Vessel status and sea-going exemption applied to transhippers, but spare parts stayed under customs and import control rules.

A craft need not be self-propelled to qualify as a vessel if it is used in navigation, and transhippers with sea-going characteristics were treated as sea-going vessels for customs purposes, bringing them within the exemption from customs duty and from filing bills of entry. Spare parts imported for those transhippers did not share that exemption because the vessels were not foreign-going at the relevant time, i.e. they were not engaged in carriage between an Indian port and a foreign port. The substantial-compliance argument based on governmental permission and exchange release was rejected, leaving the spare parts subject to customs duty and import control requirements.

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Issues: (i) Whether the transhippers were vessels and sea-going vessels entitled to exemption from customs duty and from filing bills of entry; (ii) whether the spare parts imported for those transhippers were liable to customs duty and import control requirements.

Issue (i): Whether the transhippers were vessels and sea-going vessels entitled to exemption from customs duty and from filing bills of entry

Analysis: The transhippers were held to be vessels within the meaning of the general law because they were descriptions of craft used in navigation, and navigation was not confined to self-propelled craft. The Court applied the broad meaning of vessel and used in navigation, and treated the self-propelled and non-self-propelled transhippers alike. On the facts, the vessels moved between inland waters and the sea, were equipped and registered as sea-going craft, carried the indicia of sea-going operation, and fell within the exemption notification for ocean-going vessels.

Conclusion: The transhippers were vessels and sea-going vessels, and their import was exempt from customs duty and the requirement to file bills of entry.

Issue (ii): Whether the spare parts imported for those transhippers were liable to customs duty and import control requirements

Analysis: The spare parts claim depended on the vessels being foreign-going and on the applicability of the import control exemption. The Court held that the transhippers were not foreign-going vessels at the relevant time because they were not engaged in carriage between an Indian port and a foreign port. The asserted substantial compliance based on governmental permission and exchange release was also rejected.

Conclusion: The spare parts were liable to customs duty and import control requirements, and the petitions relating to them failed.

Final Conclusion: Relief was granted in relation to the transhippers themselves, but refused in relation to the spare parts, resulting in partial success for the petitioners and partial success for the customs authorities.

Ratio Decidendi: A craft need not be self-propelled to be a vessel if it is used in navigation, and a vessel navigating beyond inland waters is a sea-going vessel entitled to the relevant customs exemption; spare parts for a vessel not shown to be foreign-going remain subject to the import control regime.

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