Bonded warehouse sales to ocean-going vessels were not in the course of import and remained taxable.

Goods imported into customs bonded warehouses are treated as having crossed the customs frontier once customs duty is assessed and the importer is permitted to clear them, even if duty collection is deferred and the goods remain warehoused. The constitutional phrase "in the course of import" is linked to the actual movement of goods through the import process, not their continued physical storage in bond for convenience. On that basis, sales of bunker, fuel, or furnace oil from bonded warehouses to ocean-going vessels were not sales in the course of import and were therefore liable to State sales tax under Article 286(1)(b) of the Constitution.

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Issues: Whether sales of bunker, fuel or furnace oil from customs bonded warehouses to ocean-going vessels were sales in the course of import and therefore exempt from State sales tax under Article 286(1)(b) of the Constitution of India.

Analysis: Goods imported and placed in customs bonded warehouses are deemed to have crossed the customs frontier once customs duty has been levied and the importer has been permitted to clear them, even though actual collection of duty is postponed and the goods remain warehoused. The course of import does not continue merely because the importer, for convenience, keeps the goods in bond after assessment of duty. The constitutional expression "in the course of import" is tied to the movement of goods and their passage through the customs process, not to their factual mingling with the general mass of goods in the country. On that footing, sales made from bonded warehouses to ocean-going vessels were not sales in the course of import.

Conclusion: The sales were not exempt as sales in the course of import and were liable to State taxation.

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