Customs duty confined to line pipes used in the designated area, where the non-designated portion was separately identifiable.

Where customs law is extended only to a designated area in the Continental Shelf or Exclusive Economic Zone, duty is confined to the portion of goods actually used within that area. On the facts, approved drawings and length-wise quantification showed that only part of the line pipes was to be installed in the designated area, while the remaining identifiable portion lay in the non-designated area where customs law did not apply. The mere fact that the pipes ran through or connected designated areas did not justify duty on the entire length. Customs duty was therefore restricted to the designated-area portion only.

---

---

Issues: Whether customs duty was leviable only on the portion of line pipes used in the designated area, and not on the portion laid in the non-designated area.

Analysis: The statutory scheme empowered the Central Government to declare designated areas in the Continental Shelf and Exclusive Economic Zone and to extend the Customs Act, 1962 and the Customs Tariff Act, 1975 to such areas. Notifications issued under that power treated the designated area as territory to which customs law applied. On the facts, the importer established through approved drawings and length-wise quantification that only part of the total pipe length was required to be installed in the designated area, while the remaining portion lay in the non-designated area where customs law did not apply. The fact that the pipe segments ran from one designated area to another and passed through a non-designated area did not justify duty on the entire length when the non-designated portion was separately identifiable and not shown to be liable.

Conclusion: Customs duty was payable only on the length of line pipes used in the designated area, and not on the length used in the non-designated area.

Final Conclusion: The demand could not be sustained on the entire quantity of line pipes, and relief followed to the extent of restricting duty to the designated-area portion only.

Ratio Decidendi: Where customs law is extended only to a designated area, duty can be levied only on the portion of goods actually used within that area if the non-designated portion is separately identifiable and quantifiable.

---