SAI UDYOG Vs. UNION OF INDIA

JUDGEMENT

(1.) The ship in the present case arrived with a cargo in November 1978. According to the petitioners there was an explosion in which the ship got damaged. The damage was so extensive that it became a wreck. It was sold for a consideration of Re. 1/- to one Mr. Satish Chanura Sanghi. The vessel was salvaged later but only to be subjected to the ship breaking operation. The question raised is about the exigibility of duty and the extent thereof.

(2.) Mr. Dalal contends that there was no vessel which had been broken up in terms of the notification dated 11th October, 1958, and that the proviso to that notification is not attracted at all. According to him at the time when it entered the waters of Bombay Port it was a vessel. At that point of time no duty was leviable. Duty is attracted only when it is broken up. At that point of time, according to counsel, there was no such vessel which could be broken up. Consequently no obligation for payment of duty arose.

(3.) We feel that the interpretation placed on that notification is not correct. The main portion of the exemption notification refers to ocean going vessels. The reference to such vessel in the proviso refers to the condition at the time when the ship entered the territorial waters. No doubt, the levy arises only when the ship is broken up. The chargeability so generated is, however, linked to the act of import which in the present case would be at the time when the ship entered the Bombay Port in 1978. In that view of the matter, duty is rightly leviable on the vessel in question.