Case Law Details
Court : SC
Brief : Can a ship made in Hindustan Shipyard Ltd and delivered to Dempo Steamship Ltd after paying excise duty be charged customs duty when it was brought to India and auctioned for breaking it up? This question has come to the Supreme Court a second time and it has referred it back to the Excise and Customs Appellate Tribunal for reconsideration. According to the tribunal, goods manufactured in a customs bonded warehouse are treated as goods manufactured in a foreign country. When the vessel was taken out of the country for plying as foreign going vessel, and subsequently when it was brought back to India for breaking purposes, it amounted to re-import, inviting customs duty. When this case, M/s Mustan Taherbhai vs Commissioner of Customs came to the Supreme Court in 2001 after a bout in the Gujarat high court, the apex court had sent it back to the tribunal pointing out that the vessel was built in India and excise duty was paid on it and it was delivered to an Indian party. However, the tribunal affirmed its order imposing the duty. The Supreme Court now set aside the tribunal’s order and asked it to reconsider the case on the parameters set by it earlier.
This appeal, under Section 130E of the Customs Act, 1962 (for short “the Act”), is directed against order dated 18th February, 2003, passed by the Customs, Excise & Gold (Control) Appellate Tribunal, as it existed at the relevant time, (for short “the Tribunal”). By the impugned order the Tribunal has dismissed the appeal filed by the appellant herein and confirmed the levy of customs duty on the ocean going vessel, registered as M.V. Jagat Priya, purchased by them in a Court auction, for breaking/ scrapping purpose in terms of Notification No. 133/87-Cus.
It was held that the impugned judgment deserves to be set aside on the short ground that while deciding the case, the Tribunal has ignored the specific directions issued by this Court, vide order dated 30th August, 2001. It is evident from the impugned order, in particular from paras 15 and 16 that the Tribunal has not appreciated the facts obtaining in the present case in their correct perspective, which has resulted in vitiating its decision on the question of leviability of import duty. Although, from para 14 of the impugned order it is evident that the Tribunal was conscious of the direction of this Court that it was required to first record the correct facts and then in the factual perspective locate and apply the relevant law, yet in the very next paragraph it proceeds to hold that when it is accepted that Notification No. 118/59-Cus. did not exist at the time of clearance of the vessel from the ship yard, the persistent plea that the ship was manufactured in a warehouse located in India and therefore, it attracted excise duty alone need not be considered at all. In our opinion, in light of the decision and directions of this Court in C.A. 1998 of 2000, judicial discipline obliged the Tribunal to examine the entire legal issue after ascertaining the foundational facts, regardless of its earlier view in the matter. Therefore, the decision of the Tribunal cannot be sustained.
Citation : M/S. MUSTAN TAHERBHAI VERSUS COMMNR. OF CENTRAL EXCISE & CUSTOMS
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Very Interesting and informative Atricles . We are also importing ships for scrap. This one is an eye openner, recently we have purchased 2 Ships form ONGC and coerced by the Customs Department to Pay Customs and Canvat on it . Please enlighten us on futher progress on this case. Hanif Shaikh