiles Offshore Ltd., (2017) 3 SCC 211 is that customs duty would be leviable only on the import of conveyances at the first instance (i.e., at the time of first entry). This event was in 2005 and 2011 in the case of the two vessels we are concerned with. Post the aforesaid event, they ceased to be goods and were only conveyances. The Supreme Court in Aban, [Foot Note supra 2] has explained this in the following terms:-

13. To appreciate the controversy, it is necessary to understand certain concepts as envisaged under the Act. 'Goods' for the purpose of the Act includes vessels, aircrafts and vehicles as defined in sub-section (22) to Section 2, yet the distinction has to be recognized between a vessel or an aircraft as a mere good and when the vessel or an aircraft comes to India as a conveyance carrying imported goods. When a vessel or an aircraft is imported into India as a good, customs duty is payable thereon. However, when a vessel is used as a conveyance of an imported good, the position would be different.

7. Hence the critical event in order to attract liability under Notification No.12/2012 would be the date of import alone and not their subsequent run as a conveyance. In the present case, these critical dates are in 2005 and 2011, even prior to date of Notification.

8. The decision of the Orissa High Court has attained finality and the operative portion reads as follows:-

‘Discussion and Reasons

21. The above submissions have been considered. Since the central plank of the submission of the Opposite Parties to justify the insistence on payment of customs duty on the vessel in question at the time of its conversion from foreign goi