1) The ullage survey is carried out both at the time of shipment of the goods from the foreign port (as shown in the Bill of Lading), and at die Indian Port of unloading. It is customary for the Captain of the Vessel to enter a protest against the measurements so recorded at the foreign port so as to get over discrepancies which may arise later.

2) In the present case, the goods are pumped through pipelines from the ship at the Cochin Port into the shore tanks of Cochin Refineries Ltd. (CRL) which are situated in its refinery 14 Kms. away. It is CRL's case that the measurement in the shore tanks should be adopted for the purposes of levy of duty.

3) The definitions of the terms "import", "imported goods", "India" etc., and Section 12 which is the charging section, contemplate the levy of customs duty on goods imported into India. This would indicate that the levy has to be on goods which are actually imported into India, which is a matter of fact which has to be ascertained. It cannot, in law, be a hypothetical figure.

4) The Ullage survey is carried out in circumstances and in a manner which does not and cannot reflect complete accuracy. Whether this could be a ready reckoner for the levy of duty is the question to be decided. In view of its basic inaccuracy, one cannot possibly adopt it as the final word as to the exact quantity of goods imported into India. The Public Notice on which reliance has been placed and the decision of the Hon'ble Bombay High Court (Pendse J.) seem to concentrate on Section 116 of the Act which provides for penalties for not accounting for goods. This is a penalty which attaches to the person in charge of the conveyance. Of course, in computing the subject penalty, the amount of duty that would have been chargeable on the goods not unloaded or the deficient goods is a measure. However, the decision seems to be applicable to circumstances which do not determine the quantum of duty which is payable.

5) If one looks at Section 116, the reference is to goods not unloaded or deficient goods. In the present case, that section cannot come into application because it is not the case that the goods have not been unloaded. The question is as to what should be the quantum of duty which is leviable on the goods which have been unloaded and as to how that quantity of goods unloaded be determined. The issue has, therefore, to be examined de hors considerations applicable to Section 116.

6) There are several decisions of the High Courts and the CEGAT which consider as to what should be the correct criterion for determining the quantity on which duty is to be levied - whether it should be the quantity mentioned in the ullage survey report or the measurement in the shore tank as follows:-