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of <h1>Ownership of vessel during importation process deems respondent liable for customs duty</h1> <h3>COMMISSIONER OF CUSTOMS Versus SHREE DEV KRUPA SHIP BREAKING</h3> COMMISSIONER OF CUSTOMS Versus SHREE DEV KRUPA SHIP BREAKING - TMI Issues Involved:1. Definition of 'Importer' under Section 2(26) of the Customs Act, 1962.2. Applicability of Notification No.163/65-Cus dated 16.10.1965 and its conditions.3. Determination of the relevant date for customs duty on the vessel.4. Rate of duty applicable under Section 15 of the Customs Act, 1962.Detailed Analysis:1. Definition of 'Importer' under Section 2(26) of the Customs Act, 1962:The primary issue was whether the respondent, M/s Shree Dev Krupa Ship Breaking, was an 'importer' as per Section 2(26) of the Customs Act, 1962. The court noted that the definition includes any owner or any person holding himself out to be the importer at any time between importation and clearance for home consumption. The vessel was sold to the respondent before it was cleared for home consumption, making the respondent the owner during the importation process. Thus, the respondent fell within the definition of 'importer.'2. Applicability of Notification No.163/65-Cus dated 16.10.1965 and its Conditions:Notification No.163/65-Cus exempted ocean-going vessels manufactured in a warehouse from customs duty, provided that duty would be levied if the vessel was broken up. The court emphasized that the proviso created a legal fiction, shifting the date of import to the date the vessel was broken up. The court held that this fiction must be given full effect, meaning the vessel was deemed imported for breaking up on the date it was sold for scrapping.3. Determination of the Relevant Date for Customs Duty on the Vessel:The court referred to the Supreme Court's decision in Union of India v. Jalyan Udyog, which held that the date of breaking up should be the date when permission for scrapping was granted by the Director General of Shipping. In this case, the vessel was sold to the respondent before such permission was obtained, making the respondent liable for customs duty as the importer.4. Rate of Duty Applicable under Section 15 of the Customs Act, 1962:Section 15 specifies that the rate of duty is determined on the date the Bill of Entry is presented. The court noted that the vessel was not cleared for home consumption when sold to the respondent, who then filed the Bill of Entry. Therefore, the duty rate applicable was the one in force on the date the respondent filed the Bill of Entry.Conclusion:The court concluded that the respondent was the importer under Section 2(26) of the Customs Act, 1962. The legal fiction created by Notification No.163/65-Cus was applicable, making the respondent liable for customs duty. The relevant date for determining the duty was when the respondent filed the Bill of Entry. The Tribunal's order was quashed, and the appeal was allowed in favor of the revenue.
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