JAIN SHUDH VANASPATI LTD Vs. S R PATANKAR

JUDGEMENT

(1.) The Petitioners, holders of a valid import licence, imported palm oil in bulk, 1996.6115 mts from Malaysia and 2902-3001 mts from Penang. Both the consignments were shipped to Bombay on M.V. "Dolphin II". The vessel arrived within Indian territorial waters on 27th February 1979. At this time a notification was in force whereunder the Central Government had exempted, inter alia palm oil falling within Chapter XV of the First Schedule to the Customs Tariff Act, 1975, when imported into India, from the whole of the duty of customs leviable thereon. On 28th February 1979 the import general manifest of the vessel was registered, numbered and displayed on the notice board of the Collector of Customs, Bombay. On that day the Petitioners' clearing agents filed with the Customs authorities 6 bills of entry relating to the said goods. The Bombay port trust authorities had on 23rd February 1979 informed the vessel's shipping agents that, in order to secure a berth for the purposes of discharge of cargo, it might have to wait in stream for a period of 65 days from the date of its registration at Bombay. Having regard to this, the vessel left Indian territorial waters and sailed to Karachi for the purposes of unloading cargo there. On and from 1st March 1979, as a result of the Union budget proposals for 1979-80, the levy of import duty at the rate of 12.5% ad valorem on certain specified edible oils, including palm oil, was proposed. On 6th March 1979 the vessel re-entered Indian territorial water and waited its turn to discharge cargo. On 13th March 1979, it is alleged by the petitioners, the customs authorities purported to effect an amendment upon the notice of registration of the import general manifest of the vessel so that it read "2262/7-3-79". On 13th March 1979 the 1st respondent passed assessment orders upon the 6 bills of entry relating to the said goods levying customs duty thereon at the rate of 12.5% advalorem. This petition, filed on 20th March 1979, challenges the validity of the said assessment orders.

(2.) It was contended by Mr. A. K. Sen, learned counsel for the petitioners, that the taxable event took place on 27th February 1979 when the vessel first entered Indian territorial waters. He relied for this purpose upon Section 12 of the Customs Act, 1962, and upon the definitions of imported goods and Indian therein. Reliance was placed by him upon the judgments of Division Benches of this Court in M. S. Shawhney v. Messrs. Sylvania and Laxman Ltd., 77 Bom. L.R. 380, and in Synthetics and Chemicals Ltd. v. S. C. Coutinho, 1981 E.L.T. 414. Mr. Sen submitted that when the taxable event took place there was a total exemption from payment of customs duty upon the said goods and, as such, there was no question of payment of any duty even if the exemption was withdrawn when the bills of entry were filed or the vessel was granted entry inward. Mr. Sen submitted that the scheme of the Customs Act showed that once a vessel containing goods entered Indian territorial waters the goods became liable to payment of duty under Section 12, subject only to the exceptions contained inter alia in Sections 13, 20, 21, 22, 23, 25, 53, 54, 57, 60 and 68. Accordingly, in Mr. Sen's submission, the fact that the vessel left Indian territorial waters after 27th February 1979 and re-entered them on 6th March 1979 was irrelevant.

(3.) It was submitted on behalf of the respondents that the decisions in the Sylvania and Synthetics cases were not good law in view of the fact that their ratio was contrary to that of certain judgments of the Supreme Court. It is necessary to go into this question in this case.