Point of Law: Levy of customs duty - Vessel - Where the vessels had been imported long before notification that was sought to be applied in those cases, and particularly at a time when there was no requirement to file a BOE, Opposite Parties could not insist on levy of customs duty at a later stage

JUDGMENT :

S. Muralidhar, J.

1. The Great Eastern Shipping Company Limited (Petitioner No.1) and its Company Secretary (Petitioner No.2) have filed this writ petition seeking three reliefs. First, for a declaration that condition No.82 of Sl. No.462 of Notification No.12/2012 Cus. dated 17th March, 2012 issued by the Department of Revenue, Ministry of Finance, Government of India to the extent it has made the import of the vessel ‘Jag Arnav’, retrospectively amenable to customs duty is ultra vires under Sections 12, 25 and 46 of the Customs Act, 1962 (‘Act’) and Articles 14, 19 (1) (g), 265 and 300A of the Constitution of India. The second prayer is for a direction to the Assistant Commissioner, Central Excise, Customs & Service Tax, Balasore Division, Orissa (Opposite Party No.3) and the Commissioner, Central Excise, Customs & Service Tax, Bhubaneswar-1 (Opposite Party No.4) not to deny Petitioner No.1 permission to convert the vessel ‘Jag Arnav’ to ‘coastal status’ and not to charge customs duty. The third is to prohibit Opposite Party No.3 from withholding permission to convert the foreign going vessels of Petitioner No.1 to ‘coastal run’ and from demanding any customs duty on all of the vessels of Petitioner No.1, including ‘Jag Arnav’, imported into India prior to 17th March, 2012.

Background

2. Petitioner No.1 is stated to be a private sector shipping service provider involved in transportation of crude oil, petroleum products, gas and dry bulk commodities. It is stated to be a member of the Indian National Ship Owners Association (INSA).

3. Petitioner No.1, on 3rd July, 2001 acquired from Panama, a motor ship, ‘Jag Arnav’. In terms of Section 406 of the Merchant Shipping Act, 1958 (MS Act), a general licence for ‘Jag Arnav’ to undertake worldwide trade and coastal trade in Indian waters was obtained by Petitioner No.1. ‘Jag Arnav’ arrived at Paradeep Port, Orissa on 30th April, 2003 for the first time. At that relevant time the import of a foreign going vessel was exempt from customs duty in terms of Serial No.352 of Notification No.21/2002-Cus, dated 1st March, 2002 as amended, read with the relevant tariff heading under the Central Excise Tax. The said Entry 352 read as follows: “Heading 8901: All goods (excluding vessels and other floating structures as are imported for breaking up).”

4. Section 12 of the Act is its charging section. Its levies duties on goods imported into India. The rate of duty applicable to imported goods is a function of the prescribed duty rate mentioned in the First Schedule to the Customs Tariff Act, 1975 (CT Act). Classification of goods under the appropriate tariff entry is necessary for determining the applicable rate of customs duty. Under Section 15 the relevant date for determination of the duty payable, in case of goods entered for home consumption under Section 46, is “the date on which a bill of entry is respect of such goods is presented”. In the case of other goods (i.e. other than those cleared from a warehouse under Section 68 of the Act) it is the rate prevalent on the “date of payment of duty.”

5. Under Section 2 (9) of the Act, the expression ‘conveyance’ includes a vessel, an aircraft and a vehicle. Under Section 2 (21) the expression ‘foreign going vessel’ means any vessel or aircraft for the time being engaged in the carriage of goods or passengers between any port or airport in India and any port or airport outside India, whether touching any intermediate port or airport in India or not, and includes—

“(i) any naval vessel of a foreign Government taking part in any naval exercises;

(ii) any vessel engaged in fishing or any other operations outside the territorial waters of India;

(iii) any vessel or aircraft proceeding to a place outside India for any purpose whatsoever.”

6. Section 2 (22) of the Act, the expression “goods” includes “vessels, aircrafts and vehicles”. The expression “